Investment Office ANRS
Project Profile on the Establishment ofAerosol Insecticide Producing
Plant
Development Studies Associates (DSA)
October 2008
Addis Ababa

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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 ............................................................................................ 4
4. Raw Materials and Utilities................................................................... 4
4.1 Availability and Source of Raw Materials.......................................................... 4
4.2 Annual Requirement and Cost of Raw Materials and Utilities........................... 4
5. Location and Site .................................................................................... 6
6. Technology and Engineering................................................................. 6
6.1 Production Process.............................................................................................. 6
6.2 Machinery and Equipment.................................................................................. 7
6.3 Civil Engineering Cost........................................................................................ 7
7. Human Resource and Training Requirement ..................................... 8
7.1 Human Resource................................................................................................. 8
7.2 Training Requirement ......................................................................................... 8
8. Financial Analysis................................................................................... 9
8.1 Underlying Assumption...................................................................................... 9
8.2 Investment......................................................................................................... 10
8.3 Production Costs............................................................................................... 11
8.4 Financial Evaluation ......................................................................................... 11
9. Economic and Social Benefit and Justification.................................. 12
ANNEXES ................................................................................................... 14

1
1. Executive Summary
This profile envisages the establishment of a plant for the production of 1.8 million cans of
aerosol insecticide per year.
The present countrywide demand for aerosol insecticide is estimated at 5,741,692 aerosol cans
per annum. The regional demand is estimated to be 2,039,439. The annual future countrywide
demand is expected to grow from 5,741,692 cans in the year 2015 to 8,172,218 cans in the year
2024. During the same period, the annual regional demand will grow from 2,039,439 to
2,902,757 cans.
The total investment requirement is estimated at Birr 22.45 million out of which Birr 1,288,132
is for machinery and equipment.
The plant will create employment opportunities for 30 persons.
The project is financially viable with an internal rate of return (IRR) of 43% and a net present
value (NPV) of Birr 13.81 million at 18 % annual discounted rate.
2. Product Description and Application
Aerosol insecticides are those which are bottled under pressure inside sprayer cans. They consist
of toxic elements finely distributed in gases or liquids under high pressure. Aerosols exhibit self-
dispersing, pressurized, self propelling characteristics.
Aerosol insecticides are mainly used to destroy mosquitoes, flies and cockroaches from
residences, bars, hotels and offices.

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3. Market Study, Plant Capacity and Production Program
3.1 Market Study
3.1.1 Present Demand and Supply
In the absence of comprehensive data on import and domestic production of aerosol, a household
approach is used to estimate the present demand for aerosol throughout the country. There are an
estimated 211 million urban household in country. If we assume a third of these households
consumes six cans per year, the present countrywide demand is 5,741,692 cans. Deducting an
annual local supply of approximately 500,000, the demand gap is 5,241,692 cans. If we analyze
the current demand in ANRS using the same methodology, the current regional demand will
stand at 2,039,439 can; however, the market for aerosol shall not be confined in region.
Although it is not included in the analysis, it is quite plausible to assume that there is some
demand from rural residents as well.
3.1.2 Projected Demand
The demand projection is based on the assumption used in the above section and an average of
4% annual growth of urban population. Table 1 illustrates that the current countrywide annual
demand for aerosol stands at about 5.7 million cans and it is projected to rise to 8 million in the
year 2024. This shows that there is sufficient demand for the product but the marketing should
not be confined to on the region alone.

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Table 1: Projected Demand
Year
Country Wide ANRS
No.
Household
Annual
Demand
(pcs/cans)
No.
Household
Annual
Demand
(pcs/cans)
2015 2899844 5,741,692 679813 2,039,439
2016 3015838 5,971,360 707006 2,121,017
2017 3136472 6,210,214 735285 2,205,857
2018 3261931 6,458,623 764697 2,294,091
2019 3392408 67,16,967 795285 2,385,855
2020 3528104 6,985,646 827097 2,481,289
2021 3669229 7,265,072 860181 2,580,541
2022 3815998 7,555,675 894588 2,683,762
2023 3968638 7,857,902 930371 2,791,113
2024 4127383 8,172,218 967586 2,902,757
3.1.3 Pricing and Distribution
The unit current retail price for aerosol varies from Birr 44 to 77 depending on the quality of the
product. There is strong competition from far-east Asian countries. Thus, it is suggested to enter
into the market aiming at lowest exiting retail price to the consumer keeping, at same time, its
high quality. Therefore, it is proposed that the new product be sold at Birr 33 to the whole
sellers, accounting the difference as profit margin to the distributors and retailers.
The product can be distributed through existing channels of department stores, supermarkets and
whole sellers throughout the country.
3.2 Plant Capacity
It is assumed that construction will take two years and production will be commenced in the year
2010. At full capacity, the envisaged plant will have a capacity to produce 4.6 million aerosol
cans by operating two shifts per day for 275 working days per year, deducting holidays and other
stoppages.

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3.3 Production Program
The plant would start production by utilizing 75% (i.e., 1,350,000 cans - below the regional
demand) 85% (1,530,000 cans), 95% (1,710,000 cans) of its capacity during the first, second,
third year of its operation, respectively. Starting from the fourth year, it will produce at full
capacity – 1.8 million cans. The cautious gradual increase in capacity is suggested taking into
accounts that the plant may face challenges to penetrate the countrywide demand and thus
regional demand is given priority; and also the product may face strong competition with
imported product and thus time is required for fine adjustments.
4. Raw Materials and Utilities
4.1 Availability and Source of Raw Materials
Most of the imports are available at the domestic market. However, due to possible deficiency on
the domestic raw material supply, it is suggested that about 60% of the total volume be imported
from counties of far-east Asia.
4.2 Annual Requirement and Cost of Raw Materials and Utilities
The types, quantities and costs of the row materials are shown in Table
Table 2: Required Raw Materials at Full Capacity
.No. Row Material Qty Unit
Price
Local Foreign Total
Insecticide (active)
ingredient
7.2 ton
7,184,800 10,777,200 17,962,000
Propellant 24 ton 5,645,200 8,467,800 14,113,000
Aromatic essence 18 ton 3,079,200 4,618,800 7,698,000
Cans (pcs) 1,800,000 pcs 92,37,600 9,237,600
Total 25,146,800 23,863,800 49,010,600
Alternative Technology:
The followings are some of the many alternatives technologies based on the inputs used. .
Insecticides fall into two types; inorganic and organic. Organic molecules always contain carbon
and inorganic don't.

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The inorganic insecticides in main use are:
 Silica (SiO2); this acts as a dessicant and strips off the waxy coating off the cuticle of
the insect thus causing suffocation. This is sometimes referred to as diatomaceous
earth or kieselguhr and is made up of the frustules of diatoms (Bacillariophyceae),
this material also has a tremendous surface area which explains why it is a good
absorbent. These are unicellular algae characterised by the silicified cell made by two
halves. (Silicified meaning infiltration or replacement of organic tissues or of other
minerals such as calcite by silica).
 Boric Acid (H3BO3); also known as Boracic Acid and is used for incorporating into
baits for ant control.
The organic insecticides are split up into the following main groups:
 Organophosphorous compounds (OP); these are compounds made up of an organic
molecule to which has been added Phosphorous.
 Organochlorine compounds (OC); these are compounds made up of an organic
molecule with the addition of chlorine. The downside to these types of insecticide is
that they are very persistent. Some studies have shown that when Lindane has been
used it is still active after a number of years. As a consequence these compounds are
largely banned as they threaten the environment.
 Carbamates(C); These are effective against a wide range of pests. Moderately residual
and effective at higher temperatures, but broken down if alkalinity is high.
 Pyrethrum is a natural insecticide obtained from the flower heads of tropical
chrysanthemum and has excellent knockdown properties at low concentrations. The
downside to using natural pyrethrum is that it is very expensive. Another natural
insecticide is Rotenone which is obtained from the Derris tree, useful as a contact
insecticide.

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 Pyrethrins/Synthetic Pyrethroids(SP); These fall into two categories; those that are
photostable and those that are not photostable and chemically stable. These products
are sometimes mixed with another compound such as piperonyl butoxide to give a
synergic effect enabling high residuality and good knockdown. I am covering one of
the best known, which is Permethrin.
The annual electricity energy consumption of the plant is estimated to be 25,000 kwh which will
cost Birr 13,750. The annual water consumption of the plant is estimated to be 1000m3
costing
Birr 2,650. The total utilities cost is estimated at Birr 16,400.
5. Location and Site
Bahir Dar and Combolcha are optional candidates to host this plant. It is believed that both cities
do have sufficient infrastructure to accommodate this plant.
6. Technology and Engineering
6.1 Production Process
The production process to be employed in the envisaged plant involves the preparation of the
insecticide spray and bottling (can filling).
The insecticide raw material is blended with synergist and other ingredients such as aromatic
essence to a given formulation. The blend is then filtered to remove any impurities.
Alternatively, ready blended aerosol concentrate can be bought in and diluted. The can should be
inspected on receipt and later air blast cleaned before the filling operation.
The product filler and crimper/gaster and mounted on an operating bench which has an integral
extraction system. At this level of production, the cans are fed manually into the enclosures of
both machines. It is also possible to employ automatic enclosure systems, which produce 12-15
cans a minute. The insecticide solution is pumped from the storage tank to the filling machine

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where the cans are filled. They are then passed to the crimper/gaster where they are filled with
the propellant and sealed tight by fitting an inner stopper and cap.
The propellant is filtered before being pumped into the filler machine fitted with gas detection
equipment. Finally the caps are mounted on the cans which are then packed in carton boxes for
dispatch after inspection.
The technical data and information are compiled form UNIDO document “How to Start
Manufacturing Industries Vol. III & I.
6.2 Machinery and Equipment
The list of required machineries and equipments and their prices is depicted in Table 3.
Table 3: Machinery and Equipments
Qty. Price (Birr)
Item Description Unit Total
1 Blending tanks 4 46188 184,752
2 Filling machine 1 603010 603,010
3 Compressors & pumps 4 76980 307,920
4 Conveyors control
equipment
- 192,450
Total 1,288,132
Supplier Address:
Company Name: Shouda Machinery & Equipments Co., Ltd.
Company Address: Rm. 1305, Section B, No. 9120 Humin Rd., Xuhui
District, Shanghai, China
City/Town: Shanghai
Province/State: Shanghai
Country/Region: China
Zip/Postal Code: 200235
6.3 Civil Engineering Cost
A total area of 1500m2
is required to set up the plant out of which 500m2
would be net built up
area. The estimated cost of cost of land lease is Birr 90,000, while that of the construction is Birr
2.6 million.

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7. Human Resource and Training Requirement
7.1 Human Resource
The plant will create jobs for 30 people. The detail is shown in Table 4.
Table 4: Human Resource Requirement
Job Title No.
Salary/Wage (Birr)
Monthly Annual
1 General Manager 1 8,981 107,772
2 Secretary 1 2,053 24,634
3 Administration and Finance Head 1 3,849 46,188
4 Commercial Division Head 1 3,849 46,188
5 Production Head 1 5,132 61,584
6 Technical Head 1 5,132 61,584
7 Operators and laborers 12 2,566 369,504
8 Mechanics and electricians 4 2,566 123,168
9 Casher 1 2,053 24,634
10 Driver 1 1,540 18,475
11 Messenger, Cleaner, Guard 6 770 55,426
Total 30 38,490 939,156
Employment Benefits 20% of Annual
Salary 187,831
1,126,987
7.2 Training Requirement
Intensive training before commencement and various periodic on job-trainings should be carried
out. . The average annual cost of training is estimated to be Birr 128,300; the amount is included
in the working capital.

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8. Financial Analysis
8.1 Underlying Assumption
The financial analysis of this plant is based on the data provided in the preceding chapters and
the following assumptions.
A. Construction and Finance
Box 1: Construction and Finance
Construction period 2 years
Source of finance 40% equity and 60% loan
Tax holidays 2 years
Bank interest rate 12%
Discount for cash flow 18%
Value of land Based on lease rate of ANRS
Spare Parts, Repair & Maintenance 3% of fixed investment
B. Depreciation
Box 2: 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)
Box 3: Working Capital
Raw Material-Local 30 days
Raw Material-Foreign 120 days
Factory Supplies in Stock 30 days
Spare Parts in Stock and Maintenance 30 days
Work in Progress 10 days
Finished Products 15 days
Accounts Receivable 30 days
Cash in Hand 30 days
Accounts Payable 30 days
8.2 Investment
The Total Initial Investment including working capital at full capacity is estimated at Birr 8.75
million of which Birr 502,000 is for plant machinery and equipments. The detail is shown in
Table 5.
Table 5: Total Initial Investment & Working Capital at Full Capacity
Item Cost
Land 4,500.00
Building and civil works 2,566,000.00
Office equipment 192,450.00
Vehicles 641,500.00
Plant machinery & equipment 1,288,132.00
Total Fixed Investment 4,692,582.00
Pre production capital expenditure* 234,981.45
Total Initial Investment 4,927,563.45
Working capital at full capacity 17,508,983.61
Total 22,436,547.06
*Pre-production capital expenditure includes - all expenses for pre-investment
studies, consultancy fee during construction and expenses for company‘s
stablishment, 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 is estimated at Birr 21 million. The details are shown at
Table 6.
Table 6: Total Production Cost at Full Capacity
Total Production Cost at Full Capacity
Items Cost
1. Raw materials 19,100,000.00
2. Utilities 16,400.00
3. Wages and Salaries 439,200.00
4. Spares and Maintenance 54,945.00
Factory costs 19,610,545.00
5. Depreciation 176,015.00
6. Financial costs 1,237,542.45
Total Production Cost 21,024,102.45
8.4 Financial Evaluation
I. Profitability
The income statement (Annex 4) shows that the proposed project generates profit starting from
the first year of operation. Undiscounted annual profit starts at about Birr 3.3 million in first year
and reaches about Birr 6.3 million in the eight year of the project life. Gross Profit to Sales ratio
starts at 7.41% and reaches 15.04% at the eight year. Return on Equity starts at 37.18% and
reaches 70.40%. The total profit earned during the whole ten years of operation amounts to about
Birr 56.2 million. These indicators prove that the project is profitable.

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II. Breakeven Analysis
The breakeven analysis shows that the Total Revenue equals the Total Cost at 9.7% of capacity
which is achieved at the first year of operation.
III. Payback Period
The project pays back its initial investment during the second year of operation.
IV. Simple Rate of Return
The simple interest rate is 28.7%
V. Internal Rate of Return and Net Present Value
The Internal Rate of Return is 42.6% and the Net Present Value at 18% discount rate per annum
is Birr 13,808,891 (See Annex 3).
VI. Sensitivity Analysis
Sensitivity analysis is conducted in two respects: sensitivity to revenue and row material costs. A
10% decrease in sales revenue reduces the total revenue by about 77% - from Birr 56.2 million to
Birr 12.95 million; and the IRR reduces to 36%. This shows that the product is highly sensitive
to sales revenue.
On the other hand increase in input costs have relatively less adverse impact on profit. If, for
instance, input costs increase by 10% the total revenue reduces by about 65% - from Birr 56.2
million to Birr 19.7 million; and the IRR is not affected by much.
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

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A. Profit Generation
The project is found to be financially viable and earns a total profit of Birr 56.2 million within
the project life. Such a result is attractive for a business undertaking whose initial investment is
only Birr 22.5 million.
B. Tax Revenue
In the project life under consideration, the government will collect about Birr 20.2 million from
corporate tax payment alone (i.e. excluding income tax from employees, sales tax and VAT).
C. Import Substitution and Foreign Exchange Saving
The project has strong import substitution effect. During ten years of operation, this plant will
save an equivalent of Birr 561.95 million foreign currency, which otherwise would have been
needed to import aerosols from elsewhere.
D. Employment and Income Generation
The proposed project is expected to create employment opportunity to 30 citizens of the region.
E. Diversification and InterSectoral linkage
The proposed project helps to diversify ANRS’ and Ethiopian economy. It contributes to
industrialization of the economy of the region as well as the county as a whole. It has a potential
to strengthen the linkage between the manufacturing and the trade sectors.
F. Public health
It complements to the on-going efforts to enhance the public health, especially the fight against
malaria.

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ANNEXES

1
Annex 1: Total Net Working Capital Requirements (in Birr)
CONSTRUCTION PRODUCTION YEARS
Year 1 Year 2 1 2 3 4
Capacity Utilization (%) 0 0 0.75 0.85 0.95 1
1. Total Inventory 0 0 22903523.25 25957324.99 29011129.28 30538030.15
Raw Materials in Stock- Total 0 0 9867437.53 11183095.01 12498752.49 13156582.52
Raw Material-Local 0 0 2057464.988 2331793.482 2606121.976 2743287.506
Raw Material-Foreign 0 0 7809969.976 8851301.53 9892630.518 10413295.01
Factory Supplies in Stock 0 0 41540.974 47080.968 52618.396 55387.11
Spare Parts in Stock and Maintenance 0 0 11536.736 13073.77 14610.804 15380.604
Work in Progress 0 0 1038524.35 1176993.408 1315465.032 1384698.278
Finished Products 0 0 2077048.7 2353989.382 2630930.064 2769399.122
2. Accounts Receivables 0 0 4912722.47 5567752.988 6222783.506 6550297.482
3. Cash in Hand 0 0 95650.216 108405.802 121158.822 127535.332
CURRENT ASSETS 0 0 18044460.98 20450388.76 22856316.55 24059283.01
4. Current Liabilities 0 0 4912722.47 5567752.988 6222783.506 6550297.482
Accounts Payable 0 0 4912722.47 5567752.988 6222783.506 6550297.482
TOTAL NET WORKING CAPITAL REQUIREMENTS 0 0 13131738.51 14882635.78 16633535.61 17508982.96
INCREASE IN NET WORKING CAPITAL 0 0 13131738.51 1750897.27 1750897.27 875449.1739

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Annex 1: Continued
PRODUCTION YEARS
5 6 7 8 9 10
Capacity Utilization (%) 30538030.15 30538030.15 30538030.15 30538030.15 30538030.15 30538030.15
1. Total Inventory 13156582.52 13156582.52 13156582.52 13156582.52 13156582.52 13156582.52
Raw Materials in Stock-Total 2743287.506 2743287.506 2743287.506 2743287.506 2743287.506 2743287.506
Raw Material-Local 10413295.01 10413295.01 10413295.01 10413295.01 10413295.01 10413295.01
Raw Material-Foreign 55387.11 55387.11 55387.11 55387.11 55387.11 55387.11
Factory Supplies in Stock 15380.604 15380.604 15380.604 15380.604 15380.604 15380.604
Spare Parts in Stock and Maintenance 1384698.278 1384698.278 1384698.278 1384698.278 1384698.278 1384698.278
Work in Progress 2769399.122 2769399.122 2769399.122 2769399.122 2769399.122 2769399.122
Finished Products 6550297.482 6550297.482 6550297.482 6550297.482 6550297.482 6550297.482
2. Accounts Receivables 126740.1 126740.1 126740.1 126740.1 126740.1 126740.1
3. Cash in Hand 23909264.1 23909264.1 23909264.1 23909264.1 23909264.1 23909264.1
CURRENT ASSETS 6509453.85 6509453.85 6509453.85 6509453.85 6509453.85 6509453.85
4. Current Liabilities 6509453.85 6509453.85 6509453.85 6509453.85 6509453.85 6509453.85
Accounts Payable 17399807.7 17399807.7 17399807.7 17399807.7 17399807.7 17399807.7
TOTAL NET WORKING CAPITAL REQUIREMENTS 0 0 0 0 0 0
INCREASE IN NET WORKING CAPITAL 30538030.15 30538030.15 30538030.15 30538030.15 30538030.15 30538030.15

3
Annex 2: Cash Flow Statement (in Birr)
CONSTRUCTION PRODUCTION YEARS
Year 1 Year 2 1 2 3 4
TOTAL CASH INFLOW 2467306.508 19976289.47 49946022.47 51692770.52 57697210.52 60371913.98
1. Inflow Funds 2467306.508 19976289.47 4912722.47 655030.518 655030.518 327514.8998
Total Equity 986922.09 7990516.302 0 0 0 0
Total Long Term Loan 1480384.418 11985773.17 0 0 0 0
Total Short Term Finances 0 0 4912722.47 655030.518 655030.518 327514.8998
2. Inflow Operation 0 0 45033300 51037740 57042180 60044400
Sales Revenue 0 0 45033300 51037740 57042180 60044400
Interest on Securities 0 0 0 0 0 0
3. Other Income 0 0 0 0 0 0
TOTAL CASH OUTFLOW 2467306.508 2467306.508 59288020.18 49402990.15 54202408.33 57597164.74
4. Increase In Fixed Assets 2467306.508 2467306.508 0 0 0 0
Fixed Investments 2349814.5 2349814.5 0 0 0 0
Pre-production Expenditures 117492.008 117492.008 0 0 0 0
5. Increase in Current Assets 0 0 18044460.98 2405927.788 2405927.788 1202964.099
6. Operating Costs 0 0 38068026.43 43136764.27 48205504.67 50739873.59
7. Corporate Tax Paid 0 0 0 0 0 2332673.62
8. Interest Paid 0 0 3175532.772 1615938.5 1346616.272 1077291.478
9.Loan Repayments 0 0 0 2244359.598 2244359.598 2244359.598
10.Dividends Paid 0 0 0 0 0 0
Surplus Deficit) 0 17508982.96 -9341997.71 2289777.798 3494802.19 2774751.798
Cumulative Cash Balance 0 17508982.96 8166985.254 10456765.62 13951567.81 16726319.61

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Annex 2: Continued
PRODUCTION YEARS
5 6 7 8 9 10
TOTAL CASH INFLOW 60044400 60044400 60044400 60044400 60044400 60044400
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 60044400 60044400 60044400 60044400 60044400 60044400
Sales Revenue 60044400 60044400 60044400 60044400 60044400 60044400
Interest on Securities 0 0 0 0 0 0
3. Other Income 0 0 0 0 0 0
TOTAL CASH OUTFLOW 56205674.26 56069735.28 55881208.7 53448325.08 53448325.08 53448325.08
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 50739873.59 50739873.59 50739873.59 50739873.59 50739873.59 50739873.59
7. Corporate Tax Paid 2413471.828 2546857.64 2627653.282 2708451.49 2708451.49 2708451.49
8. Interest Paid 807969.25 538647.022 269322.228 0 0 0
9. Loan Repayments 2244359.598 2244359.598 2244359.598 0 0 0
10. Dividends Paid 0 0 0 0 0 0
Surplus Deficit) 3838725.736 3974664.718 4163191.304 6596074.922 6596074.922 6596074.922
Cumulative Cash Balance 20565045.34 24539710.06 28702898.8 35298976.29 41895051.21 48491126.13

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Annex 3: Discounted Cash Flow-Total Capital Invested (Birr)
CONSTRUCTION PRODUCTION YEARS
Year 1 Year 2 1 2 3 4
TOTAL CASH INFLOW 0 0 45033300 51037740 57042180 60044400
1. Inflow Operation 0 0 45033300 51037740 57042180 60044400
Sales Revenue 0 0 45033300 51037740 57042180 60044400
Interest on Securities 0 0 0 0 0 0
2. Other Income 0 0 0 0 0 0
TOTAL CASH OUTFLOW 2467306.508 2467306.508 51199762.37 44887664.1 49956401.94 53947997.13
3. Increase in Fixed Assets 2467306.508 2467306.508 0 0 0 0
Fixed Investments 2349814.5 2349814.5 0 0 0 0
Pre-production Expenditures 117492.008 117492.008 0 0 0 0
4. Increase in Net Working Capital 0 0 13131738.51 1750897.27 1750897.27 875449.18
5. Operating Costs 0 0 38068026.43 43136764.27 48205504.67 50739873.59
6. Corporate Tax Paid 0 0 0 0 0 2332673.62
NET CASH FLOW -2467306.51
-
2467306.508
-
6166462.372 6150075.896 7085778.06 6096402.874
CUMULATIVE NET CASH FLOW -2467306.51 -4934610.45
-
11101072.82
-
4950996.926 2134781.134 8231184.008
Net Present Value (at 18%) -2467306.51
-
2090935.892
-
4428656.834 3743126.84 3654764.064 2664793.566
Cumulative Net present Value -2467306.51 -4558242.4
-
8986899.234
-
5243772.394 -1589008.33 1075785.236

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Annex 3: Continued
PRODUCTION YEARS
5 6 7 8 9 10
TOTAL CASH INFLOW 60044400 60044400 60044400 60044400 60044400 60044400
1. Inflow Operation 60044400 60044400 60044400 60044400 60044400 60044400
Sales Revenue 60044400 60044400 60044400 60044400 60044400 60044400
Interest on Securities 0 0 0 0 0 0
2. Other Income 0 0 0 0 0 0
TOTAL CASH OUTFLOW 53153345.42 53286731.23 53367526.87 53448325.08 53448325.08 53448325.08
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 50739873.59 50739873.59 50739873.59 50739873.59 50739873.59 50739873.59
6. Corporate Tax Paid 2413471.828 2546857.64 2627653.282 2708451.49 2708451.49 2708451.49
NET CASH FLOW 6891054.584 6757668.772 6676873.13 6596074.922 6596074.922 6596074.922
CUMULATIVE NET CASH FLOW 15122238.59 21879909.93 28556780.49 35152857.98 41748932.9 48345007.83
Net Present Value (at 18%) 2552664.498 2121402.01 1776303.236 1487125.3 1260275.504 1068030.784
Cumulative Net present Value 3628449.734 5749851.744 7526154.98 9013280.28 10273555.78 11341586.57

7
Annex 4: NET INCOME STATEMENT (in Birr)
PRODUCTION YEARS
1 2 3 4 5
Capacity Utilization (%) 75% 85% 95% 100% 100%
1. Total Income 45033300 51037740 57042180 60044400 60044400
Sales Revenue 17000000 25500000 34000000 34000000 34000000
Other Income 0 0 0 0 0
2. Less Variable Cost 9991229.35 14986844.03 19982458.7 19982458.7 19982458.7
VARIABLE MARGIN 7008770.65 10513155.98 14017541.3 14017541.3 14017541.3
(In % of Total Income) 41.23 41.23 41.23 41.23 41.23
3. Less Fixed Costs 2974327 3038263 3102199 3102199 3102199
OPERATIONAL MARGIN 4034443.65 7474892.98 10915342.3 10915342.3 10915342.3
(In % of Total Income) 23.73 29.31 32.1 32.1 32.1
4. Less Cost of Finance 5320383.31 2454604.76 2045503.96 1636403.17 1227302.38
5. GROSS PROFIT
-
1285939.66 5020288.22 8869838.34 9278939.13 9688039.92
6. Income (Corporate) Tax 0 0 2660951.5 2783681.74 2906411.98
7. NET PROFIT
-
1285939.66 5020288.22 6208886.83 6495257.39 6781627.94
RATIOS (%)
Gross Profit/Sales 7.41% 11.43% 12.34% 12.95% 13.40%
Net Profit After Tax/Sales 7.41% 11.43% 8.64% 9.06% 9.38%
Return on Investment 36.05% 37.59% 29.09% 29.05% 28.69%
Return on Equity 37.18% 64.98% 54.88% 60.63% 62.73%

8
Annex 4: Continued
PRODUCTION YEARS
6 7 8 9 10
Capacity Utilization (%) 100% 100% 100% 100% 100%
1. Total Income 60044400 60044400 60044400 60044400 60044400
Sales Revenue 34000000 34000000 34000000 34000000 34000000
Other Income 0 0 0 0 0
2. Less Variable Cost 19982458.7 19982458.7 19982458.7 19982458.7 19982458.7
VARIABLE MARGIN 14017541.3 14017541.3 14017541.3 14017541.3 14017541.3
(In % of Total Income) 41.23 41.23 41.23 41.23 41.23
3. Less Fixed Costs 2661109 2661109 2661109 2661109 2661109
OPERATIONAL MARGIN 11356432.3 11356432.3 11356432.3 11356432.3 11356432.3
(In % of Total Income) 33.4 33.4 33.4 33.4 33.4
4. Less Cost of Finance 818201.59 409100.79 0 0 0
5. GROSS PROFIT 10538230.71 10947331.51 11356432.3 11356432.3 11356432.3
6. Income (Corporate) Tax 3161469.21 3284199.45 3406929.69 3406929.69 3406929.69
7. NET PROFIT 7376761.5 7663132.05 7949502.61 7949502.61 7949502.61
RATIOS (%)
Gross Profit/Sales 14.14% 14.59% 15.04% 15.04% 15.04%
Net Profit After Tax/Sales 9.90% 10.21% 10.53% 10.53% 10.53%
Return on Investment 28.88% 28.52% 28.16% 28.16% 28.16%
Return on Equity 66.20% 68.30% 70.40% 70.40% 70.40%

9
Annex 5: Projected Balance Sheet (in Birr)
CONSTRUCTION PRODUCTION YEARS
Year 1 Year 2 1 2 3 4
TOTAL ASSETS 2467306.508 22443593.41 30694404.76 34938455.85 40387531.34 43913592.54
1. Total Current Assets 0 17508982.96 26211448.8 30907154.38 36807884.36 40785600.05
Inventory on Materials and Supplies 0 0 9920512.674 11243247.18 12565981.69 13227350.23
Work in Progress 0 0 1038524.35 1176993.408 1315465.032 1384698.278
Finished Products in Stock 0 0 2077048.7 2353989.382 2630930.064 2769399.122
Accounts Receivables 0 0 4912722.47 5567752.988 6222783.506 6550297.482
Cash in Hand 0 0 95650.216 108405.802 121158.822 127535.332
Cash Surplus, Finance Available 0 17508982.96 8166985.254 10456765.62 13951567.81 16726319.61
Securities 0 0 0 0 0 0
2. Total Fixed Assets, Net of Depreciation 2467306.508 4934610.45 4482955.96 4031301.47 3579646.98 3127992.49
Fixed Investment 0 2349814.5 4699629 4699629 4699629 4699629
Construction in Progress 2349814.5 2349814.5 0 0 0 0
Pre-Production Expenditure 117492.008 234981.45 234981.45 234981.45 234981.45 234981.45
Less Accumulated Depreciation 0 0 451654.49 903308.98 1354963.47 1806617.96
3. Accumulated Losses Brought Forward 0 0 0 0 0 0
4. Loss in Current Year 0 0 0 0 0 0
TOTAL LIABILITIES 2467306.508 22443593.41 30694404.76 34938455.85 38276011 41802072.2
5. Total Current Liabilities 0 0 4912722.47 5567752.988 6222783.506 6550297.482
Accounts Payable 0 0 4912722.47 5567752.988 6222783.506 6550297.482
Bank Overdraft 0 0 0 0 0 0
6. Total Long-term Debt 1480384.418 13466157.59 13466157.59 11221797.99 8977438.392 6733078.794
Loan A 1480384.418 13466157.59 13466157.59 11221797.99 8977438.392 6733078.794
Loan B 0 0 0 0 0 0
7. Total Equity Capital 986922.09 8977438.392 8977438.392 8977438.392 8977438.392 8977438.392
Ordinary Capital 986922.09 8977438.392 8977438.392 8977438.392 8977438.392 8977438.392
Preference Capital 0 0 0 0 0 0
Subsidies 0 0 0 0 0 0
8. Reserves, Retained Profits Brought Forward 0 0 0 3338086.306 9171466.482 14098350.71
9.Net Profit After Tax 0 0 3338086.306 5833382.742 4926884.224 5442904.258
Dividends Payable 0 0 0 0 0 0
Retained Profits 0 0 3338086.306 5833382.742 4926884.224 5442904.258

10
Annex 5: Continued
PRODUCTION YEARS
5 6 7 8 9 10
TOTAL ASSETS 47300663.79 50998970.31 54885803.41 61205520.13 67525236.85 73844956.14
1. Total Current Assets 44624325.79 48598990.51 52762181.81 59358256.73 65954331.65 72550409.14
Inventory on Materials and Supplies 13227350.23 13227350.23 13227350.23 13227350.23 13227350.23 13227350.23
Work in Progress 1384698.278 1384698.278 1384698.278 1384698.278 1384698.278 1384698.278
Finished Products in Stock 2769399.122 2769399.122 2769399.122 2769399.122 2769399.122 2769399.122
Accounts Receivables 6550297.482 6550297.482 6550297.482 6550297.482 6550297.482 6550297.482
Cash in Hand 127535.332 127535.332 127535.332 127535.332 127535.332 127535.332
Cash Surplus, Finance Available 20565045.34 24539710.06 28702898.8 35298976.29 41895051.21 48491126.13
Securities 0 0 0 0 0 0
2. Total Fixed Assets, Net of Depreciation 2676338 2399979.8 2123621.6 1847263.4 1570905.2 1294547
Fixed Investment 4699629 4699629 4699629 4699629 4699629 4699629
Construction in Progress 0 0 0 0 0 0
Pre-Production Expenditure 234981.45 234981.45 234981.45 234981.45 234981.45 234981.45
Less Accumulated Depreciation 2258272.45 2534630.65 2810988.85 3087347.05 3363705.25 3640063.45
3. Accumulated Losses Brought Forward 0 0 0 0 0 0
4. Loss in Current Year 0 0 0 0 0 0
TOTAL LIABILITIES 45189143.44 48887449.96 52774280.5 59093999.79 65413716.51 71733433.23
5. Total Current Liabilities 6550298.252 6550298.252 6550298.252 6550298.252 6550298.252 6550298.252
Accounts Payable 6550298.252 6550298.252 6550298.252 6550298.252 6550298.252 6550298.252
Bank Overdraft 0 0 0 0 0 0
6. Total Long-term Debt 4488719.196 2244359.598 0 0 0 0
Loan A 4488719.196 2244359.598 0 0 0 0
Loan B 0 0 0 0 0 0
7. Total Equity Capital 8977438.392 8977438.392 8977438.392 8977438.392 8977438.392 8977438.392
Ordinary Capital 8977438.392 8977438.392 8977438.392 8977438.392 8977438.392 8977438.392
Preference Capital 0 0 0 0 0 0
Subsidies 0 0 0 0 0 0
8. Reserves, Retained Profits Brought Forward 19541257.53 25172688.37 31115354.49 37246544.63 43566263.91 49885980.64
9. Net Profit After Tax 5631430.844 5942666.116 6131190.136 6319716.722 6319716.722 6319716.722
Dividends Payable 0 0 0 0 0 0
Retained Profits 5631430.844 5942666.116 6131190.136 6319716.722 6319716.722 6319716.722