Baby Food

Milk Powder Production

Table of Contents11.Executive Summary

12.Product Description and Application

13.Market Study, Plant Capacity and Production Program

13.1Market Study

13.1.1Present Demand and Supply

33.1.2Projected Demand

43.1.3Pricing and Distribution

43.2Plant Capacity

43.3Production Program

54.Raw Materials and Utilities

54.1Availability and Source of Raw Materials

54.2Annual Requirement and Cost of Raw Materials and Utilities

65.Location and Site

66.Technology and Engineering

66.1Production Process

66.2Machinery and Equipment

76.3Civil Engineering Cost

87.Human Resource and Training Requirement

87.1Human Resource

87.2Training Requirement

98.Financial Analysis

98.1Underlying Assumption

108.2Investment

118.3Production Costs

128.4Financial Evaluation

139.Economic and Social Benefits and Justification

15ANNEXES

1. Executive SummaryThe project envisages production of 10,000 tons of baby food per annum. The total investment requirement of the project is estimated at about Birr 44.9 million; of which Birr 28 million is the cost of working capital and Birr 5.6 million is planned to finance the cost of building and civil-works while Birr 9.2 million is for machinery and equipment. Based on the cash flow statement, the calculated internal rate of return (IRR) and simple rate of return of the project are 22.4 % and 19.5, respectively. And the net present value (NPV) at 18 % discounting rate is Birr 4,799 thousand. The plant is expected to create employment opportunities for about 157 persons.2. Product Description and ApplicationInfant food is a supplementary food prepared for children below the age of two. Infant food relieves mothers from intensive breast-feeding. The main ingredients in the preparation of infant food are pulses, soybean, milk, potato, corn and fruits. Generally, the mixture of these ingredients is kept in such a way to fulfil the nutrition requirements in child feeding. Carbohydrates and proteins are the major nutrient elements. Infant food is prepared in a factory or at home. They are delivered in cans of 400/500 grams or in plastic containers of 1kg each. Sweetness, palatability, and tenderness are the basic requirements for infant food. Infant food is served diluted in water and boiled to form a stew or soup. They are also served as batter for spoon feeding. The main objective of preparing baby food is to give the necessary nutrition to infants in addition to their mother milk so that the babies are healthy and fit both physically and mentally. 3. Market Study, Plant Capacity and Production Program3.1 Market Study

3.1.1 Present Demand and Supply

Currently, there are few baby food producing factories in Ethiopia. Among which, Fafa Food Factory is the oldest one. However, the range of products they produce and the quality is limited. In particular, Fafa baby food production is mainly geared towards meeting relief requirements. It is freely distributed to children in drought affected areas by NGOs. There is no separate data for domestic production of baby food; in the available statistical reports, production of baby food is lumped with other locally produced composite flours, such as Dube, Miten and Edget composite flours. Here, based on factories output for few years, local production of baby food is estimated for the period between 1988 E.C and 1998E.C (Table 3.1).Table 3.1DOMESTIC PRODUCTION OF BABY FOODYear E.C.Domestic Production of Baby Food

(In Tons)

1988804

19891176

19901171

19911546

19922496

19932923

19942304

19953845

19964620

19973207

19983643

Besides, there is some supply of baby food through imports. Like the domestic production, except for the year 1999/2000 E.C, import statistics does not separately show baby food; rather, it lumps a variety of related products together. In the year 1999 E.C, nearly 62 tons of baby food is imported with at cost of Birr 2.1 million.

The demand for baby food is related to population growth and income growth. In mid 1999 E.C, there were 3.3 million children within the age of 0-4 years in the AN RS. Babies between the ages of 4 months and 2 years, which require baby food, constitute nearly half of this figure. These babies constitute about 8.5 percent of the population of the region. But, there is no single plant or factory in the region which prepares baby food even though the ingredients for making such food is available in the region. 3.1.2 Projected Demand

Feeding babies with additional food normally starts at the age of four months. However, mothers may start earlier or later than this period to feed their babies with additional food. Its demand depends upon income of the households and price of baby food. In this connection to this, the urban parents relatively better provide baby food to their offspring than the rural parents. However, due to the low standard of living of the population, it is a very small segment of the Ethiopian urban households that can provide their babies with baby food. By taking consumption per capita of babies for countries with the same per capita income as that of Ethiopia, per capita baby food consumption has been estimated at 20.8 kg/annum. This is the lowest per capita consumption of baby food in the world. Based on the above assumption, the current demand for baby food in the ANRS alone amounts to 34,320 tons. The demand for baby food is projected by relating future demand to population growth- i.e. the number of babies born each year (See Table 3.2).

TABLE 3.2PROJECTED DEMAND FOR BABY FOOD

Year E.C.At national Level

(In Tons)At ANRS Level

( In Tons)

1999343208580

2000353508837

2001364109103

2002375029376

2003386289657

2004397869947

20054098010245

20064220910552

20074347610869

20084478011195

20094612311531

Table 3.2 shows that the demand for baby food grows from 34,320 tons in 1999 E.C to 40,980 tons in 2004 E.C and 46,123 tons in 2009 E.C at the national level. Similarly, ANRSs demand (roughly estimated proportionally by taking population size of the relevant age bracket) will reach 9,947 tons and 11,531 tons in 2004 E.C and 2009 E.C, respectively. These figures clearly justify the establishment of a medium scale baby food producing plant in ANRS.3.1.3 Pricing and Distribution

There are different types of locally made and imported baby food in the domestic market. As compared to the local ones, the imported items are sold at very high price; and this makes them inaccessible to low income families. The current market prices of most popular imported baby foods (such as Cerilac and Cerifam) range from Birr 40 up to Birr 55 per can (400 mg). In contrast, the average market prices of the local products (such as Fafa and its local substitutes) range between Birr16 and Birr 20 per Kg. This project envisages producing baby food with a quality better than the existing local products; and it plans to sell it at Birr 16 per Kg. The product is to be distributed through wholesale network to all parts of the country.3.2 Plant Capacity

According to demand projections and minimum economical plant size, a plant with an annual production capacity of 10,000 tons is envisaged by this project. The plant will operate 275 days a year. Sundays and national holidays, account for 65 days a year for maintenance and repair work as well as for unexpected work interruption additional 25 days are assigned.

3.3 Production Program

The production programme is designed in such a way that the plant will start production at 75 % of its capacity in the first year. During the second and third years, the plant will produce 85 % and 100 % of its capacity, respectively. The capacity build-up is required to introduce the operators and technicians with the new machines. And also, some time is necessary to introduce the brand, and to penetrate the competitive baby food market.4. Raw Materials and Utilities4.1 Availability and Source of Raw Materials

All the necessary raw materials to produce baby food are available in the ANRS.4.2 Annual Requirement and Cost of Raw Materials and Utilities

Raw materials and utilities required for the production of 15,000 tons of infant food are indicated in Table 4.1. The principal raw materials are corn, beans, peas and soybeans.

TABLE 4.1

RAW MATERIALS AND INPUTS

Raw Materials Annual Requirement

( In Tons)Unit Price

In BirrTotal Cost

In Birr000

Corn9000250022500

Sweet Potato7200300021600

Soy bean3000800024000

Bean3000600018000

Peas3000600018000

Milk4500500022500

Fruit30050001500

Sub. Total128,100

Contingency12,810

Packing, cans15000 pcs2.5 37.5

Packing, plastics 22500 pcs0.15 3.4

Total140,950.9

TABLE 4.1

ANNUAL UTILITY REQUIREMENTUtilitiesAnnual RequirementUnit PriceTotal(In Thousands)

Electricity4,667,200 KWHBirr 0.55 / KWH2,567

Water16,000 m3Birr 2.65/m342.4

2,609.4

5. Location and Site

For its convenience to procure the necessary raw materials and to distribute the product to different parts of the country, Debre-Markos is an appropriate place to establish a baby food producing plant.6. Technology and Engineering6.1 Production ProcessRaw materials from the silos are first conveyed to respective separation and cleaned from external matter. Then they are weighed and processed in their individual machines. Beans and peas are roasted, and milled after roasting. Others are scoured and milled. After milling, the processed materials are stored in their individual bins. Once all ingredients are prepared, according to the proportion of the mix they are led to the mixer; and mixed fruit and dehydrated milk are added in the mixer. Finally, the mixture is led to the rotary distributor where the product is ready for packing, or it is directed to finished product silo and stored. Alternatively, it is possible to establish a high technology baby food processing plant with a smaller capacity and minimal, but relatively skilled, labour force. In this case, the plant requires computerized machineries and a sophisticated laboratory. This would make the project capital intensive and very expensive.

6.2 Machinery and Equipment

Principal production machinery for preparing infant food are the roaster, mills, grinders, mixers, storage bins and screw conveyors and bucket elevators. A list of machinery and equipment for the proposed plant is given in Table 6.1.The total cost of Machinery and Equipment is Birr 9.2 million. ). Of the total cost of the raw material, Birr 8.2 million or 89.1 % is in foreign currency.TABLE 6.1

MACHINERY AND EQUIPMENTNoItemQuantity

1Storage bin, 75 tons5 pcs

2Bucket elevator12 pcs

3Screen conveyor7 pcs

4Drum lieve1 pc

5Magnetic separator1 pc

6Vibro stiner2 pcs

7Roaster1 pc

8Scourer1 pc

9Grinding mill1 pc

10Hammer mill1 pc

11Roller mill1 pc

12Weighers4 pcs

13Dehuller1 pc

14Aspirator1 pc

15Dehydrator1 pc

16Mixer1 pc

17Rotary distributor1 pc

18Packing machine1 pc

19Plane siftes1 pc

20Laboratory Equipments1 set

Estimated Total Cost including Freight and Insurance isBirr 9.2 Million

Machinery Suppliers Address:Labh Group of Companies Snacks Plant Division

403-405, Time Square, Near Pariseema Complex,

C.G. Road, Ahmedabad, Gujarat,380006,

India6.3 Civil Engineering Cost

Due to technological and engineering requirements the production hall shall have a two story building with a total floor area of 2,800m2, and it costs Birr 5.6 million. This would include cost of land preparation and associated civil works. The total land area of the plant including the open space is 3000 m2. The cost of the land lease is Birr 163,770 which is as per ANRS land lease rate for Debre-Markos (which is equal to Birr 54.59 per sq meter for industrial purpose). Of the total cost of the lease 5 % is paid at the beginning while the rest will be paid in 40 years.7. Human Resource and Training Requirement7.1 Human ResourceManpower requirements for the envisaged plant and annual salary expenditure are given in Table 7.1. TABLE 7.1

MANPOWER REQUIREMENT

PostNoSalary/Month Birr/WorkerTotal

(In Birr)

1. Plant Manager1400048000

2. Engineers2300072000

3. Chemists2150036000

4. Administrator1250030000

5. Accountant2120028800

6. Salesman3150054000

7. Sales Clerks1080096000

8. Secretary285020400

9. Cashier18009600

10. Operators1080096000

11. Labors100400480000

12. Mechanics and Electricians151000180000

13. Guards640028800

14. Driver280019200

Benefits 20 %239,760

Total1571,438,560

Total annual salary expenses including benefits is Birr 1,438,560.7.2 Training Requirement

Two months on-the-job training and follow-up program is needed; and this can be managed by procuring two experts from the technology suppliers.8. Financial Analysis

8.1 Underlying Assumption The financial analysis of the baby food producing plant is based on the data provided in the preceding sections and the following assumptions.

A. Construction and Finance

Construction period2 years

Source of finance40% equity and 60% loan

Tax holidays 2 years

Bank interest rate12%

Discount for cash flow 18%

Value of landBased on lease rate of ANRS

Spare Parts, Repair & Maintenance3% of fixed investment

B. Depreciation

Building5%

Machinery and equipment10%

Office furniture10%

Vehicles20%

Pre-production (amortization)20%

C. Working Capital (Minimum Days of Coverage)

Raw Material-Local 30 days

Raw Material-Foreign 120 days

Factory Supplies in Stock 30 days

Spare Parts in Stock and Maintenance30 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 investment cost of the project including working capital is estimated at Birr 45 million as shown in Table 8.1 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 8.1 TOTAL INITIAL INVESTMENT ItemsL.CF.CTotal

Land 8,1898,189

Building5,600,0005,600,000

Office Equipment500,000500,000

Vehicles750,000750,000

Machinery & Equipment1,000,0008,200,0009,200,000

Total Fixed Investment7,858,1898,200,00016,058,189

Pre production802,909802,909

Total Initial Investment8,661,0988,200,00016,861,098

Working Capital 28,061,663028,061,663

Total36,722,7618,200,00044,922,761

*Pre-production capital expenditure includes - all expenses for pre-investment studies, consultancy fee during construction and expenses for companys establishment, project administration expenses, commission expenses, preproduction marketing and interest expenses during construction.

Of the total investment outlay, working capital accounts for 62.5 % while plant and machinery, and building and construction costs are 20.5 % and 12.5 %, respectively. The foreign component of the project accounts for Birr 8.2 million or 18.3 % of the total investment cost.

8.3 Production Costs

The total production cost at full capacity operation is estimated at Birr 149.7 millions (See Table 8.2).Of the total production costs, raw materials and utilities account for 96 %.TABLE 8.2

TOTAL PRODUCTION COSTIN BIRRRaw Material RequirementCost

1.Local Raw Material140,950,900

2.Foreign0

Total Production Cost at full Capacity

ItemsCost

1. Raw materials140,950,900

2. Utilities2,609,400

3. Wages and Salaries1,438,560

4. Spares and Maintenance481,746

Factory costs145,480,606

5. Depreciation1,560,582

6. Financial costs2,695,366

Total Production Cost149,736,553

8.4 Financial Evaluation

I. Profitability

According to the projected income statement (see Annex 4) the project will generate profit beginning from the first year of operation which increases onwards. The income statement and other profitability indicators also show that the project is viable.

II. Breakeven AnalysisThe breakeven point of the projects is given by the formula:

BEP =

Fixed Cost

Sale Variable Cost at full capacity.

The project will break even at 16.3 % of capacity utilization. III. Payback PeriodInvestment cost and income statement projection are used in estimating the project payback period. The project will payback fully the initial investment less working capital in two years.IV. Simple Rate of ReturnThe projects simple rate of return is given by the formula:

SRR= (Net Profit + Interest)/ (Total Investment Outlay) at full capacity utilization.

The SRR would be 19.5 % at full capacity utilization.

V. Internal Rate of Return and Net Present ValueBased on cash flow statement (See Annex 2) the calculated internal rate of return ( IRR) of the project is 22.4% and the net present value(NPV) at 18 % discount is Birr 4,799 thousands.VI. Sensitivity AnalysisThe sensitivity test result when undertaken by increasing the cost of production by 10 % still indicates that the project would be viable.9. Economic and Social Benefits and Justification

Based on the foregoing presentation and analysis, we can say 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:

A. Profit Generation

The project is found to be financially viable and earns on average a profit of Birr 6.99 million per year and Birr 69.95 million within the project life. Such result induces the project promoters to reinvest the profit which, therefore, increases the investment magnitude in the region.

B. Tax Revenue

In the project life under consideration, the region will collect about Birr 26.3 million from corporate tax payment alone (i.e. excluding income tax, sales tax and VAT). Such result creates 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

The commencement of this project relieves a portion of the import burden of baby food. That is, based on the projected figure we learn that in the project life an estimated amount of US Dollar 153 million will be saved as a result of the proposed project. This will create room for the saved hard currency to be allocated to other vital and strategic sectors. D. Employment and Income Generation

The proposed project is expected to create employment opportunity for several citizens of the region. That is, it will provide permanent employment to 157 professionals as well as support staff. Consequently the project creates income of Birr 1,438 thousand per year. This would be one of the commendable accomplishments of the project.

E. Pro Environment Project

The proposed production process is environment friendly. F. Diversification and InterSectoral linkage.

The proposed project helps to diversify ANRS and Ethiopian economy. It contributes to industrialization of the region as well as the countys economy.

ANNEXES

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

CONSTRUCTIONPRODUCTION

Year 1Year 21234

Capacity Utilization (%)0.000.0075%85%100%100%

1. Total Inventory0.000.0032247396.6736547049.5642996528.8942996528.89

Raw Materials in Stock- Total 0.000.0011532346.3613069992.5515376461.8215376461.82

Raw Material-Local0.000.0011532346.3613069992.5515376461.8215376461.82

Raw Material-Foreign0.000.000.000.000.000.00

Factory Supplies in Stock0.000.00120306.43136347.28160408.57160408.57

Spare Parts in Stock and Maintenance0.000.0039415.5544670.9652554.0752554.07

Work in Progress0.000.003007660.653408682.074010214.214010214.21

Finished Products0.000.006015321.316817364.158020428.418020428.41

2. Accounts Receivable0.000.0013090909.0914836363.6417454545.4517454545.45

3. Cash in Hand0.000.00331196.73375356.29441595.64441595.64

CURRENT ASSETS0.000.0034137156.1238688776.9445516208.1745516208.17

4. Current Liabilities0.000.0013090909.0914836363.6417454545.4517454545.45

Accounts Payable0.000.0013090909.0914836363.6417454545.4517454545.45

TOTAL NET WORKING CAPITAL REQUIREMENTS0.000.0021046247.0323852413.3028061662.7128061662.71

INCREASE IN NET WORKING CAPITAL0.000.0021046247.032806166.274209249.410.00

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

PRODUCTION

5678910

Capacity Utilization (%)100%100%100%100%100%100%

1. Total Inventory42996528.8942996528.8942996528.8942996528.8942996528.8942996528.89

Raw Materials in Stock-Total 15376461.8215376461.8215376461.8215376461.8215376461.8215376461.82

Raw Material-Local15376461.8215376461.8215376461.8215376461.8215376461.8215376461.82

Raw Material-Foreign0.000.000.000.000.000.00

Factory Supplies in Stock160408.57160408.57160408.57160408.57160408.57160408.57

Spare Parts in Stock and Maintenance52554.0752554.0752554.0752554.0752554.0752554.07

Work in Progress4010214.214010214.214010214.214010214.214010214.214010214.21

Finished Products8020428.418020428.418020428.418020428.418020428.418020428.41

2. Accounts Receivable17454545.4517454545.4517454545.4517454545.4517454545.4517454545.45

3. Cash in Hand441595.64441595.64441595.64441595.64441595.64441595.64

CURRENT ASSETS45516208.1745516208.1745516208.1745516208.1745516208.1745516208.17

4. Current Liabilities17454545.4517454545.4517454545.4517454545.4517454545.4517454545.45


TOTAL NET WORKING CAPITAL REQUIREMENTS28061662.7128061662.7128061662.7128061662.7128061662.7128061662.71

INCREASE IN NET WORKING CAPITAL0.000.000.000.000.000.00

Annex 2: Cash Flow Statement (in Birr)


Year 1Year 21234

TOTAL CASH INFLOW8430548.9636492211.67133090909.09137745454.55162618181.82160000000.00

1. Inflow Funds8430548.9636492211.6713090909.091745454.552618181.820.00

Total Equity3372219.5914596884.670.000.000.000.00

Total Long Term Loan5058329.3821895327.000.000.000.000.00

Total Short Term Finances0.000.0013090909.091745454.552618181.820.00

2. Inflow Operation0.000.00120000000.00136000000.00160000000.00160000000.00

Sales Revenue0.000.00120000000.00136000000.00160000000.00160000000.00

Interest on Securities0.000.000.000.000.000.00

3. Other Income0.000.000.000.000.000.00

TOTAL CASH OUTFLOW8430548.968430548.96150704386.77136941688.16163381908.98156177126.56

4. Increase In Fixed Assets8430548.968430548.960.000.000.000.00

Fixed Investments8029094.258029094.250.000.000.000.00

Pre-production Expenditures 401454.71401454.710.000.000.000.00

5. Increase in Current Assets0.000.0034137156.124551620.826827431.220.00

6. Operating Costs0.000.00110016425.33124663352.52146633743.30146633743.30

7. Corporate Tax Paid0.000.000.000.002733092.752894814.69

8. Interest Paid0.000.006550805.313234438.772695365.642156292.51

9.Loan Repayments0.000.000.004492276.064492276.064492276.06

10.Dividends Paid0.000.000.000.000.000.00

Surplus(Deficit)0.0028061662.71-17613477.67803766.38-763727.163822873.44

Cumulative Cash Balance0.0028061662.7110448185.0411251951.4210488224.2614311097.70

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

PRODUCTION

5678910


1. Inflow Funds0.000.000.000.000.000.00

Total Equity0.000.000.000.000.000.00

Total Long Term Loan0.000.000.000.000.000.00

Total Short Term Finances0.000.000.000.000.000.00


Sales Revenue160000000.00160000000.00160000000.00160000000.00160000000.00160000000.00


3. Other Income0.000.000.000.000.000.00


4. Increase In Fixed Assets0.000.000.000.000.000.00


Pre-production Expenditures0.000.000.000.000.000.00

5. Increase in Current Assets0.000.000.000.000.000.00

6. Operating Costs146633743.30146633743.30146633743.30146633743.30146633743.30146633743.30


8. Interest Paid1617219.381078146.26539073.130.000.000.00

9. Loan Repayments4492276.064492276.064492276.060.000.000.00

10.Dividends Paid0.000.000.000.000.000.00

Surplus(Deficit)4200224.634484401.254861752.449731379.699731379.699731379.69

Cumulative Cash Balance18511322.3222995723.5727857476.0137588855.7047320235.3957051615.08

Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED


Year 1Year 21234



Sales Revenue0.000.00120000000.00136000000.00160000000.00160000000.00


2. Other Income0.000.000.000.000.000.00


3. Increase in Fixed Assets8430548.968430548.960.000.000.000.00



4. Increase in Net Working Capital0.000.0021046247.032806166.274209249.410.00

5. Operating Costs0.000.00110016425.33124663352.52146633743.30146633743.30


NET CASH FLOW-8430548.96-8430548.96-11062672.368530481.216423914.5410471442.01

CUMMULATIVE NET CASH FLOW-8430548.96-16861097.93-27923770.29-19393289.08-12969374.53-2497932.52

Net Present Value (at 18%)-8430548.96-7144533.02-7945039.045191914.223313383.664577163.81

Cumulative Net present Value-8430548.96-15575081.98-23520121.02-18328206.80-15014823.14-10437659.33

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

PRODUCTION

5678910



Sales Revenue160000000.00160000000.00160000000.00160000000.00160000000.00160000000.00


2. Other Income0.000.000.000.000.000.00


3. Increase in Fixed Assets0.000.000.000.000.000.00



4. Increase in Net Working Capital0.000.000.000.000.000.00

5. Operating Costs146633743.30146633743.30146633743.30146633743.30146633743.30146633743.30


NET CASH FLOW10309720.0710054823.579893101.639731379.699731379.699731379.69

CUMMULATIVE NET CASH FLOW7811787.5517866611.1227759712.7537491092.4447222472.1356953851.82

Net Present Value (at 18%)3819045.473156460.822631942.592193998.631859320.871575695.66

Cumulative Net present Value-6618613.86-3462153.04-830210.451363788.183223109.064798804.71

Net Present Value (at 18%)4,798,804.71

Internal Rate of Return22.4%

Annex 4: NET INCOME STATEMENT ( in Birr)

PRODUCTION

12345

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

1. Total Income120000000.00136000000.00160000000.00160000000.00160000000.00

Sales Revenue120000000.00136000000.00160000000.00160000000.00160000000.00

Other Income0.000.000.000.000.00

2. Less Variable Cost109420385.91124009770.69145893847.88145893847.88145893847.88

VARIABLE MARGIN10579614.0911990229.3114106152.1214106152.1214106152.12

(In % of Total Income)8.828.828.828.828.82

3. Less Fixed Costs2156621.312214163.712300477.312300477.312300477.31

OPERATIONAL MARGIN8422992.799776065.6011805674.8211805674.8211805674.82

(In % of Total Income)77777

4. Less Cost of Finance6550805.313234438.772695365.642156292.511617219.38

5. GROSS PROFIT1872187.476541626.839110309.189649382.3110188455.43

6. Income (Corporate) Tax0.000.002733092.752894814.693056536.63

7. NET PROFIT1872187.476541626.836377216.436754567.617131918.80

RATIOS (%)

Gross Profit/Sales2%5%6%6%6%

Net Profit After Tax/Sales2%5%4%4%4%

Return on Investment22%24%20%20%19%

Return on Equity10%36%35%38%40%

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

PRODUCTION

678910

Capacity Utilization (%)100%100%100%100%100%

1. Total Income160000000.00160000000.00160000000.00160000000.00160000000.00

Sales Revenue160000000.00160000000.00160000000.00160000000.00160000000.00

Other Income0.000.000.000.000.00

2. Less Variable Cost145893847.88145893847.88145893847.88145893847.88145893847.88

VARIABLE MARGIN14106152.1214106152.1214106152.1214106152.1214106152.12


3. Less Fixed Costs1989895.421989895.421989895.421989895.421989895.42

OPERATIONAL MARGIN12116256.7012116256.7012116256.7012116256.7012116256.70


4. Less Cost of Finance1078146.26539073.130.000.000.00

5. GROSS PROFIT11038110.4511577183.5712116256.7012116256.7012116256.70

6. Income (Corporate) Tax3311433.133473155.073634877.013634877.013634877.01

7. NET PROFIT7726677.318104028.508481379.698481379.698481379.69

RATIOS (%)

Gross Profit/Sales7%7%8%8%8%

Net Profit After Tax/Sales5%5%5%5%5%

Return on Investment20%19%19%19%19%

Return on Equity43%45%47%47%47%

Annex 5: Projected Balance Sheet (in Birr)


Year 1Year 21234

TOTAL ASSETS8430548.9644922760.6459885857.2063680662.5268183784.7070446076.25

1. Total Current Assets0.0028061662.7144585341.1649940728.3656004432.4359827305.86

Inventory on Materials and Supplies0.000.0011692068.3413251010.7915589424.4615589424.46

Work in Progress0.000.003007660.653408682.074010214.214010214.21

Finished Products in Stock0.000.006015321.316817364.158020428.418020428.41

Accounts Receivable0.000.0013090909.0914836363.6417454545.4517454545.45

Cash in Hand0.000.00331196.73375356.29441595.64441595.64

Cash Surplus, Finance Available0.0028061662.7110448185.0411251951.4210488224.2614311097.70

Securities0.000.000.000.000.000.00

2. Total Fixed Assets, Net of Depreciation8430548.9616861097.9315300516.0413739934.1612179352.2710618770.39

Fixed Investment0.008029094.2516058188.5016058188.5016058188.5016058188.50

Construction in Progress8029094.258029094.250.000.000.000.00

Pre-Production Expenditure401454.71802909.43802909.43802909.43802909.43802909.43

Less Accumulated Depreciation0.000.001560581.893121163.774681745.666242327.54

3. Accumulated Losses Brought Forward 0.000.000.000.000.000.00

4. Loss in Current Year0.000.000.000.000.000.00

TOTAL LIABILITIES8430548.9644922760.6459885857.2063680662.5268183784.7070446076.25

5. Total Current Liabilities0.000.0013090909.0914836363.6417454545.4517454545.45


Bank Overdraft0.000.000.000.000.000.00

6. Total Long-term Debt5058329.3826953656.3826953656.3822461380.3217969104.2513476828.19

Loan A5058329.3826953656.3826953656.3822461380.3217969104.2513476828.19

Loan B0.000.000.000.000.000.00

7. Total Equity Capital3372219.5917969104.2517969104.2517969104.2517969104.2517969104.25

Ordinary Capital3372219.5917969104.2517969104.2517969104.2517969104.2517969104.25

Preference Capital0.000.000.000.000.000.00

Subsidies0.000.000.000.000.000.00

8. Reserves, Retained Profits Brought Forward 0.000.000.001872187.478413814.3114791030.73

9.Net Profit After Tax0.000.001872187.476541626.836377216.436754567.61

Dividends Payable0.000.000.000.000.000.00

Retained Profits0.000.001872187.476541626.836377216.436754567.61

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

PRODUCTION

5678910

TOTAL ASSETS73085718.9976320120.2479931872.6788413252.3796894632.06105376011.75

1. Total Current Assets64027530.4968511931.7473373684.1783105063.8792836443.56102567823.25

Inventory on Materials and Supplies15589424.4615589424.4615589424.4615589424.4615589424.4615589424.46

Work in Progress4010214.214010214.214010214.214010214.214010214.214010214.21

Finished Products in Stock8020428.418020428.418020428.418020428.418020428.418020428.41

Accounts Receivable17454545.4517454545.4517454545.4517454545.4517454545.4517454545.45

Cash in Hand441595.64441595.64441595.64441595.64441595.64441595.64

Cash Surplus, Finance Available18511322.3222995723.5727857476.0137588855.7047320235.3957051615.08

Securities0.000.000.000.000.000.00

2. Total Fixed Assets, Net of Depreciation9058188.507808188.506558188.505308188.504058188.502808188.50

Fixed Investment16058188.5016058188.5016058188.5016058188.5016058188.5016058188.50

Construction in Progress0.000.000.000.000.000.00

Pre-Production Expenditure802909.43802909.43802909.43802909.43802909.43802909.43

Less Accumulated Depreciation7802909.439052909.4310302909.4311552909.4312802909.4314052909.43

3. Accumulated Losses Brought Forward 0.000.000.000.000.000.00

4. Loss in Current Year0.000.000.000.000.000.00

TOTAL LIABILITIES73085718.9976320120.2479931872.6788413252.3796894632.06105376011.75

5. Total Current Liabilities17454545.4517454545.4517454545.4517454545.4517454545.4517454545.45


Bank Overdraft0.000.000.000.000.000.00

6. Total Long-term Debt8984552.134492276.060.000.000.000.00

Loan A8984552.134492276.060.000.000.000.00

Loan B0.000.000.000.000.000.00

7. Total Equity Capital17969104.2517969104.2517969104.2517969104.2517969104.2517969104.25

Ordinary Capital17969104.2517969104.2517969104.2517969104.2517969104.2517969104.25

Preference Capital0.000.000.000.000.000.00

Subsidies0.000.000.000.000.000.00

8. Reserves, Retained Profits Brought Forward 21545598.3528677517.1536404194.4644508222.9752989602.6661470982.35

9. Net Profit After Tax7131918.807726677.318104028.508481379.698481379.698481379.69

Dividends Payable0.000.000.000.000.000.00

Retained Profits7131918.807726677.318104028.508481379.698481379.698481379.69

Investment Office ANRS

Project Profile on the Establishment of Baby Food Producing Plant

Development Studies Associates (DSA)

October 2008

Addis Ababa

PAGE 1

Baby Food

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Transcript of Baby Food