Investment Office ANRS

Project Profile on the Establishment

of Peanut Butter making 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
3.1 Market Study.................................................................................................................................2
3.1.1 Present Demand and Supply....................................................................................................2
3.1.2 Projected Demand....................................................................................................................2
3.1.3 Pricing and Distribution..........................................................................................................3
3.2 Plant Capacity...............................................................................................................................3
3.3 Production Program.......................................................................................................................3
4. Raw Materials and Utilities......................................................................................3
4.1 Availability and Source of Raw Materials....................................................................................3
4.2 Annual Requirement and Cost of Raw Materials and Utilities.....................................................3
5 Location and Site.......................................................................................................4
6 Technology and Engineering.....................................................................................4
6.1 Production Process........................................................................................................................4
6.2 Machinery and Equipment............................................................................................................5
6.3 Civil Engineering Cost..................................................................................................................6
7 Human Resource and Training Requirement.........................................................6
7.1 Human Resource...........................................................................................................................6
7.2 Training Requirement....................................................................................................................6
8 Financial Analysis......................................................................................................7
8.1 Underlying Assumption.................................................................................................................7
8.2 Investment.....................................................................................................................................8
8.3 Production Costs...........................................................................................................................9
8.4 Financial evaluation......................................................................................................................9
9 Economic and Social Benefit and Justification.....................................................10
ANNEXES........................................................................................................................12
 1. Executive Summary

This project profile deals with the establishment of peanut butter making plant in Amhara
National Regional State. The following presents the main findings of the study

Demand projection shows that the domestic demand for peanut butter is substantial and is
increasing with time. Accordingly, the planned plant is set to produce 65 tons of peanut butter per
year.

The total investment requirement is estimated at Birr 1.88 million out of which Birr 1.04 million
is for machinery and equipment. The plant creates 16 jobs.

The project is financially viable with an internal rate of return (IRR) of 21.26% and a net present
value (NPV) of Birr 214,785 at annual discount rate of 18%.

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

Peanut butter is yellowish-brown butter like product made from ground nuts or peanuts. It
consists essentially of cleaned, graded, blanched, roasted and crushed groundnuts containing
about 45% oil and over 25% proteins.

Peanut butter is highly nutritive food containing protein, fat and carbohydrates as major
constituents. It contains calcium, phosphorus, iron, vitamin A, B1 & B2 etc. The calorific value
of peanut butter is around 600.

1
The peanut butter is easily separable, free from the skins or shells of peanuts and foreign matter,
and the product does not show any sign of separation of fat. Peanut butter has the characteristic
flavour of fresh roasted peanuts, and is free from and objectionable flavour and taste. A hurried
meal style, stress on balanced diet and increasing demand for ready-made food items have made
peanut butter receive a top priority.

Peanut butter is used in the production of sandwiches, candy, and bakery, insecticidal
formulations (as carried to attract the insects/pests) etc.

3. Market Study, Plant Capacity and Production Program

3.1 Market Study

3.1.1 Present Demand and Supply

The present demand for peanut butter is estimated at 100 ton/year. The demand for peanut
increases rapidly thanks to change in food preparation and rapid growth in urban population.

3.1.2 Projected Demand

The demand for peanut butter increases rapidly, nevertheless, a most assumption of 10% annual
growth rate is taken for projecting the future demand. The following table depicts the future
demand for peanut butter.

Table 1: Projected Demand for Peanut Butter

Projected
Year Demand (ton)
2009 110
2010 121
2011 133
2012 146
2013 161
2014 177
2015 195
2016 214
2017 236
2018 259

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 3.1.3 Pricing and Distribution

Prices of butter differ according to the quality. The current market price fluctuates widely
between Birr 25 – 30 per kg. For projecting sales revenue and finical analysis the average price
of Birr 20 kg is adopted for this project allowing substantial margin for distributors. The product
will find market outlet through established food distributors through out the country.

3.2 Plant Capacity

Thus, given the expected demand for peanut butter presented earlier, and technology, the
envisaged plant is set to produce 65 tons annually when it produces at full capacity.

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 85 percent capacity and then it grows to 100
percent in the 2nd year.

4. Raw Materials and Utilities

4.1 Availability and Source of Raw Materials

The raw materials required for producing peanut butter are groundnut, salt, sugar, emulsifier,
preservatives, antioxidants and other additives. The groundnut, salt and sugar are available at the
domestic market while the rest should be imported preferably from India.

4.2 Annual Requirement and Cost of Raw Materials

and Utilities

The annual requirement and costs of raw materials is shown in Table 2 below.

3
 Table 2: Annual Raw Material Requirements
Cost ( Birr)
NO Material Qty, kg
L.C F.C Total
1 Groundnut 85,000 340000 340000
2 Salt 900 675 675
3 Sugar 1,800 8100 8100
4 Emulsifier 900 5407 16221 21628
5 Preservatives 60 862 2586 3448
6 Antioxidants 6 893.25 2679.75 3573
7 Other additives 1.5 3918 11754 15672
8 Packing materials 1.5 10448.25 31344.75 41793
Total 63.789 370,304 64,586

The utilities required for the plant operation are electricity and water. Total installed electric
power is 20 kw. Electric power required for 275 days for a single shift operation of the plant at
100% capacity utilization will be 48,000 kwh per annum. Total estimated cost of electricity is
Birr 26,400 yearly. Requirement for water is 1,000 cubic meters. The cost of water is estimated
to be Birr 2,650 per annum.

5 Location and Site

In terms of availability of raw materials, labour and market several locations can be selected to
house this plant. Nevertheless, Bahir Dar, Gonder, Dessie, and Woldia are probably most
preferred.

6 Technology and Engineering

6.1 Production Process

Production of Peanut butter involves the following operations:

 the peanuts are shelled in decorticating machine,

 the shelled peanuts are heated to an internal temperature of about 145 oC to obtain
the proper roasted flavour,
 the influence of roasting time on sensory attributes and chemical measurements of
flavour components are examined,

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  roasted peanuts undergo blanching to remove the peanut skin,
 a course or medium grind is made, the ingredients are added and blended,
 the oil level is controlled at an appropriate temperature to produce the desired
texture of smooth creamy paste,
 air is removed by vacuum and the mixture is cooled, and
 Finally the peanut butter is packed by using a vacuum fill type packing unit. The
premises under which peanut butter is manufactured, packed, stored and
distributed and the equipment used during processing shall be maintained under
hygienic conditions.

Alternative technology

6.2 Machinery and Equipment

The machineries and equipment required for peanut making plant is detailed in Table 3 below.

Table 3: Required Machineries and Equipments

No Description Qty. No.s
1 Decorticating machine 1
2 Roaster with thermostat 1
3 Blanching equipment, set 1
4 Coarse grinding machine 1
5 Past grinding & mixing machine 1
6 Packing unit (vacuum fill type) 1
7 Miscellaneous testing equipments,
tools and allied equipments 15

The, total cost of machinery and equipment including freight insurance and bank cost is
estimated to be about Birr 1.04 million.

6.3 Civil Engineering Cost

5
The total site area for the envisaged plant is estimated to be 400m 2 where 250m2 is allocated to
the production place. The lease cost is estimated at Birr 24,000; while construction and civil
works are estimated to cost Birr 500,000.

7 Human Resource and Training Requirement

7.1 Human Resource
The list of required human resource for the envisaged plant is stated in tTable 4 below

Table 4: Human Resource Requirements

Salary/Wage (Birr)

Job Title No. Monthly Annual

1 General Manager 1 3,500 42,000
2 Chemist 1 2,000 24,000
3 Operators 3 1,000 36,000
4 Secretary 1 850 10,200
5 Accountant 1 1,000 12,000
6 Casher 1 850 10,200
7 Security 3 400 14,400
8 Clerks 2 700 16,800
9 Genitor 3 350 12,600
Total 16 178,200
Employment Benefits 20% of Annual
Salary 35,640
213,840

7.2 Training Requirement

Training of key personnel is important. The training should primarily focuses on the production
technology and machinery maintenance and trouble shooting. Birr 35 000 is allotted on annual
basis in the working capital.

8 Financial Analysis
8.1 Underlying Assumption

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The financial analysis peanut Butter producing 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%

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 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 10
Finished Products 15
Accounts Receivable 30
Cash in Hand 30
Accounts Payable 30

8.2 Investment
The total investment cost of the project including working capital is estimated at Birr 1.88
million as shown in Table 5 below. The Owner shall contribute 40% of the finance in the form of
equity while the remaining 60% is to be financed by bank loan.

Table 5: Total Investment and Working Capital

Total Initial Investment

Item Cost
Land 1,200.00
Building and civil works 500,000.00
Office equipment 80,000.00
Plant machinery & equipment 1,044,830.00
Total Fixed Investment 1,626,030.00
Pre production capital expenditure 81,301.50
Total Initial Investment 1,707,331.50
Working capital at full capacity 173,383.29
Total 1,880,714.79
*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.

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 8.3 Production Costs

The total production cost at full capacity operation is estimated at Birr 1.02 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 434,889.00
2. Utilities 29,050.00
3. Wages and Salaries 213,840.00
4. Spares and Maintenance 48,780.90
Factory costs 726,559.90
5. Depreciation 153,743.30
6. Financial costs
135,411.46
Total Production Cost 1,015,714.66

8.4 Financial evaluation

I. Profitability

According to the projected income statement attached in the annex part 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 4.40%, 4.40%, 18.92% and 6.47 in
the first year and are gradually rising to 35.32%, 24.72%, 17.09%, and 42.72%, respectively.
Furthermore, the income statement and other profitability indicators show that the project is
viable.

II. Breakeven Analysis

The breakeven point of the project is estimated by using income statement projection.
Accordingly, the project will break even at 36.64% of capacity utilization.

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 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 four years.

IV. Simple Rate of Return

For the envisaged plant the simple rate of return equals to 17.6%.

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
21.3% and the net present value at 18 % discount is Birr 214,785.

VI. Sensitivity Analysis

The envisaged plant is profitable even with considerable cost increment. That is the plant
maintains to be profitable starting from the first year when 10 % cost increment takes place in
the sector. This result is accompanied by NPV of Birr 259,534 discounted 18% annually.

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

A. Profit Generation

The project is found to be financially viable and earns about Birr 2.65 million within the project
life. Such result induces the project promoters to reinvest the profit which, therefore, increases
the investment magnitude in the region.

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 B. Tax Revenue

In the project life under consideration, the region will collect about Birr 985,658 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

This project has strong import substitution effete, since currently peanut butter is import item.
The project saves an estimated Birr 12.8 million worth of import.

D. Employment and Income Generation

The project creates 16 jobs and generates annual household income that amounts to Birr
213,840.00.

E. Public Health and Nutrition

The proposed production enhances nutrition of citizens and, consequently, it improves public
health.

F. Diversification and InterSectoral linkage.

The proposed project helps to diversify ANRS’ and Ethiopian economy. It contributes to
industrialization of the ANRS as well as the country as a whole. It also has a potential to
strengthen the linkage between the manufacturing and the trade sub-sectors.

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ANNEXES

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

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

1. Total Inventory 0 0 183,146 215,466 215,466 215,466

Raw Materials in Stock- Total 0 0 58,293 68,580 68,580 68,580

Raw Material-Local 0 0 34,337 40,397 40,397 40,397

Raw Material-Foreign 0 0 23,955 28,183 28,183 28,183

Factory Supplies in Stock 0 0 816 960 960 960

Spare Parts in Stock and Maintenance 0 0 4,523 5,322 5,322 5,322

Work in Progress 0 0 20,407 24,008 24,008 24,008

Finished Products 0 0 40,814 48,017 48,017 48,017

2. Accounts Receivable 0 0 120,545 141,818 141,818 141,818

3. Cash in Hand 0 0 22,523 26,497 26,497 26,497

CURRENT ASSETS 0 0 267,921 315,201 315,201 315,201

4. Current Liabilities 0 0 120,545 141,818 141,818 141,818

Accounts Payable 0 0 120,545 141,818 141,818 141,818

TOTAL NET WORKING CAPITAL REQUIREMENTS 0 0 147,376 173,383 173,383 173,383

INCREASE IN NET WORKING CAPITAL 0 0 147,376 26,007 0 0

1
 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 215,466 215,466 215,466 215,466 215,466

Raw Materials in Stock-Total 68,580 68,580 68,580 68,580 68,580 68,580

Raw Material-Local 40,397 40,397 40,397 40,397 40,397 40,397

Raw Material-Foreign 28,183 28,183 28,183 28,183 28,183 28,183

Factory Supplies in Stock 960 960 960 960 960 960

Spare Parts in Stock and Maintenance 5,322 5,322 5,322 5,322 5,322 5,322

Work in Progress 24,008 24,008 24,008 24,008 24,008 24,008

Finished Products 48,017 48,017 48,017 48,017 48,017 48,017

2. Accounts Receivable 141,818 141,818 141,818 141,818 141,818 141,818

3. Cash in Hand 26,497 26,497 26,497 26,497 26,497 26,497

CURRENT ASSETS 315,201 315,201 315,201 315,201 315,201 315,201

4. Current Liabilities 141,818 141,818 141,818 141,818 141,818 141,818

Accounts Payable 141,818 141,818 141,818 141,818 141,818 141,818

TOTAL NET WORKING CAPITAL REQUIREMENTS 173,383 173,383 173,383 173,383 173,383 173,383

INCREASE IN NET WORKING CAPITAL 0 0 0 0 0 0

2
 Annex 2: Cash Flow Statement (in Birr)
CONSTRUCTION PRODUCTION
Year 1 Year 2 1 2 3 4
TOTAL CASH INFLOW 853,666 1,027,049 1,225,545 1,321,273 1,300,000 1,300,000
1. Inflow Funds 853,666 1,027,049 120,545 21,273 0 0
Total Equity 341,466 410,820 0 0 0 0
Total Long Term Loan 512,199 616,229 0 0 0 0
Total Short Term Finances 0 0 120,545 21,273 0 0
2. Inflow Operation 0 0 1,105,000 1,300,000 1,300,000 1,300,000
Sales Revenue 0 0 1,105,000 1,300,000 1,300,000 1,300,000
Interest on Securities 0 0 0 0 0 0
3. Other Income 0 0 0 0 0 0
TOTAL CASH OUTFLOW 853,666 853,666 1,170,518 1,074,175 1,103,327 1,087,529
4. Increase In Fixed Assets 853,666 853,666 0 0 0 0
Fixed Investments 813,015 813,015 0 0 0 0
Pre-production Expenditures 40,651 40,651 0 0 0 0
5. Increase in Current Assets 0 0 267,921 47,280 0 0
6. Operating Costs 0 0 600,425 703,412 703,412 703,412
7. Corporate Tax Paid 0 0 0 0 99,000 105,771
8. Interest Paid 0 0 302,171 135,411 112,843 90,274
9.Loan Repayments 0 0 0 188,071 188,071 188,071
10.Dividends Paid 0 0 0 0 0 0
Surplus (Deficit) 0 173,383 55,028 247,097 196,673 212,471
Cumulative Cash Balance 0 173,383 228,411 475,508 672,181 884,652

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

3
 PRODUCTION
5 6 7 8 9 10
TOTAL CASH INFLOW 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000
1. Inflow Funds 0 0 0 0 0 0
Total Equity 0 0 0 0 0 0
Total Long Term Loan 0 0 0 0 0 0
Total Short Term Finances 0 0 0 0 0 0
2. Inflow Operation 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000
Sales Revenue 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000
Interest on Securities 0 0 0 0 0 0
3. Other Income 0 0 0 0 0 0
TOTAL CASH OUTFLOW 1,071,731 1,060,811 1,045,013 841,144 841,144 841,144
4. Increase In Fixed Assets 0 0 0 0 0 0
Fixed Investments 0 0 0 0 0 0
Pre-production Expenditures 0 0 0 0 0 0
5. Increase in Current Assets 0 0 0 0 0 0
6. Operating Costs 703,412 703,412 703,412 703,412 703,412 703,412
7. Corporate Tax Paid 112,542 124,190 130,961 137,731 137,731 137,731
8. Interest Paid 67,706 45,137 22,569 0 0 0
9. Loan Repayments 188,071 188,071 188,071 0 0 0
10.Dividends Paid 0 0 0 0 0 0
Surplus (Deficit) 228,269 239,189 254,987 458,856 458,856 458,856
Cumulative Cash Balance 1,112,921 1,352,110 1,607,097 2,065,953 2,524,809 2,983,665

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 Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED
CONSTRUCTION PRODUCTION
Year 1 Year 2 1 2 3 4
TOTAL CASH INFLOW 0 0 1,105,000 1,300,000 1,300,000 1,300,000

1. Inflow Operation 0 0 1,105,000 1,300,000 1,300,000 1,300,000

Sales Revenue 0 0 1,105,000 1,300,000 1,300,000 1,300,000

Interest on Securities 0 0 0 0 0 0

2. Other Income 0 0 0 0 0 0

TOTAL CASH OUTFLOW 853,666 853,666 747,801 729,420 802,413 809,183

3. Increase in Fixed Assets 853,666 853,666 0 0 0 0

Fixed Investments 813,015 813,015 0 0 0 0

Pre-production Expenditures 40,651 40,651 0 0 0 0

4. Increase in Net Working Capital 0 0 147,376 26,007 0 0

5. Operating Costs 0 0 600,425 703,412 703,412 703,412

6. Corporate Tax Paid 0 0 0 0 99,000 105,771

NET CASH FLOW -853,666 -853,666 357,199 570,580 497,587 490,817

CUMULATIVE NET CASH FLOW -853,666 -1,707,332 -1,350,132 -779,552 -281,965 208,852

Net Present Value (at 18%) -853,666 -723,446 256,535 347,273 256,650 214,540

Cumulative Net present Value -853,666 -1,577,111 -1,320,576 -973,304 -716,654 -502,113

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 Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED (Continued)
PRODUCTION
5 6 7 8 9 10
TOTAL CASH INFLOW 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000

1. Inflow Operation 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000

Sales Revenue 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000

Interest on Securities 0 0 0 0 0 0

2. Other Income 0 0 0 0 0 0

TOTAL CASH OUTFLOW 815,954 827,603 834,373 841,144 841,144 841,144

3. Increase in Fixed Assets 0 0 0 0 0 0

Fixed Investments 0 0 0 0 0 0

Pre-production Expenditures 0 0 0 0 0 0

4. Increase in Net Working Capital 0 0 0 0 0 0

5. Operating Costs 703,412 703,412 703,412 703,412 703,412 703,412

6. Corporate Tax Paid 112,542 124,190 130,961 137,731 137,731 137,731

NET CASH FLOW 484,046 472,397 465,627 458,856 458,856 458,856

CUMULATIVE NET CASH FLOW 692,898 1,165,295 1,630,922 2,089,778 2,548,635 3,007,491

Net Present Value (at 18%) 179,306 148,297 123,875 103,452 87,671 74,298

Cumulative Net present Value -322,807 -174,510 -50,635 52,816 140,488 214,785

Net Present Value (at 18%) 214,785.17

Internal Rate of Return 21.3%

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 Annex 4: NET INCOME STATEMENT ( in Birr)
PRODUCTION
1 2 3 4 5
Capacity Utilization (%) 85% 100% 100% 100% 100%
1. Total Income 1,105,000 1,300,000 1,300,000 1,300,000 1,300,000
Sales Revenue 1,105,000 1,300,000 1,300,000 1,300,000 1,300,000
Other Income 0 0 0 0 0
2. Less Variable Cost 510,889 601,046 601,046 601,046 601,046
VARIABLE MARGIN 594,111 698,954 698,954 698,954 698,954
(In % of Total Income) 53.77 53.77 53.77 53.77 53.77
3. Less Fixed Costs 243,279 256,110 256,110 256,110 256,110
OPERATIONAL MARGIN 350,832 442,844 442,844 442,844 442,844
(In % of Total Income) 31.75 34.06 34.06 34.06 34.06
4. Less Cost of Finance 302,171 135,411 112,843 90,274 67,706
5. GROSS PROFIT 48,660 307,433 330,001 352,570 375,139
6. Income (Corporate) Tax - - 99,000 105,771 112,542
7. NET PROFIT 48,660 307,433 231,001 246,799 262,597
RATIOS (%)
Gross Profit/Sales 4.40% 23.65% 25.38% 27.12% 28.86%
Net Profit After Tax/Sales 4.40% 23.65% 17.77% 18.98% 20.20%
Return on Investment 18.92% 23.55% 18.28% 17.92% 17.56%
Return on Equity 6.47% 40.87% 30.71% 32.81% 34.91%

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 Annex 4: NET INCOME STATEMENT (in Birr): Continued
PRODUCTION
6 7 8 9 10
Capacity Utilization (%) 100% 100% 100% 100% 100%

1. Total Income 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000

Sales Revenue 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000
Other Income 0 0 0 0 0
2. Less Variable Cost 601,046 601,046 601,046 601,046 601,046
VARIABLE MARGIN 698,954 698,954 698,954 698,954 698,954
(In % of Total Income) 53.77 53.77 53.77 53.77 53.77
3. Less Fixed Costs 239,849 239,849 239,849 239,849 239,849
OPERATIONAL MARGIN 459,105 459,105 459,105 459,105 459,105
(In % of Total Income) 35.32 35.32 35.32 35.32 35.32
4. Less Cost of Finance 45,137 22,569 0 0 0
5. GROSS PROFIT 413,968 436,536 459,105 459,105 459,105
6. Income (Corporate) Tax 124,190 130,961 137,731 137,731 137,731
7. NET PROFIT 289,777 305,575 321,373 321,373 321,373
RATIOS (%)
Gross Profit/Sales 31.84% 33.58% 35.32% 35.32% 35.32%
Net Profit After Tax/Sales 22.29% 23.51% 24.72% 24.72% 24.72%
Return on Investment 17.81% 17.45% 17.09% 17.09% 17.09%
Return on Equity 38.52% 40.62% 42.72% 42.72% 42.72%

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 Annex 5: Projected Balance Sheet (in Birr)
CONSTRUCTION PRODUCTION
Year 1 Year 2 1 2 3 4
TOTAL ASSETS 853,666 1,880,715 2,049,921 2,190,555 2,233,484 2,292,212
1. Total Current Assets 0 173,383 496,332 790,710 987,383 1,199,854
Inventory on Materials and Supplies 0 0 63,632 74,861 74,861 74,861
Work in Progress 0 0 20,407 24,008 24,008 24,008
Finished Products in Stock 0 0 40,814 48,017 48,017 48,017
Accounts Receivable 0 0 120,545 141,818 141,818 141,818
Cash in Hand 0 0 22,523 26,497 26,497 26,497
Cash Surplus, Finance Available 0 173,383 228,411 475,508 672,181 884,652
Securities 0 0 0 0 0 0
2. Total Fixed Assets, Net of Depreciation 853,666 1,707,332 1,553,588 1,399,845 1,246,102 1,092,358
Fixed Investment 0 813,015 1,626,030 1,626,030 1,626,030 1,626,030
Construction in Progress 813,015 813,015 0 0 0 0
Pre-Production Expenditure 40,651 81,302 81,302 81,302 81,302 81,302
Less Accumulated Depreciation 0 0 153,743 307,487 461,230 614,973
3. Accumulated Losses Brought Forward 0 0 0 0 0 0
4. Loss in Current Year 0 0 0 0 0 0
TOTAL LIABILITIES 853,666 1,880,715 2,049,921 2,190,555 2,233,484 2,292,212
5. Total Current Liabilities 0 0 120,545 141,818 141,818 141,818
Accounts Payable 0 0 120,545 141,818 141,818 141,818
Bank Overdraft 0 0 0 0 0 0
6. Total Long-term Debt 512,199 1,128,429 1,128,429 940,357 752,286 564,214
Loan A 512,199 1,128,429 1,128,429 940,357 752,286 564,214
Loan B 0 0 0 0 0 0
7. Total Equity Capital 341,466 752,286 752,286 752,286 752,286 752,286
Ordinary Capital 341,466 752,286 752,286 752,286 752,286 752,286
Preference Capital 0 0 0 0 0 0
Subsidies 0 0 0 0 0 0
8. Reserves, Retained Profits Brought Forward 0 0 0 48,660 356,093 587,094
9.Net Profit After Tax 0 0 48,660 307,433 231,001 246,799
Dividends Payable 0 0 0 0 0 0
Retained Profits 0 0 48,660 307,433 231,001 246,799

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 Annex 5: Projected Balance Sheet (in Birr): Continued
PRODUCTION
5 6 7 8 9 10
TOTAL ASSETS 2,366,738 2,468,443 2,585,947 2,907,320 3,228,694 3,550,067
1. Total Current Assets 1,428,123 1,667,311 1,922,298 2,381,154 2,840,011 3,298,867
Inventory on Materials and Supplies 74,861 74,861 74,861 74,861 74,861 74,861
Work in Progress 24,008 24,008 24,008 24,008 24,008 24,008
Finished Products in Stock 48,017 48,017 48,017 48,017 48,017 48,017
Accounts Receivable 141,818 141,818 141,818 141,818 141,818 141,818
Cash in Hand 26,497 26,497 26,497 26,497 26,497 26,497
Cash Surplus, Finance Available 1,112,921 1,352,110 1,607,097 2,065,953 2,524,809 2,983,665
Securities 0 0 0 0 0 0
2. Total Fixed Assets, Net of Depreciation 938,615 801,132 663,649 526,166 388,683 251,200
Fixed Investment 1,626,030 1,626,030 1,626,030 1,626,030 1,626,030 1,626,030
Construction in Progress 0 0 0 0 0 0
Pre-Production Expenditure 81,302 81,302 81,302 81,302 81,302 81,302
Less Accumulated Depreciation 768,717 906,200 1,043,683 1,181,166 1,318,649 1,456,132
3. Accumulated Losses Brought Forward 0 0 0 0 0 0
4. Loss in Current Year 0 0 0 0 0 0
TOTAL LIABILITIES 2,366,738 2,468,443 2,585,947 2,907,320 3,228,694 3,550,067
5. Total Current Liabilities 141,818 141,818 141,818 141,818 141,818 141,818
Accounts Payable 141,818 141,818 141,818 141,818 141,818 141,818
Bank Overdraft 0 0 0 0 0 0
6. Total Long-term Debt 376,143 188,071 0 0 0 0
Loan A 376,143 188,071 0 0 0 0
Loan B 0 0 0 0 0 0
7. Total Equity Capital 752,286 752,286 752,286 752,286 752,286 752,286
Ordinary Capital 752,286 752,286 752,286 752,286 752,286 752,286
Preference Capital 0 0 0 0 0 0
Subsidies 0 0 0 0 0 0
8. Reserves, Retained Profits Brought Forward 833,893 1,096,490 1,386,268 1,691,843 2,013,216 2,334,590
9. Net Profit After Tax 262,597 289,777 305,575 321,373 321,373 321,373
Dividends Payable 0 0 0 0 0 0
Retained Profits 262,597 289,777 305,575 321,373 321,373 321,373

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