Project Proposal on Nails & Electrodes, Gabion, Barbed Wires and Mesh Wire Manufacturing Factory

PROJECT PROPOSAL ON

NAILS & ELECTRODES, GABION, BARBED WIRES AND MESH WIRE

MANUFACTURING FACTORY

PROJECT TO BE IMPLEMENTED IN GELAN TOWN

PROJECT PROMOTER: ZANUBA TRADING PLC

JULY, 2016
FINFINE, ETHIOPIA

TABLE OF CONTENTS
 Project Proposal on Nails & Electrodes, Gabion, Barbed Wires and Mesh Wire Manufacturing Factory

Contents Pages
I. EXECUTIVE SUMMARY..........................................................................................................4
1. INTRODUCTION.......................................................................................................................5
1.1. Justification for the project..............................................................................................................5
1.2. Background of the Promoter............................................................................................................6
1.3. Objective of the Project....................................................................................................................7
1.4. The Socio-Economic Significance of the Project.........................................................................7
1.5. Location, Infrastructure and Land...................................................................................................8
A. Location....................................................................................................................................8
B. Land..........................................................................................................................................9
C. Floor Layout Plan...................................................................................................................10
1.6. Location Map of the Area..............................................................................................................11
2. MARKET STUDY AND PLANT CAPACITY.......................................................................12
2.1. Market Study...................................................................................................................................12
2.1.1. Fast Economy Growth.........................................................................................................12
2.1.2. Demand for Nail and Iron...................................................................................................14
2.1.3. Projected Demand for Nail and Iron...................................................................................15
2.1.4. Demand for Gabion and Barbed Wires...............................................................................16
2.1.5. Projected Demand Gabion and Barbed Wires.....................................................................16
2.1.6. Supply and Competition......................................................................................................17
2.1.7. Market Prospects.................................................................................................................17
2.2. Plant Capacity and production program.......................................................................................18
2.3. Pricing..............................................................................................................................................18
2.4. Marketing Strategy, Promotional Mix and Market Share..........................................................19
2.4.1. Marketing Strategy..............................................................................................................19
2.4.2. Promotional Mix.................................................................................................................19
2.4.3. Market Share.......................................................................................................................19
3. TECHNICAL STUDY OF THE PROJECT.............................................................................20
3.1. Products Description......................................................................................................................20
3.2. Raw Materials and Inputs..............................................................................................................24
3.3. Production Process.........................................................................................................................24
3.3.1. Nails......................................................................................................................................24
3.3.2. Galvanized Gabion Box, Mesh Wire and Barbed Wire.......................................................25
 Project Proposal on Nails & Electrodes, Gabion, Barbed Wires and Mesh Wire Manufacturing Factory

3.4. Machinery and Equipment Requirement......................................................................................26

3.5. Technology Choice and Source.....................................................................................................27
3.6. Civil Engineer, Building and Civil Works...................................................................................27
3.7. Utilities.............................................................................................................................................28
3.8. Project Implementation Plan/ Action Plan...................................................................................28
4. ORGANIZATION, MANAGEMENT AND MANPOWER....................................................29
4.1. Organization and Management......................................................................................................29
4.2. Man Power.......................................................................................................................................29
4.3. Organizational Structure.................................................................................................................31
4.1. Training Requirement....................................................................................................................34
5. FINANCIAL REQUIRMENT AND ANALYSIS....................................................................35
5.1. Total Initial Investment Cost.........................................................................................................35
5.1.1. Fixed Investment.................................................................................................................35
5.2. Annual Production Cost at Full Capacity.....................................................................................37
5.3. Financial Analysis and Statements...............................................................................................38
5.3.1. Underlying Assumption......................................................................................................38
5.3.2. Sources of Fund...................................................................................................................39
5.3.3. Loan repayment Schedule...................................................................................................39
5.3.4. Depreciation Schedule.........................................................................................................40
5.3.5. Revenue Projection.............................................................................................................40
5.3.6. Balance Sheet(Beginning)...................................................................................................41
5.3.7. Income Loss Statement.......................................................................................................41
5.3.8. Cash Flow Statement...........................................................................................................42
5.3.9. Profitability..........................................................................................................................42
5.3.10. Pay-Back Period................................................................................................................43
6. FUTURE DEVELOPMENT.....................................................................................................43
7. ENVIRONMENTAL IMPACT OF THE PROJECT...............................................................43
 Project Proposal on Nails & Electrodes, Gabion, Barbed Wires and Mesh Wire Manufacturing Factory

I. EXECUTIVE SUMMARY

1. Project Name Nails & Electrodes, Gabion, Barbed Wires and Mesh Wire
Manufacturing Factory
2. Project Promoter ZANUBA TRADING PLC
3. Nationality Ethiopian
4. Project location Gelan Town, Oromia Special Zone Srounding Finfinne, Oromia
Regional State
5. Project Composition Manufacturing of different Nails, Gabion Box, Mesh Wire and Barbed
Wire

6. Premises Required 1 hectare which is equivalent 10,000m2

7. Total Initial Capital Br. 70,110,740 from this amount 30% (21,033,222) financed by the
owner equity and 70% (49,077,518) financed by bank loan.
8. Market Share
The project will supply 70% of products for Domestic market and
30% for export (International market) mainly for neighboring
countries like South Sudan, Sudan and Kenya.

9. Technology Galvanized Manufacturing Technology

10. Employment
Opportunity The total manpower required for the plant will be 360 employees at full
capacity.
 Permanent workers 259
 Skilled 241( 140 male and 101 Female)
 Unskilled 18 (8 male and 9 Female)
 Temporary workers 101
 Skilled 5 ( 4male and 1 Female)
 Unskilled 96 (58 male and 38 Female)

11. Height of the Building 7 m height for warehouse and workshop buildings.

12. Benefits of the project Manufacture and Supply of Nails, Mesh Wire, Gabion and
For The region/ Barbered wire, Source of Revenue, Employment opportunity,
country Save the Country Foreign Exchange, Benefit for the Local
Community Stimulate the Local Economy, Technology Transfer,
Agricultural and Environmental development.
 Project Proposal on Nails & Electrodes, Gabion, Barbed Wires and Mesh Wire Manufacturing Factory

1. INTRODUCTION
In dynamic Socio-economic environment, like the one currently exist in Ethiopia, the growth of
industry and supportive construction based manufacturing sector has a great role to make the
overall economic growth to be consistent. The government of Ethiopia has a conducive
investment polices and guidelines that promote the private sectors involvement in the economic
development through the various investment and business endeavors.

In this regard, the owner of the envisioned Nails & Electrodes, Gabion, Barbed Wires and Mesh
Wire factory planned to invest in Gelan town, Oromia special zone and carried out this pre-
project study to check the market, technical and financial feasibility of this project. The result of
the study is very sound and promising for the owner to start the project in this area.

The promoter is very determined to commence the project. Hence, he expects to get the required
support from the regional and local governments to make the project operational.

1.1. Justification for the project

Ethiopia has a great economic potential in Africa. The current dynamic economic growth in all
sectors supports the idea to become a great nation. Agriculture is the backbone of the economy.
High improvement in terms of productivity and efficiency of this sector will strongly support the
development of other sectors (in backward and forward linkages).

Similar to the overall Ethiopian economy, the construction sector as one part of the economy is
increasing fastly. Hence, parallel growth of construction firms and construction materials
manufactures are vital to keep this growth of the sector in specific and economy in general
sustainably.

In this regard, roofing nail iron is an important element in Ethiopia. Widespread recognition of
this importance has led to concern amongst conservation practitioners regarding adequate fix
structures and durability. Besides, currently roofing nails and wire mesh are very demandable in
Ethiopia and other African countries. However, there are no enough producers in this area to
make the price low and supply to be smooth.
 Project Proposal on Nails & Electrodes, Gabion, Barbed Wires and Mesh Wire Manufacturing Factory

Regarding infrastructure development, construction, education, private sector role in the

economy and environment the plan has good strategies to achieve the goal of industrialization.

To all the above facts the parallel growth in complementary (supportive) sectors of the economy
is vital to sustain it. In relation to this, the owner of the envisioned factory interested to engage in
the sector that has government development focus apart from huge market potentials.

Therefore, manufacturing of Gabion, Mesh Wire and Barbed Wire are very important for the
development of the nation. Gabion is a large rectangular box of netted wire (mesh) used in civil
engineering works. Gabion has long been used as a transition method of construction and
engineering for protecting river banks from erosion, for hardening the shoulder of roads and the
face of slopes to prevent landslide. Gabion is also used for the foundation of water reservoirs.

In line with the above facts, the government of Ethiopia has implementing the five years Growth
and Transformation Plan(2010/11-2012/15) that aimed to achieve wider development spectrum
in all sectors with a special emphasis to agricultural development that will realize the formation
of industrialized and middle income earned. In this plan, crop production and productivity,
irrigation, environmental protection and improved water use, technology multiplication, food
security and supply and distribution are among the main strategy for agriculture and rural
development strategies.

1.2. Background of the Promoter

The promoter of the Envisioned Nail and Wire Mesh Manufacturing Factory, Ato Tadesse
Desta, is a renewed business man. He owned MUDICON CONSTRACTION PLCImport and
Export company, which was established in 2003 G.C. During this time the company has been
highly involved in exporting quality Arabica green coffee to different countries and also export
whitish Wellega and Humera types of sesame seeds. In a very short period of time the company
has been involved in diverse activities managed to acquire rich and dependable experience in
Ethiopia domestic market as import of various types of Metal products like re-bar, steel sheet,
hollow section. The company has a manpower of 65 employees.
 Project Proposal on Nails & Electrodes, Gabion, Barbed Wires and Mesh Wire Manufacturing Factory

Currently, the promoter needs to extend its ample business experience and management skill in
manufacturing sector, particularly in manufacturing of Nails and Wire Mesh for domestic and
international market.

1.3. Objective of the Project

The main objective of this factory/plant is to manufacture different types, cost effective Gabion
Box, Mesh Wire, and Barbed Wire and Nails mainly the roofing nail products for domestic
market and international market in the future.

1.4. The Socio-Economic Significance of the Project

The envisaged project deemed to contribute to the economic development of the nation in
general and Oromia region in specific with following ways:

1. Manufacture and Supply of Products

By producing and supplying variety, high quality and cost efficient Nails, Gabion Box, Mesh
Wire and Barbed Wire, it will satisfy the need of the consumers.

2. Source of Revenue

As public policy of any nation, the government collects different forms of taxes from different
business organizations and individuals. Among the different forms of taxes, business income
taxes, VAT and payroll tax are collected from undertaking business activities. Therefore, the
project will serve as sources of revenue for both the region and nation in general.

3. Employment opportunity

One of the problems that our country faced is unemployment. Therefore, the current objective of
the government is working on tackling the problem of unemployment and fostering the
development process either through creating self employment or employment in other
organization. Hence, this project will hire 360 citizens.
 Project Proposal on Nails & Electrodes, Gabion, Barbed Wires and Mesh Wire Manufacturing Factory

4. Save the Country Foreign Exchange

By producing and supplying roof Nail products, the factory will save the foreign currency of the
nation. When it starts export to other African market, the company will generate hard/foreign
currency to the nation.

5. Environmental protection and Agricultural Development

The project will contribute for environmental protection and agricultural development by
producing Gabion Box and Mesh Wire.

6. Benefit For The Local Community

As a corporate responsibility the company will engage in different development activities on the
surrounding areas. This will better worse the community and contribute for the development of
the nation.

7. Stimulate The Local Economy

This factory has positive externality in the district that will encourage the economic movement of
local economy. There will be economic relationship and transactions among different actors.

8. Technology Transfer

By producing Nails, Gabion Box, Mesh Wire and Barbed Wire products, the project will train
and develops the capacity of the technical staffs. By doing this, the company will add value in
technology transfer for the nation/region in this area.

1.5. Location, Infrastructure and Land

A. Location

The envisioned project is planned to be located in Gelan town, Oromia Special Zone
Surrounding Finfine, Oromia Regional State. The main justifications behind the selection of this
location are:
 Project Proposal on Nails & Electrodes, Gabion, Barbed Wires and Mesh Wire Manufacturing Factory

 Strategically located to the central and largest market of the nation (Addis Ababa)
 Relatively advanced development in infrastructure (Power, Water, Telephone internet,
road etc.
 All asphalt road to the nearest market outlets
 Availability of huge skilled labor force
 High construction works are undergoing in the vicinity
 The gate to port Djibouti and Mojo dry port that will make ease for inputs and machines
 Conducive investment policy and governance
 Environmentally fit for Nails, Gabion Box, Mesh Wire and Barbed Wire manufacturing.

B. Land

The total area of land required by the factor is 1 hectares, which is equivalent to 10,000 m2.
This land planned to use as follow indicated in table below.

Table Premises Required and land use plan

SN Description Land Requirement(M2)

1 Production Hall  
1.1 Workshop 2,000.00
1.2 Inspection Room 350.00
1.3 Packing Area 600.00
  Total production Hall 2,950.00
2 Warehouse  
2.1 Raw Materials and 2,000.00
Inputs
2.2 Finished Products 1,500.00
  Total Warehouse area 3,500.00
3 Office and show room  
Building (G+2)
3.1 Office 250.00
3.2 Show Room 100.00
  Total Office & 350.00
Showroom
4 Waste Accumulation 300.00
area
5 Green Area, Parking, 2,900.00
road and Buffer Zone
 Project Proposal on Nails & Electrodes, Gabion, Barbed Wires and Mesh Wire Manufacturing Factory

  Total 10,000.00

C. Floor Layout Plan

 Project Proposal on Nails & Electrodes, Gabion, Barbed Wires and Mesh Wire Manufacturing Factory

1.6. Location Map of the Area

 Project Proposal on Nails & Electrodes, Gabion, Barbed Wires and Mesh Wire Manufacturing Factory

2. MARKET STUDY AND PLANT CAPACITY

2.1. Market Study

The market study analysis for Nails, Gabion Box, Mesh Wire and Barbed Wire are mainly
related with the dynamic growing of the construction and Agricultural sector.

The statistics for Nails, Gabion Box, Mesh Wire and Barbed Wire are merged with the
complementary goods. Hence, this project will use the aggregated datas.

2.1.1. Fast Economy Growth

The Ethiopian economy has been experiencing dynamic and double digit growth that
experienced annual average growth of 11.4% in past 8 years. According to Ministry of Finance
and Economic Development (MOFED), the forecasted economic growth the economic growth
(GDP at constant basic price) for 2011/2012 is estimated to be 10.4 %. As per the estimates,
annual growth rates of the major sectors, i.e. Agriculture, industry and service were 7.6 %, 10.6
% and 13.0 %; respectively and their shares out of the total GDP were 42%, 13% and 45 %,
respectively. This continuous and a-two-digit high growth would place Ethiopia among the fast
growing countries in the world.

As sectors of the economy, the agriculture and construction sector also grows with double digit
with the average annual growth 10.31% and 12% respectively in the past 8 years. As shown in
the table below the growth of the sectors directly related with the economy as parts of the
economy.
 Project Proposal on Nails & Electrodes, Gabion, Barbed Wires and Mesh Wire Manufacturing Factory

Table Major Economic Indicators

 
Trends in Performance of the Economy: Growth Rates (%)
 
2002/0 2003/0 2004/0 2005/0 2006/0 2007/0 2008/0 2009/1
Item 3 4 5 6 7 8 9 0
GDP in
1999/00
Prices -2.1 11.7 12.6 11.5 11.5 11.6 10 10.4
Agriculture -10.5 16.9 13.5 10.9 9.4 7.5 6.4 7.6
Industry 6.5 11.6 9.4 10.2 10.2 10.4    
O/w:
Manufacturin
g 0.8 6.6 12.8 10.6 8.3 7.1    
Construction 13.6 19.5 7.5 10.5 10.9 11.3 11.7 10.9
Services 6 6.3 12.8 13.3 14.3 17    
O/w: Banking
and insurance 10.8 19.7 24.2 28.7 15.1 24.9 16.5 13.7
Distributive
services 5.5 6.4 14.7 14.2 16 15.2    
Other
services 6.5 6.1 10.9 12.5 13.1 14.2    
Real GDP per
capita GDP -4.6 10.7 9 8 7.5 7.6    
Inflation 15.1 8.6 6.1 10.6 15.8 25.3    
Source: MOFED & NBE

This fast growth of these sectors resulted from different bodies like government, non government
and private activities in Ethiopia is growing in the fastest rate. Moreover, the current five years
Ethiopian Growth and transformation plan will expand the current agriculture, infrastructure,
residential (Condominium) and buildings in paramount level.

In Economics, there exists direct relationship between sectoral development and complementary
equipments and materials. As economic science proved the demand for complementary goods
(goods that will consume together like fuel and car) have positive relationship. This means when
the demand for one good increase the corresponding complementary good demand also increase
automatically with different rate depending on the nature of good.
 Project Proposal on Nails & Electrodes, Gabion, Barbed Wires and Mesh Wire Manufacturing Factory

The fastest growth of construction and Agricultural sector created the fast and bulk demand for
construction (building) materials. Since Nails, Gabion Box, Mesh Wire and Barbed Wire are
among the main complementary materials for these sectors particularly, the corresponding
demands for these products are also increase. Therefore, Nails, Gabion Box, Mesh Wire and
Barbed Wire have the highest demand.

2.1.2. Demand for Nail and Iron

Nails and iron sheet are consumed in all construction works and in furniture and fixtures
workshops. The current demand for the product is met through domestic production and imports.

The demand for nail, Wire Mesh and Barbered wire production is alarmingly increasing as the
construction sector is booming in Ethiopia due to the increase in the number of population of the
country and the increasing the level of income.

As indicated in the table below the past demand for Wire Mesh, Barbered wire and nail show a
significance growth per annual. The future demand is calculated assuming this past demand for
nails to increase at an average of 10% per annum while the domestic production will increase at
an average of 5%.

Table Supply of Nails and Racks of Iron or Steel(in tons)

Year Ton
Local Import Total
1997 3,494 375 3,869
1998 2,702 5,810 8,512
1999 2,454 6,449 8,903
2000 2,773 5,325 8,098
2001 3,817 7,950 11,767
2002 5,190 6,582 11,772
2003 5,330 3,282 8,612
2004 8,664 4,961 13,625
2005 15,335 4,025 19,360
Source: Customs Authority
CSA, Survey of Manufacturing Industries
 Project Proposal on Nails & Electrodes, Gabion, Barbed Wires and Mesh Wire Manufacturing Factory

Table Domestic Production and Import of Iron or Steel (in ton)

Domestic Effective
Year Production Import Demand
1997/98 2,062 1,067.60 3,129
1998/99 1,709 381.1 2,090
1999/00 2,318 312.6 2,630
2000/01 1,640 404.7 2,045
2001/02 1,295 411.1 1,706
2002/03 1,030 288.8 1,319
2003/04 3,206 195.3 3,401
2004/05 3,340 158.9 3,499
2005/06 4,463 183.6 4,646
2006/07 4,909 184.2 5,093
Average 2,597 358.8 2,956
Source: CSA and Customs Authority, (various yeas)

2.1.3. Projected Demand for Nail and Iron

The demand for nails is related with construction and building sectors. New as well as renovation
of buildings and other constructions are the main end users of nails. The growing construction
sector development as evidenced in the successive increase of nail supplies is expected to
consume more. Therefore in this study the linear trend equation;
Y = 1,339.9 X + 3,802.3 R2 = 71.2% is applied to project the demand for nails. Accordingly the
demand for nails in 2017 will be 31,940 tons. Projected demand for nails is presented in Table
below.
 Project Proposal on Nails & Electrodes, Gabion, Barbed Wires and Mesh Wire Manufacturing Factory

Table Projected Demand for Nails & Iron (in ton)

Year Tons
2008 19,881
2009 21,221
2010 22,561
2011 23,900
2012 25,241
2013 26,580
2014 27,920
2015 29,260
2016 30,600
2017 31,940

2.1.4. Demand for Gabion and Barbed Wires

The demand for gabion and barbed wires in Ethiopia is being met from two sources: imports and
domestic production by importing the wires and billet and processing it in local factories.

The recent years import of gabion boxes is negligible as the production locally both in industry
and handicraft level are highly being exercised. Therefore, the current local production capacity
has reached 8,400 tonnes of Gabion products with different dimension. The historical data on
the unsatisfied demand for the barbed wire which met through, spanning the years 2000-2006
shown in the table below;

Import Of Barbed Wire (Tones) Year Import

2000 261.88
2001 263.65
2002 22.07
2003 108.1
2004 490.8
2005 266.94
2006 171.09

2.1.5. Projected Demand Gabion and Barbed Wires

The future demand for barbed wire is contingent upon the growth of the national economy,
especially the construction sector. Assuming that the construction sector will grow by 7%
 Project Proposal on Nails & Electrodes, Gabion, Barbed Wires and Mesh Wire Manufacturing Factory

annually, the future demand for the product is forecasted to range from 242 tonnes in 2008 to
545 tonnes by the year 2020 (see Table below).

Projected Demand d For Barbed Wire Projected Demand

(Tones) Year
2008 242
2009 259
2010 277
2011 297
2012 317
2013 340
2014 363
2015 389
2016 416
2017 445
2018 476
2019 510
2020 545

2.1.6. Supply and Competition

There are different forms of competition that may face the factory. These are price and non price
based competition. Moreover, there are different competitors that will compete with the project
either directly or indirectly. But the factory under discussion has diversified marketing strategies
that could enable it cope-up with the different competitors in the market. Moreover it will
frequently conduct competitors research which focuses on, the strength and the weaknesses, the
different competitor’s strategies, the techniques they use in rendering the service, their customer
handling methods, and others. Generally the project has many factors all over Ethiopia which
compete with it.

2.1.7. Market Prospects

From the above market demand and supply analysis, there exists market gab for Nails, Gabion
Box, Mesh Wire and Barbed Wire in Ethiopian market. Hence, the envisioned factory will be
successful by entering in to this market.
 Project Proposal on Nails & Electrodes, Gabion, Barbed Wires and Mesh Wire Manufacturing Factory

2.2. Plant Capacity and production program

The annual production capacity of the project in two production line for each product with two
shifts(per 8 hours) for 300 working days is 1,500,000 kgs of nails and 1,500 tons of Mesh Wire,
2,000 tons of Gabion Box and 1,000 tons of Barbed Wire at full capacity. However, for the first
three years it is estimated to produce at 40%, 60% and 80% and 100% at fourth year and then
after. Hence the annual production and program for the project is show in the table below.

Table Plant capacity and production program

Description Year
1 2 3 4_10
Capacity utilization 40 60 80 100
(%)
Nails in Kg 600,000.00 900,000.00 1,200,000.00 1,500,000
Mesh Wire in Ton 600.00 900.00 1,200.00 1,500
Gabion Box in Ton 800.00 1,200.00 1,600.00 2,000
Barbed Wire in Ton 400.00 600.00 800.00 1,000

2.3.  Pricing

It would be important to examine the possible level of price based on the competitor’s action. In
this connection, the existing average prices of similar company were assessed for the benefit of
comparison. Based on the existing retail price in the market. The firm stetted the prices as
follows;

Table pricing of the factory

Product Price of the project in Br

Nails mix(Kg) 40
Mesh Wire in ton 39000
Gabion Box in ton 40000
Barbed Wire ton 37000
 Project Proposal on Nails & Electrodes, Gabion, Barbed Wires and Mesh Wire Manufacturing Factory

2.4. Marketing Strategy, Promotional Mix and Market Share

2.4.1. Marketing Strategy

In order to reach customers different marketing ways will be used. Among the different
marketing strategies and tools for promoting and controlling the market the factory will use:
 Sponsorship of key government activities and public support mechanism.
 Using different marketing segmentation strategies and tactics.
 Utilizing effective and customer centric marketing strategies that is the marketing
strategies that focuses on different groups of customers based on different segmentation
tools like income and geography.
In general, the marketing strategy mainly focus on the satisfying the needs and the requirement
of the customers.

2.4.2. Promotional Mix

The company will follow the following promotional mix:

 Electronic Medias

 Advertising(Media, flayer and news paper)

 Public Relations

 Branding

2.4.3. Market Share

The project will supply 70% of products for Domestic market and 30% for export in
international market mainly for neighboring countries like South Sudan, Sudan and Kenya.
 Project Proposal on Nails & Electrodes, Gabion, Barbed Wires and Mesh Wire Manufacturing Factory

3. TECHNICAL STUDY OF THE PROJECT

3.1. Products Description

1. Nail
Nails are used mainly in fixing corrugated iron sheet roofs, walls or fenced construction. The
predominant roofing material in urban Ethiopia is galvanized corrugated iron sheet and capped
nails are used in fixing the corrugated iron sheets.

2. Gabion Box
Gabions are multiple twisted hexagonally woven galvanized or PVC coated steel wire mesh
compartmented baskets with a rectangular box shape. The compartments are of equal dimension
and are formed by internal diaphragms. The compartment is filled with natural stone and the
diaphragms assure minimum stone migration within the basket. Thus providing even distribution
of the stone even in abnormal conditions, and adding strength to the container to help retain its
rectangular shape during the filling operation.

Applications:
• Control and guide of water or flood
• Flood bank or guiding bank
• Prevention of rock breaking
• Water and soil protection
• Bridge protection
• Strengthening structure of soil
• Protection engineering of seaside area
 Project Proposal on Nails & Electrodes, Gabion, Barbed Wires and Mesh Wire Manufacturing Factory

• Seaport engineering
• Isolation walls
• Protection of road
Advantage:
Flexibility
Flexibility is an important benefit of any gabion structure. The double-twist hexagonal mesh
construction permits it to tolerate differential settlement without fracture. This property is
especially important when a structure is on unstable soil conditions or in areas where scour from
wave action or currents can undermine the toe of the structure and cause structural settlement.
Durability
Gabions support plant growth which provides a live coating for the wire mesh and stones, adding
to their durability. Generally, the wire mesh is needed for the first few years of the structure's
life; later the void between the stones is filled with soil, silt, and plant roots which act as a
bonding agent for the stones.
Strength
Steel wire hexagonal mesh has strength and flexibility to withstand forces generated by water
and earth masses, and the pervious nature of the gabion allows it to absorb and dissipate much of
that energy. This is evident on coast protection installations where gabion structures remain
effective long after a massive rigid structure fails. Additionally, the double twisted hexagonal
mesh won't unravel if cut.

 
 
 Project Proposal on Nails & Electrodes, Gabion, Barbed Wires and Mesh Wire Manufacturing Factory

3. Barbed Wire

Wire Materials: Galvanized steel wire, PVC coated iron wire in blue, green, yellow and other
colors.

Barbed wire, a protective - variety, of fencing, consisting usually of several strands of wire
twisted together with sharp spikes or points clinched or fastened into the strands. The advantages
of galvanized barbed wire fencing are that it is almost imperishable, is no burden on the posts;
does not oppose the wind with enough surface to rack the posts, thus allowing water to settle
around them and rot them; is economical, not only in the comparative cheapness of its first cost
but also in the amount of land covered by it; and is effective as a barrier against all kinds of stock
and a protection against dogs and wild beasts. 

The envisioned company will manufacture barbed wire with specified line wire and barb wire
diameters, barb spacing, zinc coating (class of galvanizing) and length of wire per roll. 
Rolls are shipped with wire handles for easy handling and the rolls packaged on pallets. Because
of our very high volume mass production our prices on container load quantities are the most
competitive to be found.

General Use: Barbed wire mainly serves in protecting of grass boundary, railway, highway, etc.
 Project Proposal on Nails & Electrodes, Gabion, Barbed Wires and Mesh Wire Manufacturing Factory

Barb Barb
Type Wire Gauge (SWG) Distance Length
(cm) (cm)
10# x 12#
12# x 12#
Electric Galvanized Barbed 12# x 14#
Wire; Hot-dip zinc plating 14# x 14# 7.5-15 1.5-3
barbed wire 14# x 16#
16# x 16#
16# x 18#
before coating after coating
PVC coated barbed wire; PE 1.0mm-3.5mm 1.4mm-4.0mm
7.5-15 1.5-3
barbed wire BWG11#-20# BWG8#-17#
SWG11#-20# SWG8#-17#
PVCPE coating thickness: 0.4mm-0.6mm;
  different colors or length are available at  
customers request.

4. Mesh Wire
Wire mesh is a material that is made from various strands of interconnected metal, usually steel
or aluminum. These strands can be welded together, extruded, or even connected by pins or other
devices. The size and permeability of the wire mesh will often dictate its various uses; thinner
mesh can be used as pasta or vegetable strainers, whereas larger, pinned mesh can be used as
a conveyor belt in an industrial setting. Sometimes this type of mesh is used in gardening and
landscaping applications as well.

One of the most commonly used types of mesh is welded wire mesh. This is often used in
concrete construction, as the mesh can be laid down before the concrete is poured. The concrete
can then be poured around the mesh, and once it sets, the concrete will have a higher tensile
strength because the wire mesh contained within will help stabilize the often brittle concrete.
This type of mesh is often used in place of steel rebar, which is a series of interconnected steel
rods. Mesh tends to be easier to install and it comes at a lower cost than rebar for concrete
projects.

Picture of Mesh Wire

 Project Proposal on Nails & Electrodes, Gabion, Barbed Wires and Mesh Wire Manufacturing Factory

3.2. Raw Materials and Inputs

The raw material for the production of the projection of the projects output (Nail) is wire rod,
packaging materials and other inputs. It will be supplied from over sea market.

The main raw materials for Gabion Box, Mesh Wire and Barbed Wire are 2mm Galvanized steel
wire, 0.75mm Galvanized steel wire, warping cloth and etc. The raw materials and accessories
can be obtained from local markets and from outside(international market). However, the major
problem related to raw materials is that it is subject to significant variations in price. As a result,
the project's normal operations are usually hampered by this situation.

3.3. Production Process

The envisioned plant will employ the following production process and techniques for the
production of roofing Nails, Gabion Box, Mesh Wire and Barbed Wire.

3.3.1. Nails

Manufacturing of nails passes through the following steps.

 Feeding of wire coil(rod) to nail making machine

 Forming the bottom and top portion of nail and cutting on the nail making machine
manufacturing of flat head nails ends here
 Project Proposal on Nails & Electrodes, Gabion, Barbed Wires and Mesh Wire Manufacturing Factory

 Manufacturing of the nail head on a washer making machine

 Polishing of head part
 Feeding the head to the nail making machine
 Punching of the head to the nail and pressing to umbrella shape
 Galvanizing.

Production Process Flow Diagram

3.3.2. Galvanized Gabion Box, Mesh Wire and Barbed Wire

Gabion mesh is the gabion which is woven by the hexagonal mesh machine. The diameters and
thickness depend on the mesh size. The diameter used are between 2-4mm if the raw material is
zinc coated, while the diameter will be 3-4.5m if the material is pvc-coated wire. The selvage
wire diameter is usually one gauage ticker than the body wire diameter. The box is then made
manually for the appropriate box dimension.
 Project Proposal on Nails & Electrodes, Gabion, Barbed Wires and Mesh Wire Manufacturing Factory

A single automated machine performs all the steps needed to transform the galvanized wire into
Barbed Wire and Mesh Wire. Two wires are fed into machine and twisted together to form the
cable. Another wire is fed into machine from the side and twisted around one or both cable
wires.
This wire is cut at angle on both sides to form point barb. Two wires are twisted and cut together
if four point barbs are needed. The barbed wire is wound onto spools and cut into 100m lengths.

3.4. Machinery and Equipment Requirement

The project requires relatively less complex machineries and equipment. The list of the
machineries and equipments are shown below in the table below;
1. Machineries and Equipments for Nails Production

 Nail making machine

 Polishing machine
 Wire drawing machine
 Welding machine
 Roofing nail machine
 Polishing machine
 Nail cutter sharpener
 Accessory & other
2. Machineries and Equipments for Mesh Wire and Barbed Wire
1. Hexagonal gabion wire mesh
2. Mesh Wire Making machine
3. RAZOR WIRE Machine
4. Barbed wire Machine
5. Forklift
6. Steel strip
7. Packing machine
 Also include spare parts as standard with gabion machine.
 Project Proposal on Nails & Electrodes, Gabion, Barbed Wires and Mesh Wire Manufacturing Factory

3. For one Gabion Machineries

Head alloy cover 10pcs/set
Half gears 16pcs/set
Whole tube of winding 5pcs/set
Braking strap 1pcs/set
Grating sheet 1pcs/set
Cam roller 1set/set
For two gabion machine it needs twice of the standard one gabion machine.
4. For spiral coiling machine (under gabion machine)
The speed reduction gears no of teeth (37, 41, 43, 47, 51, 54, 58, 65, 74 and 81)
&all accessory

3.5. Technology Choice and Source

The project will use galvanized manufacturing technology to Nails, Gabion Box, Mesh Wire
and Barbed Wire.

Nails are product made from pieces of metal pointed at one end and flat or umbrella headed at
the other. They join articles by being hammered through them. The flat headed nails are
consumed by construction workers for joining wooden structures and by carpenters; while the
umbrella shaped nails are consumed in every building construction when galvanized sheets are
used for roofing purpose. These products can be produced as per the required sizes. This
technology will be imported from china.

The Wire are obtained, the process of converting them into Gabion Box, Mesh Wire, Barbed
Wire and galvanized Gabion Box, Mesh Wire, Barbed Wire only requires galvanizing.

3.6. Civil Engineer, Building and Civil Works

As indicated in part 1 the total land requirement for the project is estimated to be 10,000M 2.The
buildings are planned to accommodate production houses, storage and other utility requirements
as well as offices and a social rooms/constructions.
 Project Proposal on Nails & Electrodes, Gabion, Barbed Wires and Mesh Wire Manufacturing Factory

In general the buildings must be capable of being kept clean and provision should be made for
keeping the sewerages drained out properly and room temperature is attained to keep healthy
environment. In most environments, equipment should be totally enclosed in a light structure:
where the climate is suitable. A concrete floor, which can be swept, is usual. The buildings will
have 7 m.

In the site plan is also included a common garage, storage and workshop building together with
an effluent treatment plan and gate mans’ house.

The loading and offloading areas together with incoming and outgoing roads are proposed to be
paved to ensure a clean environment around the project site. The site will be encircled by a chain
linked fence fastened to concrete posts. The project construction is designed by professional
engineers and construction will be done under close supervision and collaboration of the
engineers.

3.7. Utilities

A number of utilities would be put in place in order to ensure smooth functioning of the factory.
These utilities include:

a) Water Supply,
b) Supplementary Electricity supply,
c) Paved Road Transportation,
d) Drainage Facility

3.8. Project Implementation Plan/ Action Plan

The project's implementation is expected to take 2 years . The major activities include Bank loan
processing, construction of the building, cleaning the area around the building, procurement of
equipments and start rendering services. The time schedule for the above mentioned major
activities is presented below:
 Project Proposal on Nails & Electrodes, Gabion, Barbed Wires and Mesh Wire Manufacturing Factory

Table 5 -Project-Implementation-Schedule
SN Activities Date

 
1 Land Approval July 2014
2 Bank loan processing August–September 2014
3 Site Development October 2014
4 Building and construction work November 2014- April 2016
5 Purchasing of Machines and Equipments May-June 2016
6 Production execution July 2016

4. ORGANIZATION, MANAGEMENT AND MANPOWER

4.1. Organization and Management

The organizational structure should be in a way that the company able to achieve its objectives as
well as the satisfaction of standard requirement.

4.2. Man Power

The total manpower required for the plant will be 360 employees at full capacity.
 Permanent workers 259
 Skilled 241( 140 male and 101 Female)
 Unskilled 18 (8 male and 9 Female)
 Temporary workers 101
 Skilled 5 ( 4male and 1 Female)
 Unskilled 96 (58 male and 38 Female)

The total number of manpower, Manpower list, qualification, salary and sex composition are
listed in the table.
 Project Proposal on Nails & Electrodes, Gabion, Barbed Wires and Mesh Wire Manufacturing Factory

Table - Manpower list, Number, Qualification, Salary and Sex composition of the project
SN Position No. Qualification Sex Monthly Annual
Salary in Br Salary in br.
I Permanent
Worker
1 General Manager 1 MSC in Mechanical M/F 12,000.00 144,000.00
Engineering
2 Head, Production 1 BSC-in M/F 7,000.00 84,000.00
Division Mechanical/Industrial
Engineering
3 Technician 2 Diploma in General M&F 1,800.00 43,200.00
Mechanics
4 Production 2 Diploma in M&F 1,800.00 43,200.00
Supervisor production
Technology
5 Production Worker 122 10+1 in Metal work M&F 1,050.00 1,537,200.00
6 Assistant Prodn 85 10 completed (Semi M&F 500.00 510,000.00
Worker Skilled)
7 Head, 1 BA in Management M/F 6,000.00 72,000.00
Administration &
Finance Division
8 Personnel 1 BA in HRM M/F 3,000.00 36,000.00
9 Head, Marketing 1 BA in Marketing M/F 6,000.00 72,000.00
Dept Management
10 Sales 8 Diploma in Sales Mgt M&F 1,500.00 144,000.00
11 Accountant 2 BA In Accounting M&F 3,500.00 84,000.00
13 Cashier 3 10+2 in Bookkeeping F 1,100.00 39,600.00
14 Secretary 2 Diploma in Secretariat F 1,200.00 28,800.00
science
15 Cleaner 6 Unskilled F 700.00 50,400.00
16 Store keeper 2 Diploma in logistic M&F 1,350.00 32,400.00
mgt
17 Purchaser 2 Diploma in supp. & M&F 1,500.00 36,000.00
Put. Mgt
18 Guard 8 Unskilled M&F 700.00 67,200.00
19 Driver 6 10 completed + M&F 1,000.00 72,000.00
certification
20 Assistant Driver 2 Unskilled M 700.00 16,800.00
21 Gardner 2 Unskilled M 700.00 16,800.00
Sub Total 259 3,129,600.00
II Temporary
Worker
1 Electrician 2 Diploma in General M&F 1,600.00 38,400.00
Electricity
2 Auto Mechanic 2 Diploma in M 1,750.00 42,000.00
 Project Proposal on Nails & Electrodes, Gabion, Barbed Wires and Mesh Wire Manufacturing Factory

Automotive
technology
3 Plumber 1 10+2 in Plumbering M 1,500.00 18,000.00
4 Laborer 96 Unskilled M&F 700 806,400.00
Sub Total 101 904,800.00
Total 360 4,034,400.00
Benefits(25 % of 782,400.00
Basic Salary)
Grand Total 360 4,816,800.00

4.3. Organizational Structure

The organizational structure of the project is designed by including all the necessary personnel
under the right division. At the top of the organizational structure, there will be manager with the
responsibility of supervising the overall activity of the plant. Depending up on the nature of the
center and the amount of work to be performs; there exist auxiliary units under the general
manager.

Employees under each unit will be supervised by the department head that is accountable for the
general manager. General Manager is appointed by board of director.
 Project Proposal on Nails & Electrodes, Gabion, Barbed Wires and Mesh Wire Manufacturing Factory

Fig: Organizational Structure

Owner/s

General
Secretary Manager

Production Admin. & Marketing &

Dept. Finance Dept. Sales Dept.

Gabion, Mesh & Nails Section Admin. & Finance section

Barbed Wire Sec HRM Section
Dept.

Marketing Sales Section

Section

Hence the following section deals with the duties and responsibilities of some departments.
1. Manager
Duties and responsibilities
 She/he will plan, organize, direct and control the overall activities of the plant
 She/he will devise policies and strategies that will enable the plant to be profitable.
 She/he will incorporate modern technological innovation that will facilitate the service
delivery of the project center and increase customer’s satisfaction.
 He/he will plan, organize, direct and control the human and non-human resources of the
plant so as to achieve the short and long run objectives of the organization.
 Project Proposal on Nails & Electrodes, Gabion, Barbed Wires and Mesh Wire Manufacturing Factory

2. The Production Department

Duties and responsibilities:-
It is the core department of the project center it has two main sections (Gabion, Mesh & Barbed
Wire and Nails section) and has the following responsibilities.
 Designs and prepared prototypes of Nails, Gabion Box, Mesh Wire and Barbed Wire
based on the plant standard and customer preferences
 Use modern manufacture and processing technologies that will enhance the quality of
Nails, Gabion Box, Mesh Wire and Barbed Wire
 Produce quality product that will enable the center competent both in the domestic and
international market.
 Use appropriate technology to manage maintenance of its products.
 Control on the quality of raw materials, inputs, quality of the product and also the overall
production process.
 Produce products in least cost so that the profitability of the center is guaranteed.
 Moreover control over the quality of the final products(Nails, Gabion Box, Mesh Wire
and Barbed Wire)
3. Administration and Finance Department
It has two main sections, i.e Administration and HRM section and Finance section
3.1. Administration and HRM
Duties and responsibilities:-
 Will control the human and non human resources of the plant, which include: effective
handling of the different inventories of the machineries, equipments, raw materials,
finished products, and devise strategies of controlling against fraud and damage.
 Administer and control the company logistic resource
 Provide and manage general supportive service to the plant.
3.2. Finance section
Duties and responsibilities:-
 Will develop sound financial control system by developing modern financial control
systems.
 Project Proposal on Nails & Electrodes, Gabion, Barbed Wires and Mesh Wire Manufacturing Factory

 Will prepare the annual financial statements and prepare condensed reports for the
general manager, owner and other concerned government body.
 Manage and execute the company national and international procurement procedure
4. Marketing and Sales Department
It has two main sections, i.e Marketing and Sales section and Finance section with the following
duties and responsibilities
 Will handle the overall marketing activities of the organization which include planning,
organizing, directing, and controlling.
 Provide cost estimates in preparation for securing the profitability of the factory.
 Gather information on new product design, type and profile
 Approval of new products profile & brand plan analyzes market research.
 Plan and execute sales.
 Will develop effective customer handling strategies
 Will develop the marketing strategies for future project center’s development.
 Conduct both foreign and domestic market research for expanding the sales of the
company

4.1. Training Requirement

The production employees of the plant expected to take basic metal work skill training for 5
days. In addition training could be given to the mechanic and to the supervisor will also take skill
training from one of TVET Colleges or similar undertaking factories in Addis Ababa.
 Project Proposal on Nails & Electrodes, Gabion, Barbed Wires and Mesh Wire Manufacturing Factory

5. Financial Requirement And Analysis

5.1. Total Initial Investment Cost

The total amount of money that is required to establish the envisaged Nails & Electrodes,
Gabion, Barbed Wires and Mesh Wire is estimated to be birr 70,110,740.
Table-Total Initial Investment Capital
SN Description Cost in birr
1 Land, Building & Construction 21,803,125.00
2 Machines & Equipments 20,205,610
3 Vehicles 6,290,000
4 Office Equipment 404,100
  Total Fixed Investment Cost 48,702,835
6 Pre service Expense 392,000
7 Initial Working capital 14,642,201
  Total 63,737,036
Contingency(10 %) 6,373,70
  3.60
  Total Initial Investment Capital 70,110,740

5.1.1. Fixed Investment

A. Building & Construction
SN Description Land Unit cost in br. Total cost in br.
Requirement(M2
)
1 Total Production Hall 2950 2500 7,375,000.00
2 Total Warehouse 3500 2300 8,050,000.00
3 Office Building and show 350 2700 2,835,000.00
room
4 Waste Accumulation area 300 300 90,000.00
5 Green Area, Parking, road 2900 250 725,000.00
and Buffer Zone
7 Fence and others _ 300,000.00
8 Site Development 250,000.00
9 Design and Supervision 800,000.00
10 Land lease Initial Fee 10% pyt by 18.75 1,378,125.00
br per M2 for 60
years
Total 10,000.00 21,803,125.00
 Project Proposal on Nails & Electrodes, Gabion, Barbed Wires and Mesh Wire Manufacturing Factory

B. Machinery And Equipment

SN Description UO Quan Unit Price Total Price Remark
M tity in Br in Br.
1 Complete Gabion, Barbed & Mesh Set 2 4,050,000.00 8,100,000.00 Duty free
Wire Making Line
2 Complete Galvanized Nail making Set 2 3,875,000.00 7,750,000.00 Duty free
Line
3 Auxiliary Equipments Set 2 1,438,500.00 2,877,000.00 Duty free
4 Workshop Equipments Set 1 828,610.00 828,610.00 Duty free
5 Generator 450 KVA Uni 1 650,000.00 650,000.00 Duty free
t
Total 20,205,610.0
0

C. Vehicles
SN Description Qty Unit Price Total Price in Remark
in br. br.
1 Pick up 1 750,000 750,000 Duty free
2 Mini-Bus 1 700,000 700,000 Duty free
3 Worker Bus 2 1,300,000 2,600,000 Duty free
4 FSR Isuzu 2 1,120,000 2,240,000
truck Duty free
Total 6   6,290,000  

D. Office Equipments
SN Description Qty Unit cost in Total cost in
Br. Br.
1 Managerial Tables with chair 6 9500 57,000
2 Secretarial chairs 2 7500 15,000
3 Office Chairs with tables 18 4000 72,000
4 Computer with its printer 7 15,000 105,000
5 Shelf 5 7000 35,000
6 Telephone and fax machine 2 1800 3,600
7 Filing Cabinets 3 5500 16,500
8 Decoration and others     100,000
Total     404,100

E. Initial Working Capital

The initial working capital is estimated to be Birr. 14,642,201.

 Project Proposal on Nails & Electrodes, Gabion, Barbed Wires and Mesh Wire Manufacturing Factory

F. Pre-Service Expense

SN Description Total Cost in br

1 Project proposal 15,000
2 Environmental Impact Assessment 25,000
3 Promotion and Advertisement 250,000
4 Staff Capacity Building 100,000
5 Licensing fee and others 2000
  Total 392,000

5.2. Annual Production Cost at Full Capacity1

i. Raw Materials and Inputs

SN Description Unit Qty Unit cost in Total cost in

measure birr birr
1 Wire Rod Kg 1,100,000 20 22,000,000.00
2 Iron ore Tons 400 16200 6,480,000.00
3 Different wire Tons 4400 30000 132,000,000.00
4 Zinc Tons 112 26100 2,923,200.00
5 Packaging LS 7,000,000.00
material
Total 170,403,200.00

ii. Salary and Wage Expense

As indicated in part 4.2 (Manpower) of this study, the total cost of salary and wage is estimated
to be Br. 4,816,800.00.

1
 Project Proposal on Nails & Electrodes, Gabion, Barbed Wires and Mesh Wire Manufacturing Factory

iii. Other Operating Expenses

SN Description Annual Cost in Assumption Used

Br
1 Property Insurance 487,028.35 1% of fixed Investment Cost
2 Audit & Legal Fee 48,000.00 4000 per month
3 Worker Uniforms 41,400.00 230*180br
4 Telephone, fax and postal 24,000.00 2000 per month
5 Cleaning goods supplies 30,000.00 2500 per month
6 Repair and maintenance 974,056.70 2 % of the Fixed Cost
7 Advertisement 800,000.00 % of sales
6 Stationery and other office 21,600.00 1800 per month
supplies
8 Electricity 112,500.00 0.45*250,000KW per year
9 Water 10,000.00 2 br.*5,000m3 per year
10 Fuel 402,400.00 20120 lit*20 per year
11 Oil and lubricant 40,240.00 10% of fuel cost
12 Miscellaneous Expense 120,000.00 10000 per month
Total 3,111,225.05

5.3. Financial Analysis and Statements

5.3.1. Underlying Assumption

The financial analysis of the envisioned Nails & Electrodes, Gabion, Barbed Wires and Mesh
Wire Manufacturing Factory is based on the data provided in the preceding sections and the
following assumptions.
A. Construction and Finance

Construction period 18 months

Source of finance 30% equity and 70% loan
Tax holidays 2 years
Bank interest rate 10 %
Operating Costs Increase by 2%
Salary and wages increase by 5%

B. Depreciation
 Project Proposal on Nails & Electrodes, Gabion, Barbed Wires and Mesh Wire Manufacturing Factory

Building 5%
Machinery and equipment 10%
Office furniture 10%
Vehicles 20%
C. Working Capital

Accounts receivable 30 days

Raw material local 30days
Work in progress 5 days
Finished products 30 days
Cash in hand 5 days
Accounts payable 30 days

5.3.2. Sources of Fund

SN Description % share Amount(in birr)
Owners
1 Share 30 21,033,222
2 Bank Loan 70 49,077,518
Total 100 70,110,740

5.3.3. Loan repayment Schedule

Principal Interest Total Annual Remaining
Year Payment (10%) Payment in br. Balance
0 0 0 0 49077518
1 4907752 4907752 9815504 44169766
2 4907752 4416977 9324728 39262014
3 4907752 3926201 8833953 34354262
4 4907752 3435426 8343178 29446511
5 4907752 2944651 7852403 24538759
6 4907752 2453876 7361628 19631007
7 4907752 1963101 6870852 14723255
8 4907752 1472326 6380077 9815504
9 4907752 981550 5889302 4907752
10 4907752 490775 5398527 0

5.3.4. Depreciation Schedule

SN Description Original Value Depreciation Depreciation
 Project Proposal on Nails & Electrodes, Gabion, Barbed Wires and Mesh Wire Manufacturing Factory

In Birr rate in % Per year

1 Construction and Civil 21,803,125.00 5 1,090,156.25
Work
2 Machineries & 20,205,610 10 2,020,561.00
Equipments
3 Vehicles 6,290,000 20 1,258,000.00
4 Office Equipment 404,100 10 40,410.00
Total 48,702,835 4,409,127.25

5.3.5. Revenue Projection

Based on the price and the capacity program of the factory indicated in previous chapter, the
revenue of the factory projected as indicated in the table below;
Table Revenue projection
Description Year 1 Year 2 Year 3 Year 4_10
Nails 24,000,000.00 36,000,000.00 48,000,000.00 60,000,000.00
Wire Mesh 23,400,000.00 35,100,000.00 46,800,000.00 58,500,000.00
Gabion Box 32,000,000.00 48,000,000.00 64,000,000.00 80,000,000.00
Barbed Wire 14,800,000.00 22,200,000.00 29,600,000.00 37,000,000.00
Total 94,200,000.00 141,300,000.00 188,400,000.00 235,500,000.00
 Project Proposal on Nails & Electrodes, Gabion, Barbed Wires and Mesh Wire Manufacturing Factory

5.3.6. Balance Sheet(Beginning)

Asset
Current Asset Value in Br.
Cash 6,765,703.60
Inventory of raw materials and inputs 14,642,201.00
Total Current Asset 21,407,904.60
Fixed Asset
Land, Building and Construction 21,803,125.00
Machineries and Equipments 20,205,610.00
Office Equipment 404,100.00
Vehicles 6,290,000.00
Total fixed Asset 48,702,835.00
Total Asset 70,110,739.60
Liability
Account payable 49,077,518
Owners Equity
Capital 21,033,222
Total Liability & Owners’ Equity 70,110,740

5.3.7. Income Loss Statement

Revenue Year 1 Year 2 Year 3 Year 4_10
Sales Revenue 94,200,000.00 141,300,000.00 188,400,000.00 235,500,000.00
Purchase of Raw 68,161,280.00 102,241,920.00 136,322,560.00 170,403,200.00
Material & Inputs
Gross profit 26,038,720.00 39,058,080.00 52,077,440.00 65,096,800.00
Expenses
Salary Expense 1,926,720.00 2,890,080.00 3,853,440.00 4,816,800.00
Other Operating 1,244,490.02 1,866,735.03 2,488,980.04 3,111,225.05
Expenses
Deprecation 1,090,156.25 1,090,156.25 1,090,156.25 1,090,156.25
Building
Deprecation 1,258,000.00 1,258,000.00 1,258,000.00 1,258,000.00
Vehicles
Deprecation 2,020,561.00 2,020,561.00 2,020,561.00 2,020,561.00
Machineries & equp.
Deprecation office 40,410.00 40,410.00 40,410.00 40,410.00
Equip
Interest Expense 4,907,751.77 4,416,976.59 3,926,201.42 3,435,426.24
Lease payment 253,125.00 253,125.00 253,125.00 253,125.00
Total Expense 12,741,214.04 13,836,043.87 14,930,873.71 16,025,703.54
Profit Before Tax 13,297,505.96 25,222,036.13 37,146,566.29 49,071,096.46
Tax(30% ) - - 11,143,969.89 14,721,328.94
Net Profit 13,297,505.96 25,222,036.13 26,002,596.40 34,349,767.52
 Project Proposal on Nails & Electrodes, Gabion, Barbed Wires and Mesh Wire Manufacturing Factory

5.3.8. Cash Flow Statement

Year Year 0 Year 1 Year 2 Year 3 Year 4 -10
Equity 21,033,222
Capital
Loan 49,077,518
principal
Net sale 0 94,200,000.00 141,300,000.00 188,400,000.00 235,500,000.00
Total cash 70,110,740 94,200,000 141,300,000 188,400,000 235,500,000.00
in flow
Cash
payment
Purchase of 0 68,161,280 102,241,920 136,322,560.00 170,403,200.00
raw
materials
Pre 52,000 0 0 0
operating
expense
Investment 12,422,329 0 0 0
Other 0 1,244,490.02 1,866,735 2,488,980.04 3,111,225.05
Operating
cost
loan 0 9,815,503.54 9,324,728.37 8,833,953.19 8,343,178.01
repayment
Lease 390,000.00 90,000 90,000 90,000 90,000
payment
Tax 0 0 0 880,995.06 1,225,965.67
payment
Total 12,864,329 79,311,274 113,523,383 147,735,493 181,947,603
payment
Cash 57,246,410.60 14,888,726.44 27,776,616.60 40,664,506.77 53,552,396.94
surplus /
Deficit
Cumulativ 14,888,726.44 42,665,343.04 83,329,849.81 136,882,246.75
e cash flow

5.3.9. Profitability

According to the projected income statement, the project will start generating profit in the 1 st
year of operation. Important ratios such as profit to total sales, net profit to equity (Return on
equity) and net profit plus interest on total investment (return on total investment) show an
increasing trend during the lifetime of the project.

The income statement and the other indicators of profitability show that the project is viable.
 Project Proposal on Nails & Electrodes, Gabion, Barbed Wires and Mesh Wire Manufacturing Factory

5.3.10. Pay-Back Period

The investment cost and income statement projection are used to project the pay-back period.
The project's initial investment will be fully recovered within 5.9 years of operation.

6. Future Development
Every business undertakings be it large or small should have future development plan. It is a
plain fact that business activities are undertook in a dynamic business nature and different
environment. Therefore, the factory will have an expansion phase to manufacture different
Electrodes products.

7. Environmental Impact of The Project

Currently the issue of environment and envelopment get due emphasis and thus every citizen
called exert their maximum effort for fighting against any negative impacts on the environment
so as to result in a win-win solution on common agenda that is creating environmentally friendly
business environment. The project has some impact on the environment and the independent EIA
report is required.

8. Summary
As clearly the project cash flow statement shows the owner of the project has sufficient amount
of money that enable him pay the bank loan with in short period of time and invests in the
expansion of the project. In general, the financial statement of the project shows that the project
under discussion will cover its entire investment costs with in medium span period of time.
Hence the owner of the project has a long term plan engaging in the expansion of the factory.

Finally, the owner of the project will assist the local societies by providing them different
developmental endeavors.