cocks and valves production

7/28/2019 Cocks and Valves Production

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Investment Office ANRS

Project Profile on the Establishmentof Cocks and Valves producing plant


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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............................................................................................................53.1.3Pricing and Distribution...................................................................................................7

3.2Plant Capacity.........................................................................................................................7

3.3Production Program................................................................................................................84.Raw Materials and Utilities....................................................................................8

4.1Availability and Source of Raw Materials..............................................................................8

4.2Annual Requirement and Cost of Raw Materials and Utilities...............................................9

5.Location and Site....................................................................................................9

6.Technology and Engineering ...............................................................................10

6.1Production Process................................................................................................................10

6.2Machinery and Equipment....................................................................................................10

6.3Civil Engineering Cost..........................................................................................................11

7 H R d T i i R i 12


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1. Executive Summary

This project provides basic information on the production of pipe fittings (taps, cocks and

valves). The initial investment of the project is estimated at about Birr 29.5 million, of which

50.9% is in foreign currency.

The market study shows the existence of adequate demand for the product.

Total production costs at full capacity amount to about Birr 12.3 million while sales revenues are

estimated at Birr 1.3 million.

The project is assessed to earn an internal rate of return (IRR) of about 32.0 %, and a net present

value of Birr 16.1 million on net cash flows discounted at 18%.

The project creates employment for 102 people. Other benefits included tax revenue to the

region, foreign exchanges savings, and technological benefits.

2. Product Description and Application

Pipe fittings and valves are mechanical items which are required in a pipe network system, such


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Cocks and valves are fittings used in water pipes. They are needed in all areas (homes,

hospitals, offices, public water taps, etc) where water is delivered through pipes. These fittings

are also used (with adjustment) for pipes used to transport other liquid substances. Examples of

cocks and valves are water taps used for opening and closing the flow of water; check valves are

used to check the flow of water or other liquid during maintenance operations. Cocks and valves

are normally made of brass or stainless steel due to the fact that these metals/alloys are not

affected by water and are corrosion proof. The products are produced either by casting or

machining process

3. Market Study, Plant Capacity and Production Program

3.1 Market Study

3.1.1 Present Demand and Supply

The market for pipe fitting and valves is assessed based on the applications listed earlier. The

demand assessment is analyzed suing the trend of supplies which are composed of local

production if any and/or imports. The source of data is the yearly published External trade

Statistics by the Customs authority for imports.

The supply of piped water is expanding in both urban and rural areas of the Amhara Region


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Table 1 shows the yearly supplies of appliances such as taps, cocks and valves during the period

1991 to 20001 only through imports as there is no local production of such construction

materials.

The import figures during the period 1991 to 2000 have shown a general increasing trend.

During the period indicated, an average of 510,740 tons or about 511 tons of taps, cocks and

valves per year had been imported into the country with a total CIF value of Birr 25 million.

The present demand for such fittings and valves is conservatively estimated to be the average

imports between the year 1994 and the year 2000, which is about 651 tons /year.

Table 1

SUPPLY OF TAPS, COCKS AND VALVES(1991 - 2000)

Year Quantity (kg) CIF Value('000'Birr)

1991 18,656 881

1992 23,988 2,0661993 - -

1994 605,374 23,288

1995 411,802 23,0171996 758,033 28,5141997 463,345 24,883

1998 553 685 22 600


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the urban areas of the Amhara Region are supplied with piped water; and the provision of piped

water is expanding. However, all materials used to construct or install piped water in the country

or in Amhara Region (pipes, valves, water meters, etc) are imported from abroad. In another

project idea, we have proposed the establishment of a plant which will produce metal pipes for

water supply. To facilitate the further expansion of piped water supply and hygiene of the

population as well as to be self-sufficient, the production of taps, cocks and valves in the Region

is of paramount importance.

All taps, cocks and valves used in the water system of the country are imported. Considering the

extent of water supply system and its potential for expansion all over the country, one can safely

assume that there is more than sufficient demand for such construction materials, which will

make a new plant viable.

The basis of demand projection is either the growth trend of past supplies or the anticipated

growth of the construction sector contribution of GDP. The construction sector GDP is estimated

to increase by about 14.5% yearly. Assuming that the future growth of sector is almost same

level, say 14% per year, the projected demand for taps, cocks and valves, etc for the coming ten

years is given in Table 2.In this projection demand for the products will increase from 742 tons in the year 2001 to 2413

tons in the year 2010.

Table 2


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3.1.3 Pricing and Distribution

Selling prices are determined by general market indictors. Since the fittings are of various in

sizes and types, their selling prices vary also from time to time as a result of fluctuations in

supplies. The CIF selling price of such fittings ranges from Birr 38/kg to Birr 61/kg .The selling

price of the plant is estimated to be Birr 20,000 per ton.

Sales and distribution can be arranged through sole distributors and retailers. In this particular

case, the market area and the nature of the product dictate that sales and distribution be arranged

through wholesalers and retailers so that the product can be made available throughout the

market.

3.2 Plant Capacity

Under circumstances where supplies are made only through imports and there are no local

producers, it becomes reasonable to assume case of import substitution and consider all imports

as potential demand in the country. In all cases, the portion of demand met by imports has been

considered as part of the gap between supply and demand, or the available demand.

Considering 8 working hours per day and 275 working days per year, the envisaged plant is

assumed to produce about 1200 tons of different fittings and valves per year in one shift.


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Table 3

ANNUL PRODUCTION AND MIX AT 100% CAPACITY UTILIZATION

Pipe fittings and

valves

Production

(%)

Production

(tons)

25 300

20 2401 15 180

1 10 120

1 10 120

1 6 722 5 60

2 6 60

3 4 48Total Production 100 1200

3.3 Production Program

New producers/ suppliers that come into the market take time before they get used to customer

behaviour, establish sales networks and create sufficient awareness of their brand of a product.

Thus, three year period has been assumed to elapse before the plant reaches at full capacity.

According, a production programme of 75%, 85% and 100% capacity has been adopted during

the first, second and third year of production, respectively.


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4.2 Annual Requirement and Cost of Raw Materials and Utilities

As per the IPS estimations, the annual requirement of raw materials and utilities and their

respective cost are given in Table 4.

The only auxiliary materials required for the manufacturing of pipe fittings and valves are oil and

packaging materials. Both of these auxiliary materials are abundant locally.

The utilities required the manufacturing of valves and pipe fittings are electric power and water.

The power requirement is, on average, 2,688,000 KWA. Annual consumption raw materials and

utilities for a single shift per day, 275 days per year of operation is given in Table 4.

Table 4.ANNUAL MATERIALS AND UTILITIES REQUIREMENT AT 100%

CAPAITY UTILIZATION

Materials and Input Unit Qty.Unit Cost in

Birr/tonTotal cost in Birr

Raw Materials

Scrap iron & steel Tons 1,500 2000 3,000,000

Others 500 - 600,000Aux. Materials

Oil Lit 108,000 5.00 540,000

Packaging materials 200 000


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6. Technology and Engineering

6.1 Production Process

First, the various materials are weighed and charged into a furnace. After making sure that the

chemical composition is within the range of malleable iron casting, the metal is tapped into the

crane ladle to be powered into the sand mould previously made. The castings are separated from

sand after cooling for 5 to 10 minutes by share out.

After removing sand, the cast products are separated from spruce, runners and gates by

hammering. The products are then treated in a shot blast prior to inspection.

The spruce, runners and gates are re-melted for use. After inspection, the products are sealed in

an annealing pot and charged into the annealing furnace. After being annealed completely at a

proper temperature for a proper time, the casting is removed of gates and burrs by the cutting

machine.

The distortion of casting is removed by the deformation corrector. Then, the castings are cleaned

by shot blast and pickled for galvanizing. The castings after galvanizing are machined and

threaded. Finally, every, piece of casting is subject to the pressure leakage test and anti corrosive

oil is applied to the casting and packed for dispatch.


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Table 5

MACHINERY AND EQUIPMENT

Machinery & equipment Qty.

Moulding machines 1setSand Conditioning plant

Melting furnace

Shot blasting Machine Annealing Furnace

Galvanizing shop Tapping machine

Laboratory Equipment

Testers etc ''

Machinery and equipment of the project could be purchased from the following Supplier.

Ashok Kumar Arora

E-81, Phase IV, Focal Point

Ludhiana 141010

Punjab

India

Phone: 91-161-2673735

Fax: 91-161-2670077

For better quality, the promoter could buy the machineries and equipment from


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The plant layout for the production line must be designed to follow the process. Stores are

recommended to be located at the beginning and end of the production line.

7. Human Resource and Training Requirement

7.1 Human Resource

The total manpower requirement for this plant will be about 95 people. Of this, about 80 will be

direct workers. Details of manpower and associated salaries are given in Table 6.

Table 6

DETAILS OF MANPOWER

Manpower Qty.

Monthly

Salary /Person

Annual

Salary (Birr)Manager 1 3500 42,000

Engineer 1 3000 36,000

Foremen 4 1500 72,000

Operators 40 900 432,000Asst. Operators 40 750 360,000

Technicians 3 1000 36,000

Asst. Technicians 3 800 28,800

Clerical workers 6 800 57,600Others 4 400 19,200

Total 102 1,083,600B fit (20%) 216 720


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8. Financial Analysis

8.1 Underlying Assumption

The financial analysis of Pipe fittings producing plant is based on the data provided in the

preceding chapters and the following assumptions.

A. 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

Building 5%

Machinery and equipment 10%

Office furniture 10%

Vehicles 20%


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8.2 Investment

The total investment cost of the project including working capital is estimated at Birr 29.5million as shown in table 7 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.

The foreign component of the project accounts for Birr 15.0 million or 50.9% of the total

investment cost.

Table 7: Total initial investment

LC FC Total

Land36,000 36,000

Building6,100,000 6,100,000

Office equipment20,000 20,000

Vehicles

250,000 250,000machinery & equipment5,000,000 15,000,000 20,000,000

Total Fixed Investment11,406,000 15,000,000 26,406,000

Pre production1,320,300 1,320,300

Total Initial

Investment 12,726,300 15,000,000 27,726,300

Working capital 1,736,582 0 1,736,582Total

14,462,882 15,000,000 29,462,882

*Pre-production capital expenditure includes - all expenses for pre-investment studies,


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Table 8

Total Production Cost at full Capacity

Items Cost

1. Raw materials 4,340,000

2. Utilities 1,480,378

3. Wages and Salaries 1,300,320

4. Spares and Maintenance 792,180

Factory costs 7,912,878

5. Depreciation 2,621,060

6. Financial costs1,767,773

Total Production Cost 12,301,711

8.4 Financial Evaluation

I. Profitability

According to the projected income statement the envisaged project starts earning profit from the

first year of operation.The rate of return on investment and the rate of return on equity of the

project is 33% and 42 %, respectively.

II. Breakeven Analysis

Break even capacity is the level of capacity utilization at which the project not makes any profit


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V. Internal Rate of Return and Net Present Value

Based on cash flow statement the calculated IRR of the project is 32% and the net present value

of 18% discount rate Birr 16.1 million.

VI. Sensitivity Analysis

The project will not be affected if prices of raw materials increase by 10%.

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 facilitates the provision of piped water, introduces new skills and

technology to the Region, and promotes self-sufficiency; possibility of exporting to other parts of

the country and 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 on average a profit of birr 17.6 million per

year and birr 76.2 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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D. Employment and Income Generation

The proposed project is expected to create employment opportunity to several citizens of the

country. That is, it will provide permanent employment to 102 professionals as well as support

staff. Consequently the project creates income of birr 1.3 million per year. This would be one of

the commendable accomplishments of the project.

E. Pro Environment Project

The proposed production does not pollute the environment.


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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 (%) 0.00 0.00 75% 85% 100% 0%

1. Total Inventory 0.00 0.00 1430015.96 1620684.76 1906687.95 0.00

Raw Materials in Stock- Total 0.00 0.00 355090.91 402436.36 473454.55 0.00

Raw Material-Local 0.00 0.00 355090.91 402436.36 473454.55 0.00

Raw Material-Foreign 0.00 0.00 0.00 0.00 0.00 0.00

Factory Supplies in Stock 0.00 0.00 8618.68 9767.83 11491.57 0.00

Spare Parts in Stock and Maintenance 0.00 0.00 64814.73 73456.69 86419.64 0.00

Work in Progress 0.00 0.00 215466.91 244195.84 287289.22 0.00

Finished Products 0.00 0.00 430933.83 488391.67 574578.44 0.00

2. Accounts Receivable 0.00 0.00 1963636.36 2225454.55 2618181.82 0.00

3. Cash in Hand 0.00 0.00 227511.65 257846.54 303348.87 0.00

CURRENT ASSETS 0.00 0.00 3266073.07 3701549.48 4354764.10 0.00

4. Current Liabilities 0.00 0.00 1963636.36 2225454.55 2618181.82 0.00

Accounts Payable 0.00 0.00 1963636.36 2225454.55 2618181.82 0.00

TOTAL NET WORKING CAPITAL REQUIRMENTS 0.00 0.00 1302436.71 1476094.94 1736582.28 0.00

INCREASE IN NET WORKING CAPITAL 0.00 0.00 1302436.71 173658.23 260487.34 -1736582.28

1


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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 1906687.95 1906687.95 1906687.95 1906687.95 1906687.95 1906687.95

Raw Materials in Stock-Total 473454.55 473454.55 473454.55 473454.55 473454.55 473454.55

Raw Material-Local 473454.55 473454.55 473454.55 473454.55 473454.55 473454.55

Raw Material-Foreign 0.00 0.00 0.00 0.00 0.00 0.00

Factory Supplies in Stock 11491.57 11491.57 11491.57 11491.57 11491.57 11491.57

Spare Parts in Stock and Maintenance 86419.64 86419.64 86419.64 86419.64 86419.64 86419.64

Work in Progress 287289.22 287289.22 287289.22 287289.22 287289.22 287289.22

Finished Products 574578.44 574578.44 574578.44 574578.44 574578.44 574578.44

2. Accounts Receivable 2618181.82 2618181.82 2618181.82 2618181.82 2618181.82 2618181.82

3. Cash in Hand 303348.87 303348.87 303348.87 303348.87 303348.87 303348.87

CURRENT ASSETS 4354764.10 4354764.10 4354764.10 4354764.10 4354764.10 4354764.10

4. Current Liabilities 2618181.82 2618181.82 2618181.82 2618181.82 2618181.82 2618181.82


TOTAL NET WORKING CAPITAL REQUIRMENTS 1736582.28 1736582.28 1736582.28 1736582.28 1736582.28 1736582.28

INCREASE IN NET WORKING CAPITAL 1736582.28 0.00 0.00 0.00 0.00 0.00

2


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Annex 2: Cash Flow Statement (in Birr)


Year 1 Year 2 1 2 3 4TOTAL CASH INFLOW 13863150.00 15599732.28 19963636.36 20661818.18 24392727.27 -2618181.82

1. Inflow Funds 13863150.00 15599732.28 1963636.36 261818.18 392727.27 -2618181.82

Total Equity 5545260.00 6239892.91 0.00 0.00 0.00 0.00

Total Long Term Loan 8317890.00 9359839.37 0.00 0.00 0.00 0.00

Total Short Term Finances 0.00 0.00 1963636.36 261818.18 392727.27 -2618181.82

2. Inflow Operation 0.00 0.00 18000000.00 20400000.00 24000000.00 0.00

Sales Revenue 0.00 0.00 18000000.00 20400000.00 24000000.00 0.00

Interest on Securities 0.00 0.00 0.00 0.00 0.00 0.00

3. Other Income 0.00 0.00 0.00 0.00 0.00 0.00

TOTAL CASH OUTFLOW 13863150.00 13863150.00 13727821.73 11926383.93 16505664.06 286902.48

4. Increase In Fixed Assets 13863150.00 13863150.00 0.00 0.00 0.00 0.00

Fixed Investments 13203000.00 13203000.00 0.00 0.00 0.00 0.00

Pre-production Expenditures 660150.00 660150.00 0.00 0.00 0.00 0.00

5. Increase in Current Assets 0.00 0.00 3266073.07 435476.41 653214.61 -4354764.10

6. Operating Costs 0.00 0.00 5700688.04 6423291.77 7507197.38 281160.00

7. Corporate Tax Paid 0.00 0.00 0.00 0.00 3631190.90 0.00

8. Interest Paid 0.00 0.00 4761060.63 2121327.52 1767772.94 1414218.359. Loan Repayments 0.00 0.00 0.00 2946288.23 2946288.23 2946288.23

10. Dividends Paid 0.00 0.00 0.00 0.00 0.00 0.00

Surplus(Deficit) 0.00 1736582.28 6235814.63 8735434.25 7887063.21 -2905084.30

Cumulative Cash Balance 0.00 1736582.28 7972396.91 16707831.15 24594894.36 21689810.06

3


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

PRODUCTION

5 6 7 8 9 10

TOTAL CASH INFLOW 26618181.82 24000000.00 24000000.00 24000000.00 24000000.00 24000000.00

1. Inflow Funds 2618181.82 0.00 0.00 0.00 0.00 0.00

Total Equity 0.00 0.00 0.00 0.00 0.00 0.00

Total Long Term Loan 0.00 0.00 0.00 0.00 0.00 0.00

Total Short Term Finances 2618181.82 0.00 0.00 0.00 0.00 0.00


Sales Revenue 24000000.00 24000000.00 24000000.00 24000000.00 24000000.00 24000000.00


3. Other Income 0.00 0.00 0.00 0.00 0.00 0.00TOTAL CASH OUTFLOW 19712237.12 15204202.82 14956714.60 11762938.17 11762938.17 11762938.17

4. Increase In Fixed Assets 0.00 0.00 0.00 0.00 0.00 0.00



5. Increase in Current Assets 4354764.10 0.00 0.00 0.00 0.00 0.00

6. Operating Costs 7507197.38 7507197.38 7507197.38 7507197.38 7507197.38 7507197.38


8. Interest Paid 1060663.76 707109.17 353554.59 0.00 0.00 0.00

9. Loan Repayments 2946288.23 2946288.23 2946288.23 0.00 0.00 0.00

10. Dividends Paid 0.00 0.00 0.00 0.00 0.00 0.00

Surplus(Deficit) 6905944.69 8795797.18 9043285.40 12237061.83 12237061.83 12237061.83

Cumulative Cash Balance 28595754.76 37391551.94 46434837.34 58671899.17 70908961.01 83146022.84

4


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Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED


Year 1 Year 2 1 2 3 4



Sales Revenue 0.00 0.00 18000000.00 20400000.00 24000000.00 0.00


2. Other Income 0.00 0.00 0.00 0.00 0.00 0.00

TOTAL CASH OUTFLOW 13863150.00 13863150.00 7003124.74 6596950.00 11398875.63 -1455422.28

3. Increase in Fixed Assets 13863150.00 13863150.00 0.00 0.00 0.00 0.00



4. Increase in Net Working Capital 0.00 0.00 1302436.71 173658.23 260487.34 -1736582.28

5. Operating Costs 0.00 0.00 5700688.04 6423291.77 7507197.38 281160.00


NET CASH FLOW-

13863150.00-

13863150.00 10996875.26 13803050.00 12601124.37 1455422.28

CUMMULATIVE NET CASH FLOW-

13863150.00-

27726300.00-

16729424.74 -2926374.74 9674749.63 11130171.91

Net Present Value (at 18%)-

13863150.00-

11748432.20 7897784.59 8400962.37 6499519.77 636178.49

Cumulative Net present Value-

13863150.00-

25611582.20-

17713797.62 -9312835.25 -2813315.49 -2177136.99

5


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Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED (Continued)

PRODUCTION

5 6 7 8 9 10



Sales Revenue 24000000.00 24000000.00 24000000.00 24000000.00 24000000.00 24000000.00


2. Other Income 0.00 0.00 0.00 0.00 0.00 0.00

TOTAL CASH OUTFLOW 13087103.32 11550805.41 11656871.79 11762938.17 11762938.17 11762938.17

3. Increase in Fixed Assets 0.00 0.00 0.00 0.00 0.00 0.00



4. Increase in Net Working Capital 1736582.28 0.00 0.00 0.00 0.00 0.00

5. Operating Costs 7507197.38 7507197.38 7507197.38 7507197.38 7507197.38 7507197.38


NET CASH FLOW 10912896.68 12449194.59 12343128.21 12237061.83 12237061.83 12237061.83

CUMMULATIVE NET CASH FLOW 22043068.59 34492263.18 46835391.39 59072453.22 71309515.06 83546576.89

Net Present Value (at 18%) 4042481.12 3908113.82 3283743.16 2758919.88 2338067.70 1981413.30

Cumulative Net present Value 1865344.12 5773457.95 9057201.11 11816120.99 14154188.69 16135601.99

Net Present Value (at 18%) 16,135,601.99

Internal Rate of Return 32.0%

6


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Annex 4: NET INCOME STATEMENT ( in Birr)

PRODUCTION

1 2 3 4 5

Capacity Utilization (%) 75% 85% 100% 0% 100%

1. Total Income 18000000.00 20400000.00 24000000.00 0.00 24000000.00

Sales Revenue 18000000.00 20400000.00 24000000.00 0.00 24000000.00

Other Income 0.00 0.00 0.00 0.00 0.00

2. Less Variable Cost 5029432.04 5700022.97 6705909.38 0.00 6705909.38

VARIABLE MARGIN 12970567.97 14699977.03 17294090.62 0.00 17294090.62

(In % of Total Income) 72.06 72.06 72.06 #DIV/0! 72.06

3. Less Fixed Costs 3292316.00 3344328.80 3422348.00 2902220.00 3422348.00

OPERATIONAL MARGIN 9678251.97 11355648.23 13871742.62 -2902220.00 13871742.62

(In % of Total Income) 54 56 58 #DIV/0! 58

4. Less Cost of Finance 4761060.63 2121327.52 1767772.94 1414218.35 1060663.76

5. GROSS PROFIT 4917191.34 9234320.70 12103969.68 -4316438.35 12811078.86

6. Income (Corporate) Tax 0.00 0.00 3631190.90 0.00 3843323.66

7. NET PROFIT 4917191.34 9234320.70 8472778.78 -4316438.35 8967755.20

RATIOS (%)

Gross Profit/Sales 27% 45% 50% #DIV/0! 53%

Net Profit After Tax/Sales 27% 45% 35% #DIV/0! 37%

Return on Investment 33% 39% 35% -10% 34%

Return on Equity 42% 78% 72% -37% 76%

7


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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 24000000.00 24000000.00 24000000.00 24000000.00 24000000.00

Sales Revenue 24000000.00 24000000.00 24000000.00 24000000.00 24000000.00

Other Income 0.00 0.00 0.00 0.00 0.00

2. Less Variable Cost 6705909.38 6705909.38 6705909.38 6705909.38 6705909.38

VARIABLE MARGIN 17294090.62 17294090.62 17294090.62 17294090.62 17294090.62

(In % of Total Income) 72 72 72 72 72

3. Less Fixed Costs 3108288.00 3108288.00 3108288.00 3108288.00 3108288.00

OPERATIONAL MARGIN 14185802.62 14185802.62 14185802.62 14185802.62 14185802.62

(In % of Total Income) 59 59 59 59 59

4. Less Cost of Finance 707109.17 353554.59 0.00 0.00 0.00

5. GROSS PROFIT 13478693.45 13832248.03 14185802.62 14185802.62 14185802.62

6. Income (Corporate) Tax 4043608.03 4149674.41 4255740.79 4255740.79 4255740.79

7. NET PROFIT 9435085.41 9682573.62 9930061.83 9930061.83 9930061.83

RATIOS (%) Gross Profit/Sales 56% 58% 59% 59% 59%

Net Profit After Tax/Sales 39% 40% 41% 41% 41%

Return on Investment 34% 34% 34% 34% 34%

Return on Equity 80% 82% 84% 84% 84%

8


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Annex 5: Projected Balance Sheet (in Birr)


Year 1 Year 2 1 2 3 4TOTAL ASSETS 13863150.00 29462882.28 36343709.98 42893560.64 48812778.46 43248308.41

1. Total Current Assets 0.00 1736582.28 11238469.98 20409380.64 28949658.46 21689810.06

Inventory on Materials and Supplies 0.00 0.00 428524.31 485660.89 571365.75 0.00

Work in Progress 0.00 0.00 215466.91 244195.84 287289.22 0.00

Finished Products in Stock 0.00 0.00 430933.83 488391.67 574578.44 0.00

Accounts Receivable 0.00 0.00 1963636.36 2225454.55 2618181.82 0.00

Cash in Hand 0.00 0.00 227511.65 257846.54 303348.87 0.00

Cash Surplus, Finance Available 0.00 1736582.28 7972396.91 16707831.15 24594894.36 21689810.06

Securities 0.00 0.00 0.00 0.00 0.00 0.00

2. Total Fixed Assets, Net of Depreciation 13863150.00 27726300.00 25105240.00 22484180.00 19863120.00 17242060.00

Fixed Investment 0.00 13203000.00 26406000.00 26406000.00 26406000.00 26406000.00

Construction in Progress 13203000.00 13203000.00 0.00 0.00 0.00 0.00Pre-Production Expenditure 660150.00 1320300.00 1320300.00 1320300.00 1320300.00 1320300.00

Less Accumulated Depreciation 0.00 0.00 2621060.00 5242120.00 7863180.00 10484240.00

3. Accumulated Losses Brought Forward 0.00 0.00 0.00 0.00 0.00 0.00

4. Loss in Current Year 0.00 0.00 0.00 0.00 0.00 4316438.35

TOTAL LIABILITIES 13863150.00 29462882.28 36343709.98 42893560.64 48812778.46 43248308.41

5. Total Current Liabilities 0.00 0.00 1963636.36 2225454.55 2618181.82 0.00


Bank Overdraft 0.00 0.00 0.00 0.00 0.00 0.00

6. Total Long-term Debt 8317890.00 17677729.37 17677729.37 14731441.14 11785152.91 8838864.68

Loan A 8317890.00 17677729.37 17677729.37 14731441.14 11785152.91 8838864.68

Loan B 0.00 0.00 0.00 0.00 0.00 0.007. Total Equity Capital 5545260.00 11785152.91 11785152.91 11785152.91 11785152.91 11785152.91

Ordinary Capital 5545260.00 11785152.91 11785152.91 11785152.91 11785152.91 11785152.91

Preference Capital 0.00 0.00 0.00 0.00 0.00 0.00

Subsidies 0.00 0.00 0.00 0.00 0.00 0.00

8. Reserves, Retained Profits Brought Forward 0.00 0.00 0.00 4917191.34 14151512.04 22624290.82

9. Net Profit After Tax 0.00 0.00 4917191.34 9234320.70 8472778.78 0.00

Dividends Payable 0.00 0.00 0.00 0.00 0.00 0.00

Retained Profits 0.00 0.00 4917191.34 9234320.70 8472778.78 0.00

9


28/28

Annex 5: Projected Balance Sheet (in Birr): Continued

PRODUCTION

5 6 7 8 9 10

TOTAL ASSETS 47571518.86 54060316.04 60796601.43 70726663.27 80656725.10 90586786.94

1. Total Current Assets 32950518.86 41746316.04 50789601.43 63026663.27 75263725.10 87500786.94Inventory on Materials and Supplies 571365.75 571365.75 571365.75 571365.75 571365.75 571365.75

Work in Progress 287289.22 287289.22 287289.22 287289.22 287289.22 287289.22

Finished Products in Stock 574578.44 574578.44 574578.44 574578.44 574578.44 574578.44

Accounts Receivable 2618181.82 2618181.82 2618181.82 2618181.82 2618181.82 2618181.82

Cash in Hand 303348.87 303348.87 303348.87 303348.87 303348.87 303348.87

Cash Surplus, Finance Available 28595754.76 37391551.94 46434837.34 58671899.17 70908961.01 83146022.84

Securities 0.00 0.00 0.00 0.00 0.00 0.00

2. Total Fixed Assets, Net of Depreciation 14621000.00 12314000.00 10007000.00 7700000.00 5393000.00 3086000.00

Fixed Investment 26406000.00 26406000.00 26406000.00 26406000.00 26406000.00 26406000.00

Construction in Progress 0.00 0.00 0.00 0.00 0.00 0.00

Pre-Production Expenditure 1320300.00 1320300.00 1320300.00 1320300.00 1320300.00 1320300.00

Less Accumulated Depreciation 13105300.00 15412300.00 17719300.00 20026300.00 22333300.00 24640300.003. Accumulated Losses Brought Forward 0.00 0.00 0.00 0.00 0.00 0.00

4. Loss in Current Year 0.00 0.00 0.00 0.00 0.00 0.00

TOTAL LIABILITIES 47571518.86 54060316.04 60796601.43 70726663.27 80656725.10 90586786.94

5. Total Current Liabilities 2618181.82 2618181.82 2618181.82 2618181.82 2618181.82 2618181.82


Bank Overdraft 0.00 0.00 0.00 0.00 0.00 0.00

6. Total Long-term Debt 5892576.46 2946288.23 0.00 0.00 0.00 0.00

Loan A 5892576.46 2946288.23 0.00 0.00 0.00 0.00

Loan B 0.00 0.00 0.00 0.00 0.00 0.00

7. Total Equity Capital 11785152.91 11785152.91 11785152.91 11785152.91 11785152.91 11785152.91

Ordinary Capital 11785152.91 11785152.91 11785152.91 11785152.91 11785152.91 11785152.91

Preference Capital 0.00 0.00 0.00 0.00 0.00 0.00

Subsidies 0.00 0.00 0.00 0.00 0.00 0.00

8. Reserves, Retained Profits Brought Forward 18307852.47 27275607.67 36710693.08 46393266.71 56323328.54 66253390.37

9. Net Profit After Tax 8967755.20 9435085.41 9682573.62 9930061.83 9930061.83 9930061.83

Dividends Payable 0.00 0.00 0.00 0.00 0.00 0.00

Retained Profits 8967755.20 9435085.41 9682573.62 9930061.83 9930061.83 9930061.83

10

cocks and valves production

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