Investment Office ANRS

Project Profile on Assembly of

Centrifugal Pumps

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............................................................................................................4
3.1.3Pricing and Distribution...................................................................................................5
3.2Plant Capacity.........................................................................................................................5
3.3Production Program................................................................................................................5

4.Raw Materials and Utilities.................................................................................6

4.1Availability and Source of Raw Materials..............................................................................6
4.2Annual Requirement and Cost of Raw Materials and Utilities...............................................6

5Location and Site...................................................................................................6

6Technology and Engineering ...............................................................................6
6.1Production Process..................................................................................................................6
6.2Machinery and Equipment......................................................................................................7
6.3Civil Engineering Cost...........................................................................................................8

7Human Resource and Training Requirement.....................................................8

7.1Human Resource ....................................................................................................................8
7.2Training Requirement.............................................................................................................9

8Financial Analysis..................................................................................................9
8.1Underlying Assumption .........................................................................................................9
8.2Investment.............................................................................................................................10
8.3Production Costs...................................................................................................................11
8.4Financial Evaluation.............................................................................................................11

9Economic and Social Benefit and Justification.................................................12

ANNEXES..............................................................................................................14

1. Executive Summary
This project profile deals with the establishment of a plant that assembles centrifugal pumps
Amhara National Regional State. The following presents the main findings of the study
Demand projection divulges that the domestic demand for centrifugal pumps is substantial and is
increasing with time. Accordingly, the planned plant is set to assemble 340 centrifugal pumps
annually. The total investment cost of the project including working capital is estimated at Birr
7.11 million and creates job opportunities to 31 citizens
The financial result indicates that the project will generate profit beginning from the first year of
operation. Moreover, the project will break even at 34.20% of capacity utilization and it will
payback fully the initial investment less working capital in four years. The result further show
that the calculated IRR of the project is 22.6%; while the NPV discounted at 18% annually is
about Birr 1.13 million.
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, diversification of
the economy 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

Pumps are used to deliver water, particularly when the water has to be lifted from a lower level
to a higher level, where energy is needed for shifting the water. The energy is obtained from a
motor which converts electrical energy into mechanical energy. They are two types of pumps
the centrifugal type is the most versatile and broadly used in agriculture and industry. This type
of pump is compact, easy to maintain and low in energy consumption
Among water pumps, the small-type centrifugal pumps enjoy a large demand being extensively
used, in the fields of agriculture, civil engineering, chemical industry, waterworks, mining and
3

air-conditioning, and for many other industrial purposes. From the technical point of view,
manufacture of pumps of the above type is comparatively easy. Accordingly, centrifugal pumps
may constitute one of the industrial fields most suit-able for developing countries. Developed
through many years of research, centrifugal pumps feature complete standardization, a fact
which makes possible a comparatively cheap cost of making while offering high performances.
Features of Centrifugal Pump
(1) Keeping favourable efficiency over a wide range of volumes of water, without causing
overload.
(2) Small consumption of electric power and cost of fuels on account of high efficiency.
(3) Less troubles on account of the simple mechanism.

3. Market Study, Plant Capacity and Production Program

3.1

Market Study
3.1.1 Present Demand and Supply

Annual of import of all types of pumps is around 80,000 units of which 60000 units is estimated
to centrifugal pumps. Share of the Amhara Region is about 20000 units. This will increase as
more and more farmers turn to small scale irrigation activities to increase their income. The
current level of use of pumps and the expected increase of this use will justify the establishment
of a viable pump assembly plant in the Amhara Region. Assembled pumps can also be exported
to other parts of the country. The projected plant will cover only 17% of the regional share of the
import.

3.1.2 Projected Demand

Assuming that demand will increase at 4% per annum, the projected demand is depicted in Table
1 below. Note that the proposed plant can cover a very small portion of the total demand.

Table 1: Projected Demand

Year

Projected
demand (pcs)

2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

2,080
2,163
2,250
2,340
2,433
2,531
2,632
2,737
2,847
2,960

3.1.3 Pricing and Distribution

The Price is set on competitive bases. Currently, imported centrifugal pumps sell in range of Birr
20,000 to 25,000 depending on their quality. The envisaged plants product price is set well
below the market retail price to attract customer. Distribution will be directly to the customers as
well as through the exiting market channel.

3.2

Plant Capacity

Thus, given the expected demand for centrifugal pumps presented earlier, and the planned
technology, the envisaged plant is set to produce 340 pieces annually.

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 shift, where the remaining days will be holidays and for maintenance. During the
first year of operation the plant will operate at 75 percent capacity and then it grows to 85 and 95
percents in the 2nd and 3rd year, respectively. The capacity will grow to 100 percent starting from
the 4th year. This consideration is developed based on the assumption that market and logistics
barriers would take place for the first three years of operation. Annual production can be
doubled by increasing te number of shifts.

4. Raw Materials and Utilities

4.1

Availability and Source of Raw Materials

The raw materials casts, steels, bolts, ball bearings should be imported, preferably from India.

4.2

Annual Requirement and Cost of Raw Materials

and Utilities

A full capacity, 190 tons of casts, steels, bolts, ball bearings, etc are required. All this materials
should be imported. The total cost of these materials is estimated at Birr 1.9 million.
The utility requirements are shown in Table 2 below.
Table 2: Utilities Requirements at Full Capacity

Item
Electricity
Water
Fuel

Qty
110000 kw
6000 m3
5000 lit

Total

Annual
Cost
(Birr)
60,500
15,900
25,000
101,400

5 Location and Site

The appropriate location for the envisaged project in view of the availability, infrastructure,
skilled labour as well as market for the output is Combolcha.

6 Technology and Engineering

6.1

Production Process

Machining is followed by inspection, and, in accord with the materials, key-waying, drilling,
etc., after which work pieces are stored in a warehouse.

The operation up to the above stage centred on work by machine tools of centred on work by
machine tools of various kinds. Then, the assembly process takes over, with required parts
brought out of the warehouse for assembly.
The assembled pumps are subjected to performance tests, and they are shipped out after painting
and packing.
Alternative
Integrated manufacturing from the manufacture of raw materials to pumps is alternative
which requires heavy investment. In this project profile, therefore, it is proposed that the plant
makes pumps through machining and assembly of cast materials.

6.2

Machinery and Equipment

The machineries and equipment required for producing centrifugal pumps is detailed in Table 3
below.
Table 3: Required Machineries and Equipments

Description
1
2

Vertical lathe (with accessories)

Engine lathe (with accessories)

Coying lathe (with accessories)

4
5
6

Vertical milling m/c (with accessories)

Multiple drilling m/c (with accessories)
Tapping and milling m/c (with
accessories)
Slotter
key miller
Cylindrical and grinding m/c (with
accessories)
Testing equipment
Power receiving equipment
Others

7
8
9
10
11
12

Specification

No

LV 600 mm x 4-400 rpm x 7.5 kw

LG 750 mm x 20-1,500 rpm x 3.7
kw
LC 500 mm x 20-1,500 rpm x 3.7
kw
MV No.3, 5.4 kw
TP DU 1,000 mm radial type
PT stroke 150 mm, No. Stroke
120/min
MK 300-2,000 rpm, 1kw
GB 800 mm x 250 mm, 2.2 kw

1
2
1
1
1
1
1
1
1
1
1

The total cost of the above listed machineries and equipments is estimated at Birr 4,760,000
Supplier Address
7

The National Small Industries Corporation Limited

Ladha Udyog Bhavan
Okhla Industrial Estate
New Delhi-110 020
India

6.3

Civil Engineering Cost

The total site area for the envisaged plant is estimated to be 1,000m2 where 300m2 is allocated to
the production place and other facilities. The

7 Human Resource and Training Requirement

7.1

Human Resource

The human resource requirement at full capacity is shown in Table 4 below.

Table 4: Human Resource Requirement

Salary/Wage (Birr)

Job Title
1
2
3
4
5
6
7
8
9
1
0
1
1
1
3

No.

Monthly
Annual
5,000
60,000
4,000
96,000
2,000
168,000
600
50,400
800
19,200
1,600
19,200
900
10,800
1,500
18,000
1,600
19,200

General Manager
Engineers
Skilled Workers
Unskilled Workers
Clerical Workers
Personnel Head
Secretary
Accountant
Marketing Officer

1
2
7
7
2
1
1
1
1

Casher

1,000

12,000

Security

400

19,200

Genitor

3
31

350

12,600
504,600

Total
Employment Benefits 20% of Annual
Salary

100,920
605,520

7.2

Training Requirement

Both induction and periodic trainings are indispensable. Annual training budget that amounts to
Birr 60,000 is included in the working capital.

8 Financial Analysis
8.1

Underlying Assumption

The financial analysis of centrifugal pumps assembly plant is based on the data provided in the
preceding chapters and the following assumptions.
A. Construction and Finance

Construction period

2 year

Source of finance

40% equity and 60% loan

Tax holidays

2 years

Bank interest rate

12%

Discount for cash flow

18%

Value of land

Based on lease rate of ANRS

Spare Parts, Repair & Maintenance

3% of fixed investment

B. Depreciation
Building

5%

Machinery and equipment

10%

Office furniture

10%

Vehicles

20%

Pre-production (amortization)

20%

C. Working Capital (Minimum Days of Coverage)

Raw Material-Local

30

Raw Material-Foreign

120

Factory Supplies in Stock

30

Spare Parts in Stock and Maintenance

30

Work in Progress
Finished Products
Accounts Receivable
Cash in Hand
Accounts Payable

10
15
30
30
30

8.2

Investment

The total investment cost of the project including working capital is estimated at Birr 7.11
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: Initial Investment and Working Capital

Total Initial Investment

Item
Land
Building and civil works
Office equipment
Vehicles

Cost
3,000.00
600,000.00
100,000.00
250,000.00

Plant machinery & equipment

Total Fixed Investment
Pre production capital expenditure
Total Initial Investment
Working capital at full capacity

4,760,000.00
5,713,000.00
285,650.00
5,998,650.00
1,113,644.12

Total

7,112,294.12
*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.

10

8.3

Production Costs

The total production cost at full capacity operation is estimated at Birr 3.91 million as detailed in
table 6 below.
Table 6: Production Cost at Full Capacity

Total Production Cost at Full Capacity

Items
Cost
1. Raw materials
2. Utilities

101,400.00

3. Wages and Salaries

605,520.00

4. Spares and Maintenance

171,390.00

Factory costs
5. Depreciation
6. Financial costs

Total Production Cost

8.4
I.

1,900,000.00

2,778,310.00
623,130.00
512,085.18
3,913,525.18

Financial Evaluation

Profitability

According to the projected income statement attached in the annex part (see annex 3) 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 0.85%, 17.01%, and
1.15%in the first year and are gradually rising to 36.95%, 18.55% and 46.37%. The initial annual
profit is Birr 32,661; while the final is about Birr 1.32 million. The project will generate a total
profit of about Birr 10.27 million during ten operational years. Furthermore, the income
statement and other profitability indicators show that the project is viable.

11

II.

Breakeven Analysis

The breakeven point of the project is estimated by using income statement projection.
Accordingly, the project will break even at 34.20% 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 fourth year
of operation.
IV.

Simple Rate of Return

For the envisaged plant the simple rate of return equals to 18.6%.
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
22.6% and the net present value at 18 % annual discount rate is Birr 1.13 million.
VI.

Sensitivity Analysis

The envisaged plant is profitable even with considerable cost increment. That is the plant
maintains to be profitable starting from the second year when 10 % cost increment takes place in
the sector. This result is accompanied by a total profit of about Birr 8.56 million. On the other
hand, a 10% decline in sales will reduce the total profit to 6.62 million.

9 Economic and Social Benefit and Justification

The envisaged project possesses wide range of benefits where it promotes the socio-economic
goals and objectives stated in the strategic plan of the Amhara National Regional State. These
benefits are listed as follows
[

12

A. Profit Generation
The project is found to be financially viable and will generate a total profit of about Birr 10.27
million during ten operational years. 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 4 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
Based on the projected figure we learn that in the project life an estimated amount of USD
4,870,500 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
region. That is, it will provide permanent employment to 31 citizens.
E. Modernization, diversification and integration
The proposed modernizes the economy in general and the agricultural sector in particular. It also
plays great role in diversification and integration of the various sectors.

13

ANNEXES

14

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

CONSTRUCTION

Capacity Utilization (%)

1. Total Inventory

PRODUCTION

Year 1

Year 2

75%

85%

95%

100%

1,329,258

1,506,492

1,683,727

1,772,344

551,864

625,445

699,027

735,818

Raw Material-Local

23,318

26,427

29,536

31,091

Raw Material-Foreign

528,545

599,018

669,491

704,727

Factory Supplies in Stock

2,783

3,154

3,525

3,711

Spare Parts in Stock and Maintenance

14,023

15,893

17,762

18,697

Work in Progress

69,575

78,852

88,128

92,767

Finished Products

139,150

157,703

176,256

185,533

2. Accounts Receivable

417,273

472,909

528,545

556,364

3. Cash in Hand

57,839

65,551

73,263

77,119

1,252,506

1,419,507

1,586,507

1,670,008

4. Current Liabilities

417,273

472,909

528,545

556,364

Accounts Payable

417,273

472,909

528,545

556,364

TOTAL NET WORKING CAPITAL REQUIREMENTS

835,233

946,597

1,057,962

1,113,644

INCREASE IN NET WORKING CAPITAL

835,233

111,364

111,364

55,682

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%

1,772,344

1,772,344

1,772,344

1,772,344

1,772,344

1,772,344

735,818

735,818

735,818

735,818

735,818

735,818

31,091

31,091

31,091

31,091

31,091

31,091

704,727

704,727

704,727

704,727

704,727

704,727

3,711

3,711

3,711

3,711

3,711

3,711

Spare Parts in Stock and Maintenance

18,697

18,697

18,697

18,697

18,697

18,697

Work in Progress

92,767

92,767

92,767

92,767

92,767

92,767

Finished Products

185,533

185,533

185,533

185,533

185,533

185,533

2. Accounts Receivable

556,364

556,364

556,364

556,364

556,364

556,364

77,119

77,119

77,119

77,119

77,119

77,119

1,670,008

1,670,008

1,670,008

1,670,008

1,670,008

1,670,008

4. Current Liabilities

556,364

556,364

556,364

556,364

556,364

556,364

Accounts Payable

556,364

556,364

556,364

556,364

556,364

556,364

1,113,644

1,113,644

1,113,644

1,113,644

1,113,644

1,113,644

Capacity Utilization (%)

1. Total Inventory
Raw Materials in Stock-Total
Raw Material-Local
Raw Material-Foreign
Factory Supplies in Stock

3. Cash in Hand
CURRENT ASSETS

TOTAL NET WORKING CAPITAL REQUIREMENTS

INCREASE IN NET WORKING CAPITAL

Annex 2: Cash Flow Statement (in Birr)

CONSTRUCTION

PRODUCTION

Year 1

Year 2

2,999,325

4,112,969

4,242,273

4,390,636

4,900,636

5,127,818

2,999,325

4,112,969

417,273

55,636

55,636

27,818

Total Equity

1,199,730

1,645,188

Total Long Term Loan

1,799,595

2,467,781

417,273

55,636

55,636

27,818

2. Inflow Operation

3,825,000

4,335,000

4,845,000

5,100,000

Sales Revenue

3,825,000

4,335,000

4,845,000

5,100,000

Interest on Securities

TOTAL CASH OUTFLOW

2,999,325

2,999,325

4,421,715

3,693,665

4,240,717

4,266,406

4. Increase In Fixed Assets

2,999,325

2,999,325

2,856,500

2,856,500

142,825

142,825

5. Increase in Current Assets

1,252,506

167,001

167,001

83,500

6. Operating Costs

2,039,256

2,303,349

2,567,443

2,699,489

7. Corporate Tax Paid

368,307

430,797

8. Interest Paid

1,129,953

512,085

426,738

341,390

9.Loan Repayments

711,229

711,229

711,229

10.Dividends Paid

Surplus (Deficit)

1,113,644

-179,442

696,972

659,919

861,412

Cumulative Cash Balance

1,113,644

934,202

1,631,174

2,291,093

3,152,505

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
5,100,000

6
5,100,000

7
5,100,000

8
5,100,000

9
5,100,000

10
5,100,000

Total Equity

Total Long Term Loan

Total Short Term Finances

2. Inflow Operation

5,100,000

5,100,000

5,100,000

5,100,000

5,100,000

5,100,000

Sales Revenue

5,100,000

5,100,000

5,100,000

5,100,000

5,100,000

5,100,000

TOTAL CASH OUTFLOW

4,123,163

4,095,559

4,035,815

3,264,843

3,264,843

3,264,843

4. Increase In Fixed Assets

Fixed Investments

Pre-production Expenditures

2,699,489

2,699,489

2,699,489

2,699,489

2,699,489

2,699,489

7. Corporate Tax Paid

456,401

514,145

539,749

565,353

565,353

565,353

8. Interest Paid

256,043

170,695

85,348

9. Loan Repayments

711,229

711,229

711,229

976,837

1,004,441

1,064,185

1,835,157

1,835,157

1,835,157

4,129,342

5,133,783

6,197,968

8,033,126

9,868,283

11,703,440

TOTAL CASH INFLOW

1. Inflow Funds

Interest on Securities
3. Other Income

5. Increase in Current Assets

6. Operating Costs

10.Dividends Paid
Surplus (Deficit)
Cumulative Cash Balance

Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED

CONSTRUCTION
Year 1

PRODUCTION

Year 2

TOTAL CASH INFLOW

3,825,000

4,335,000

4,845,000

5,100,000

1. Inflow Operation

3,825,000

4,335,000

4,845,000

5,100,000

Sales Revenue

3,825,000

4,335,000

4,845,000

5,100,000

Interest on Securities

TOTAL CASH OUTFLOW

2,999,325

2,999,325

2,874,489

2,414,714

2,678,807

3,185,969

3. Increase in Fixed Assets

2,999,325

2,999,325

Fixed Investments

2,856,500

2,856,500

142,825

142,825

4. Increase in Net Working Capital

835,233

111,364

111,364

55,682

5. Operating Costs

2,039,256

2,303,349

2,567,443

2,699,489

6. Corporate Tax Paid

430,797

NET CASH FLOW

-2,999,325

-2,999,325

950,511

1,920,286

2,166,193

1,914,031

CUMULATIVE NET CASH FLOW

-2,999,325

-5,998,650

-5,048,139

-3,127,853

-961,660

952,372

Net Present Value (at 18%)

-2,999,325

-2,541,801

682,642

1,168,746

1,117,298

836,641

Cumulative Net present Value

-2,999,325

-5,541,126

-4,858,484

-3,689,738

-2,572,440

-1,735,799

2. Other Income

Pre-production Expenditures

Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED

(Continued)

PRODUCTION
5

10

TOTAL CASH INFLOW

5,100,000

5,100,000

5,100,000

5,100,000

5,100,000

5,100,000

1. Inflow Operation

5,100,000

5,100,000

5,100,000

5,100,000

5,100,000

5,100,000

Sales Revenue

5,100,000

5,100,000

5,100,000

5,100,000

5,100,000

5,100,000

3,155,891

3,213,634

3,239,238

3,264,843

3,264,843

3,264,843

3. Increase in Fixed Assets

Fixed Investments

Pre-production Expenditures

2,699,489

2,699,489

2,699,489

2,699,489

2,699,489

2,699,489

456,401

514,145

539,749

565,353

565,353

565,353

NET CASH FLOW

1,944,109

1,886,366

1,860,762

1,835,157

1,835,157

1,835,157

CUMULATIVE NET CASH FLOW

2,896,481

4,782,847

6,643,608

8,478,766

10,313,923

12,149,081

720,159

592,177

495,034

413,747

350,633

297,147

-1,015,640

-423,462

71,571

485,319

835,952

1,133,099

Interest on Securities
2. Other Income
TOTAL CASH OUTFLOW

4. Increase in Net Working Capital

5. Operating Costs
6. Corporate Tax Paid

Net Present Value (at 18%)

Cumulative Net present Value
Net Present Value (at 18%)
Internal Rate of Return

1,133,099.05

22.6%

Annex 4: NET INCOME STATEMENT ( in Birr)

PRODUCTION
Capacity Utilization (%)
1. Total Income
Sales Revenue

75%

85%

95%

100%

100%

3,825,000

4,335,000

4,845,000

5,100,000

5,100,000

3,825,000

4,335,000

4,845,000

5,100,000

5,100,000

1,799,045

2,038,917

2,278,790

2,398,726

2,398,726

2,025,955

2,296,083

2,566,210

2,701,274

2,701,274

Other Income
2. Less Variable Cost
VARIABLE MARGIN
(In % of Total Income)
3. Less Fixed Costs
OPERATIONAL MARGIN
(In % of Total Income)
4. Less Cost of Finance
5. GROSS PROFIT

52.97

52.97

52.97

52.97

52.97

863,341

887,562

911,783

923,893

923,893

1,162,614

1,408,521

1,654,427

1,777,381

1,777,381

30.40

32.49

34.15

34.85

34.85

1,129,953

512,085

426,738

341,390

256,043

32,661

896,436

1,227,690

1,435,990

1,521,338

368,307

430,797

456,401

32,661

896,436

859,383

1,005,193

1,064,937

6. Income (Corporate) Tax

7. NET PROFIT
RATIOS (%)
Gross Profit/Sales

0.85%

20.68%

25.34%

28.16%

29.83%

Net Profit After Tax/Sales

0.85%

20.68%

17.74%

19.71%

20.88%

Return on Investment

17.01%

20.28%

18.23%

18.93%

18.57%

Return on Equity

1.15%

31.51%

30.21%

35.33%

37.43%

Annex 4: NET INCOME STATEMENT (in Birr): Continued

PRODUCTION
Capacity Utilization (%)
1. Total Income
Sales Revenue

10

100%

100%

100%

100%

100%

5,100,000

5,100,000

5,100,000

5,100,000

5,100,000

5,100,000

5,100,000

5,100,000

5,100,000

5,100,000

2,398,726

2,398,726

2,398,726

2,398,726

2,398,726

2,701,274

2,701,274

2,701,274

2,701,274

2,701,274

Other Income
2. Less Variable Cost
VARIABLE MARGIN
(In % of Total Income)
3. Less Fixed Costs
OPERATIONAL MARGIN
(In % of Total Income)
4. Less Cost of Finance

52.97

52.97

52.97

52.97

52.97

816,763

816,763

816,763

816,763

816,763

1,884,511

1,884,511

1,884,511

1,884,511

1,884,511

36.95

36.95

36.95

36.95

36.95

170,695

85,348

1,713,816

1,799,163

1,884,511

1,884,511

1,884,511

514,145

539,749

565,353

565,353

565,353

1,199,671

1,259,414

1,319,157

1,319,157

1,319,157

Gross Profit/Sales

33.60%

35.28%

36.95%

36.95%

36.95%

Net Profit After Tax/Sales

23.52%

24.69%

25.87%

25.87%

25.87%

Return on Investment

19.27%

18.91%

18.55%

18.55%

18.55%

Return on Equity

42.17%

44.27%

46.37%

46.37%

46.37%

5. GROSS PROFIT
6. Income (Corporate) Tax
7. NET PROFIT
RATIOS (%)

Annex 5: Projected Balance Sheet (in Birr)

CONSTRUCTION
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
2,999,325
0
0
0
0
0
0
0
0
2,999,325
0
2,856,500
142,825
0
0
0
2,999,325
0
0
0
1,799,595
1,799,595
0
1,199,730
1,199,730
0
0
0
0
0
0

Year 2
7,112,294
1,113,644
0
0
0
0
0
1,113,644
0
5,998,650
2,856,500
2,856,500
285,650
0
0
0
7,112,294
0
0
0
4,267,376
4,267,376
0
2,844,918
2,844,918
0
0
0
0
0
0

PRODUCTION
1
7,562,228
2,186,708
568,669
69,575
139,150
417,273
57,839
934,202
0
5,375,520
5,713,000
0
285,650
623,130
0
0
7,562,228
417,273
417,273
0
4,267,376
4,267,376
0
2,844,918
2,844,918
0
0
0
32,661
0
32,661

2
7,803,071
3,050,681
644,492
78,852
157,703
472,909
65,551
1,631,174
0
4,752,390
5,713,000
0
285,650
1,246,260
0
0
7,803,071
472,909
472,909
0
3,556,147
3,556,147
0
2,844,918
2,844,918
0
0
32,661
896,436
0
896,436

3
8,006,860
3,877,600
720,315
88,128
176,256
528,545
73,263
2,291,093
0
4,129,260
5,713,000
0
285,650
1,869,390
0
0
8,006,860
528,545
528,545
0
2,844,918
2,844,918
0
2,844,918
2,844,918
0
0
929,097
859,383
0
859,383

4
8,328,643
4,822,513
758,226
92,767
185,533
556,364
77,119
3,152,505
0
3,506,130
5,713,000
0
285,650
2,492,520
0
0
8,328,643
556,364
556,364
0
2,133,688
2,133,688
0
2,844,918
2,844,918
0
0
1,788,480
1,005,193
0
1,005,193

Annex 5: Projected Balance Sheet (in Birr):

Continued

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

5
8,682,350
5,799,350
758,226
92,767
185,533
556,364
77,119
4,129,342
0
2,883,000
5,713,000
0
285,650
3,115,650
0
0
8,682,350
556,364
556,364
0
1,422,459
1,422,459
0
2,844,918
2,844,918
0
0
2,793,673
1,064,937
0
1,064,937

6
9,170,791
6,803,791
758,226
92,767
185,533
556,364
77,119
5,133,783
0
2,367,000
5,713,000
0
285,650
3,631,650
0
0
9,170,791
556,364
556,364
0
711,229
711,229
0
2,844,918
2,844,918
0
0
3,858,610
1,199,671
0
1,199,671

7
9,718,976
7,867,976
758,226
92,767
185,533
556,364
77,119
6,197,968
0
1,851,000
5,713,000
0
285,650
4,147,650
0
0
9,718,976
556,364
556,364
0
0
0
0
2,844,918
2,844,918
0
0
5,058,280
1,259,414
0
1,259,414

8
11,038,133
9,703,133
758,226
92,767
185,533
556,364
77,119
8,033,126
0
1,335,000
5,713,000
0
285,650
4,663,650
0
0
11,038,133
556,364
556,364
0
0
0
0
2,844,918
2,844,918
0
0
6,317,695
1,319,157
0
1,319,157

9
12,357,291
11,538,291
758,226
92,767
185,533
556,364
77,119
9,868,283
0
819,000
5,713,000
0
285,650
5,179,650
0
0
12,357,291
556,364
556,364
0
0
0
0
2,844,918
2,844,918
0
0
7,636,852
1,319,157
0
1,319,157

10
13,676,448
13,373,448
758,226
92,767
185,533
556,364
77,119
11,703,440
0
303,000
5,713,000
0
285,650
5,695,650
0
0
13,676,448
556,364
556,364
0
0
0
0
2,844,918
2,844,918
0
0
8,956,009
1,319,157
0
1,319,157

10