Werhouseing
Werhouseing
ON
WAREHOUSE AND STOREGE
FACILITY
PROMOTER:
February 2025
S/W/Kombolcha
Table of Contents
EXECUTIVE SUMMARY....................................................................................................4
1. INTRODUCTION..........................................................................................................5
1.1. Background of the Promoter....................................................................................6
1.2. Project Justification..................................................................................................8
1.3. Objective of the Project..........................................................................................10
1.4. The Socio-Economic Significance of the Project...................................................10
2. Description of the Project.............................................................................................12
3. The Project Area...........................................................................................................14
3.1. Location..........................................................................................................14
3.2. Floor layout Plan.............................................................................................16
3.2.1. Land Use Plan.................................................................................................17
3.3. Location Map of the Area......................................................................................18
4. THE MARKET STUDY AND STORAGE CAPACITY............................................19
4.1. Market Study..........................................................................................................19
4.1.1. Demand and Supply for Improved seeds in Ethiopia.....................................19
4.2. Market Prospects....................................................................................................27
4.3. Storage Capacity and service program...................................................................27
4.4. Service Charge.......................................................................................................28
5. TEHCNICAL STUDY.................................................................................................28
5.1. Description of the Project Service/ Product Mix...................................................28
5.2. Construction and Civil Work.................................................................................28
5.2.1. Construction Schedule....................................................................................28
5.2.2. Architectural Design & Layout.......................................................................28
5.2.3. Construction Plan and process........................................................................29
5.3. Utilities...................................................................................................................30
5.4. Project Implementation...........................................................................................30
6. MANAGEMENT AND ORGANIZATIONAL STRUCTURE...................................31
6.1. Organization and Management...............................................................................31
6.2. Man Power.............................................................................................................31
6.3. Organizational Structure.........................................................................................31
7. FINANCIAL REQUIRMENT AND ANALYSIS.......................................................34
7.1. Total Investment Cost............................................................................................34
7. Total Investment Cost Br. 10,000,000 from this amount 30 %( Br. 3,000,000) from
owner equity and 70 %( 7,000,000) from bank loan.
8. Employment Opportunity The total manpower required for the plant will be 40
Employees at full capacity.
Permanent workers 24
Skilled 19
Unskilled 5
Temporary workers 16
Skilled 1
Unskilled 15
9. Social and Economic Benefit Provide quality flour mill service, increase agricultural
productivity, employment, generation of income, stimulates
Town economy and benefits local people.
Type of business ownership Privately owned business enterprise
1. INTRODUCTION
It has been more than two and half decades since the government of Ethiopia had formally
adopted Agriculture Development Led Industrialization (ADLI) as its development strategy
in 1994. The main goal of this strategy is to attain fast and broad-based development within
the agricultural sector and to make this sector's development to power broad economic
growth. ADLI had been further rationalized as the basis of the poverty reduction program
subsequently adopted by the government in 2002 (MoFED, 2002), a program is officially
known as Sustainable Development and Poverty Reduction Program (SDPRP).
To this effect, the owner of the envisioned storage facility will be suited in the intended
Project area. This project study is undertaken to check the market, technical and financial
feasibility of this project. The output of the study is very encouraging for the owner to
establish the project in kombolcha city administration. The owners of the project have great
interest and determination to commence the project. Hence, they expect to get the
necessary support from the regional and local governments to realize the project.
1.1. Background of the Promoter
Major Stores are owned by Government, Public Enterprises, Private Commercial
Companies and Individual Traders. The major owners of storage facilities are:-
• The Ethiopian Grain Trade Enterprise (EGTE),
• The Ethiopian Food Security Reserve Administration (EFSRA),
• The Disaster Risk Management and Food Security Sector (DRMFSS),
• The Merchandise Wholesale & Import Trade Enterprise (MEWIT),
• The Agricultural Input Supply Enterprise (AISE),
• The Ethiopian Seed Enterprise (ESE),
• Bureau of Agriculture (BoA),
• Farmers‟ Cooperative Unions,
• NGOs
EGTE has a total store capacity of approximately 800,000 MT throughout the country;
GTE is the biggest store owner in Ethiopia. Many of its warehouses are in Addis Ababa,
Nazareth, Dire Dawa, Shashemene, Mekelle are leased to WFP, EFSRA and ECX.
EFSRA has a total of 322,000 MT warehouse capacities in 7 strategically located sites (see
below); EFSRA is the second biggest store owner in the country.
MEWIT: The Merchandise Wholesale & Import Trade Enterprise (MEWIT) is a
governmental enterprise engaged in importing and distributing consumer goods like V. oil,
Pasta & Macaroni, wheat flour, sugar, cement etc. It owns stores throughout the country.
Many of its warehouses are also leased to NGOs, other Companies and WFP.
AISE: The Agricultural Input Supply Enterprise (AISE) is a governmental enterprise,
engaged in importing and distributing mainly fertilizers and agricultural inputs. It has
stores throughout the country. WFP leased one of its warehouses in Mekelle.
ESE: The Ethiopian Seed Enterprise (ESE) has also warehouses in some locations of the
country. WFP leased one of its warehouses in Kombolcha.
BoA: Bureau of Agriculture (BoA) has also warehouses in regional level.
NGOs: Llike CARE, CRS, CONCERN, ICRC, MEKANEYESUS, WVI etc. own and
lease warehouses in towns Nazareth, Dire Dawa, Mekelle, Kombolcha and in areas like E.
and W. Harerge, Borena Zone, SNNPR etc. where they are active.
Farmers’ Cooperative Unions FCU‟s own and lease stores to store their produce,
agricultural inputs etc. throughout the country.
Private Warehouse Owners: An approximately more than 300,000MT capacity stores are
owned by private owners mainly in towns like Addis Ababa, Nazareth, Dire Dawa,
Shashemene, Gondar and Mekelle.
CURRENT SITUATION OF STORAGE IN THE COUNTRY & WFP WAREHOUSES
Currently WFP is facing acute warehouse space shortage especially in SOs Nazareth and
Dire Dawa. In order to solve this problem in Dire Dawa, WFP has got a 6000 MT
warehouse space from DRMFSS and hired additional 2 warehouses with total capacity of
5500 MT after long negotiation with DRMFSS and searching suitable warehouses from
private owners. Negotiation with EGTE to get additional warehouses in Nazareth failed
since EGTE is expecting 202,000 MT of a shipment of Wheat from February to April
2010. Almost all private owned big warehouses are occupied by fertilizer importers and
getting a suitable warehouse to hire is becoming difficult. Not only the unavailability of
warehouse but also the cost of hiring a privately owned warehouse has been increased from
the usual 5-6Birr/MT/Month to 20- 25Birr/MT/Month in Nazareth. A total of 276,000 MT
of fertilizer is expecting to arrive from February to April 2010 and many big warehouses
will not be free until the end of April 2010 Except Somali Region, about 63 % of the WFP
warehouses in SOs are leased from EGTE, MEWIT, ESE and AISE.
Government and Commercial Storage
Ethiopian Grain Trade Enterprise is re-established in accordance with Regulation No.
58/92 of the Councils of Ministers and completed merger with Ethiopian Oil Seeds and
Pulses Export Corporation. EGTE has the capacity to store more than seven million
quintals of grain in its warehouses situated in different parts of the country. The Enterprise
has Transport Department with Heavy and Light trucks to transport grain from place to
place and for customers to their specific location.
Related Services
Rental of warehouses and store management.
Fumigation service and issuance of quality certificate.
Weigh bridge services.
Modern machine cleaning services for different type of grain.
Transportation services, and
Provide market information on request.
Ethiopia commodity exchange
The Ethiopia Commodity Exchange (ECX) is an organized marketplace, where buyers and
sellers come together to trade, assured of quality, quantity, payment, and delivery. The
Exchange is jointly governed by private-public Board of Directors. ECX offers an
integrated warehouse system from the receipt of commodities on the basis of industry
accepted grades and standards for each traded commodity by type to the ultimate delivery.
Commodities are deposited in warehouses operated by ECX in major surplus regions of the
country. At the ECX warehouse, commodities are sampled, weighed and graded using
state-of-the-art technology grading and weighing equipment. ECX warehouses issue an
Electronic Goods Received Note and provide the depositor or his/her representative with a
signed print copy. The Electronic Goods Received Notes are not negotiable, transferable or
represent legal title to the deposited commodity. The depositor has to get Electronic
Warehouse Receipt issued by the ECX Central Depository in order to establish legal title to
the deposited commodity. The Deposited commodities are stored using global standards of
inventory management which rely on First-In-First-Out principles, rotation, and careful
environmental control. ECX Inventory Management system guarantees the quality and
quantity of the commodity throughout the pre-determined period of storage. Further, ECX
warehouses are insured at maximum coverage to protect against loss and damage of
deposits.
The effectiveness of such services and research generated inputs are governed by the
strength and efficiency of support services such as extension, credit and input supply,
including the supply of improved seed. As it embodies the plant genetic potential,
agricultural inputs is base for increased production and productivity while also addressing
the country’s food security and poverty reduction challenges.
Seed is a key input for improving crop production and productivity. Increasing the quality
of seeds can increase the yield potential of the crop by significant folds and thus, is one of
the most economical and efficient inputs to agricultural development (FAO, 2006).
Generation and transfer of improved technologies are critical prerequisites for agricultural
development particularly for an agrarian based economy such as of Ethiopian. Despite the
release of several technologies, particularly of improved crop varieties, there has been
limited use of improved seeds by the majority of farmers (CSA, 2010).
Among others, unavailability of quality seeds at the right place and time coupled with poor
promotion system, is one of the key factors accounting for limited use of improved seeds,
which further contributing for low agricultural productivity. Poor availability and
promotion of improved seeds is due to inefficiency of the seed systems of the country.
Farmers can access seed both from formal and informal sources. However, the formal
system supplies only a small proportion of the demand. This has contributed to the wide
use of low yielding local varieties, low quality seed and limited use of improved
agricultural technologies. The reality is well known; low production and productivity. Self
Help Africa’s experience shows that cooperative based seed multiplication has the potential
to significantly increase food security and farm income for rural households.
By storing agricultural inputs in better place, the project will keep the of the quality of the
improved seeds.
2. Increase agricultural productivity
As it is well known, agricultural inputs has a great role in agricultural productivity. Hence,
the availability of this agricultural inputs storage facility will increase the agricultural
productivity in the Wereda or District.
3. 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 and payroll income tax are collected from undertaking business
activities. Therefore, the agricultural inputs storage facility will serve as sources of
revenue for the town as well as for the region.
4. 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 40 citizens.
As a union responsibility the building will engage in different development activities on the
surrounding areas. This will better worth the community and contribute for the
development of the nation.
The envisioned agricultural inputs storage facility has positive externality in the city as
well as in the Wereda that will encourage the economic movement of national, Regional
and local economy. There will be economic relationship and transactions among different
actors.
2. Description of the Project
The Proposed project is to establish Ware house and Storage Facilities in kombolcha city.
Storage/warehouse facilities are locations where food and non-food commodities are stored
pending onward movement.
A warehouse is the point in the supply chain where raw materials, work-in-process (WIP),
or finished goods are stored for varying lengths of time.
Term “Warehousing” is referred as transportation at zero miles per hour. Warehousing
provides time and place utility for raw materials, industrial goods, and finished products,
allowing firms to use customer service as a dynamic value-adding competitive tool.
• The warehouse is where the supply chain holds or stores goods.
• Functions of warehousing include
– Transportation consolidation
– Product mixing
– Docking
– Service
– Protection against contingencies
WAREHOUSE ACTIVITIES
• Receive goods
• Identify the goods
• Dispatch goods to storage
• Hold goods
• Pick goods
• Marshal shipment
• Dispatch shipment
• Operate an information system
TYPE OF WAREHOUSING
• Public Warehousing
• Private Warehousing
• Contract Warehousing
• Multi-client Warehousing
The envisaged storage and distribution facility is planned to be located in kombolcha city
particularly the industrial zone, Amhara regional government, is 375KMs far away from
the capital city and located in west of Addis Ababa.
One of the favorable condition of the project area in terms of the topographic aspect is its’
flatness, which in effect, make the construction process easier and cost effective.
Kombolcha city is situated a fertile area known for its natural resources. The area is
surrounded by different chains of hills and mountains including .
It is established with the objective, to provide the following services to the farmers.
Provision of agricultural inputs (both chemical and biological,
Marketing / procurement / of agricultural inputs
Provision of multiple credit service
Capacity building mainly in the area of managerial and leadership skill
Provision of small scale farming tools and other farm inputs at reasonable price
Distribution of up to date market information
3.2. Floor layout Plan
3.2.1. Land Use Plan
The project required a total of 4,000m2 land required to construct the improved seeds
storage and its facilities. Land use plan indicated in table below.
Since the establishment of Ethiopian Seed Enterprise as the first public and formal seed
sector, the enterprise has remained the sole producer and supplier of improved seeds for
over three decades. The enterprise is also playing the leading role for the advent of
organized seed production and supply system in the country. Despite the better capacity
ESE has, seed supply remained far behind the demand in those years. The huge gap
between the demand and supply has existed in the history of the enterprise. Stimulated by
the fast agricultural development growth over the last seven years, demand for improved
seed is still increasing rapidly from time to time in the country. The overall annual average
seed requirement for cereals, pulses and oil crops is estimated to be over 400,000 tons
(Marja H. et al., 2008). However; the average yearly supply of improved seed doesn’t
exceeds 20,000 tons since the establishment of ESE.
In the recent years, following the establishment of several private and public seed
enterprises by the regional governments increased the number of actors involved in the
seed sector. The Ethiopian government took the initiatives of organizing and bringing
together those actors and combining their efforts to increase improved seed supply in the
country.
Table. Demand and supply of hybrid maize basic seed over the last five years (2005/06-
2009/10)
Despite the aforementioned several efforts undertaken by the government, there is often
shortage of source seed, which limits commercial seed production in the country, mainly
due to mismatches between seed demand and supply (Table below). One of the reasons for
the mismatch is that there is limited capacity to supply as much source seed as demanded
and multiplication of initial seed, which subsequently delivered to mass producers, is not
supported by irrigation and almost totally depend on main season rainfall. The other main
reason is that demands of farmers often become volatile, indicating problems related with
demand assessment and forecast during planning process, suggesting demand re-vision
based on the dynamic condition of farmers‟ situation has paramount importance.
Moreover, seed production supply system in the country has focused only on hybrid maize
and wheat varieties that limited farmers‟ option to other beneficial crops. This makes
farmers merely depend on farm-saved varieties which are genetically low productive. As
depicted in Table 8, the overall seed supply of all crops is 28%, and the maximum supply
of 31% was for cereals out of all crops grown in Ethiopia
Table - Comparison between improved seed demand and supply over the last three years
(2008/09 to 2009/10)
Although the gap still exists in the case of certified seed supply for both hybrid and non-
hybrid crops, there is also an increasing trend over the last four years in fulfilling the
demand (Table below).
Table- Demand vs. supply of certified seeds of hybrid and non-hybrid (in qt) over four
years
Source: MoARD, 2010
This initiative has contributed significantly to productivity, production, and benefits. The
strategy is focusing on creating integration among all actors mainly research, extension and
farmers with the support of administrative organs and NGOs. This approach has played a
significant role in putting huge amount of seeds in the hands of small scale farmers, which
potentially enhance the informal system. In 2009/10 cropping season, about 67,393 quintals
of seeds were produced in the above mentioned regions through scaling up program
(Asnake F. et al. 2010: unpublished data. The 2009/10 cropping season seed multiplication
and distribution data shows that from 360,272 quintals of seeds allotted to regions only
264,039 quintals (73.29%) had reached to farmers and finally planted. This indicates that
ESE and RSEs have significant amount of carry-over seed stock every year, while several
farmers are not getting access to improved seeds. This problem was attributed to poor seed
marketing (promotion and sales outlets) for reaching end users and/or the inabilities of the
enterprises to meet the farmers need in terms of varietal choice and product quality ( Table
below).
Table-Amount of improved non hybrid seeds (in qt) collected and planted by regions
during 2010/11 cropping season
Source: MoARD, 2010
Most of ESE seed production has been taking place on its own farms, state farms and
contractual farmers‟ fields. Over the past decades, annual seed sell of ESE was between
7,000 to 22,000 metric tons (ESE, 2010). Most recently, the enterprise has been taking shift
in strategy and as a result of crush seed production programs undertaken in 2009/10
cropping season, ESE alone produced about 54,326 tons of certified seeds, of which 52,430
tons (96.51%) is for cereals (Table below).
This shows that there is a 61% increase in supply as compared to what was supplied in the
preceding year (2008/09 cropping season). As indicated in the table, from cereals, about
78% of the produce was the share of wheat seed.
Table - Annual certified seed supply by ESE over the last five years (in tons)
There has been chronic shortage of initial seeds and the research system couldn’t satisfy
the demand of commercial seed producers. On the other hand, since the seed system of the
country is not well developed, the little amount of seed produced hasn’t been channeled
into the appropriate seed system. After the development of the five years strategic plan,
however, there has been development in the NARS seed system mainly of EIAR, which
has changed its direction towards client-driven quality seed production in required quantity
using supplemental irrigation. As discussed in the earlier sessions, the strategic plan also
makes use of special approaches such as crush seed multiplication in order to augment seed
production under normal season (rain fed) conditions, thereby fill the initial seed shortage.
Table- Seeds of different classes produced by EIAR during 2009/10 cropping season
Table-Performance of breeder, pre-basic and basic seed production by EIAR and ESE
during 2009/10 production year
Import of herbicides in the past 12 years has shown a general increasing trend although
there were years where a drastic fall of import and huge growths are observed. During the
period 2000 – 2003, the imported quantity ranges from 1,019 tons to 1,462 tons with a
mean figure of 1,223 tons. In the middle of the data set i.e. 2004--2007, the yearly average
quantity of import has increased to 2,136 tons, which is an increase of 46% compared to
the previous year’s annual average.
The imported quantity during year 2008 has fell drastically to a level of 14 tons. However,
during the years 2009 and 2010 the imported quantity sharply increased to 3,793 tons and
4,936 tons. These are the periods in which the highest volume of import was registered.
The extreme increases again were followed by a substantial decline in the year 2011, in
which the recorded import is 1,774 tons.
With regard to fungicides the data presented in Table 3.1 does not show any trend. The
data is highly erratic jumping to a very high quantity in some years and a sudden decline in
other years. During the period 2000-2007 the imported quantity ranges from the lowest 168
tons to the highest 747 tons with a mean figure of 353 tons. Import during year 2008 is
almost nil with only 10 tons but revived in the next three years (2009-2011) to an annual
average of 408 tons.
In order to take into account the fluctuations observed in some years the recent three years
average level of import is considered to reflect the present demand. Accordingly, the
present demand for herbicides and fungicides is estimated at 3,500 tons and 408 tons,
respectively.
Fertilizer consumption (metric tons) in Ethiopia
Fertilizer consumption measures the quantity of plant nutrients used per unit of arable land.
Fertilizer products cover nitrogenous, potash, and phosphate fertilizers (including ground
rock phosphate). Traditional nutrients--animal and plant manures--are not included. For the
purpose of data dissemination, FAO has adopted the concept of a calendar year (January to
December). Some countries compile fertilizer data on a calendar year basis, while others
are on a split-year basis. This page has the latest values, historical data, forecasts, charts,
statistics, an economic calendar and news for Fertilizer consumption (metric tons) in
Ethiopia.
Targeted User
The target customers of the envisioned agricultural inputs storage facilities are the
members farmers and cooperatives Farmers unions, NGO, industry parks, privet
customer’s since they bought agricultural inputs from the union.
Based on market study, the demand for agricultural storage facilities is very high.
Therefore, the envisioned project will be successful by entering in to this market in the
town.
The envisioned storage facility has a capacity to store 100,000 quintal at different seasons
per year at full capacity of operation. It has also a capacity to park 10 trucks per day.
Initially the project utilizes 80% of its operation, 90% in the second year of operation and
full capacity at the third year of operation.
4.4. Service Charge
Out of the total selling price of the improved seeds by the union, Birr 35 is a service charge
for the storage facility per quintal. This service facility charge is added to the total price.
The parking service is Birr 10 per day.
5. TEHCNICAL STUDY
5.1. Description of the Project Service/ Product Mix
The envisioned agricultural storage facilities will store different inputs mainly improved
seeds, fertilizers and agrochemicals of the union before its distribution to farmers and
cooperatives. Besides, it also gives parking service.
Additionally, the group considered typical construction activities and durations taken from
similar construction projects as well as realistic constraints on building development. For
instance, it is necessary for the structural frame to be completed before concrete can be
placed for the slab on deck. Hand drawn construction plans detailing site entrances and
storage areas were coordinated with the project schedule to give the reader visualizations of
the construction site set up through various periods of the construction process.
The construction process for this project is normally a disjointed three stages development
by which the conceptualized need of the promoter of this project is translated into a
functional facility that will meet their needs in terms of time, cost and quality.
Based on a general program of the project owners the consultant who is going to be hired
makes site studies, develops structural designs, prepares drawings and specifications,
determines quantities involved and estimated the resultants costs. All these activities will
be done in the first phase of the project which is the design stage after the document are
produced by the designers have been received, and the works secured the project is
supposed to enter the tendering stage. At this stage contractors study the project document
analyze and subsequently determine the construction methods, built up their unit rates and
submit their bids for the works. The promoter of this project intends to compare the bids
and award the contract for the lowest responsible bidder. This, is of course, presupposes
that the favorable proposal does not exceed the allocated budget.
After the award is made and the contract signed between this project owner and the
contractor, the project constructor is expected to prepare and submits a detailed
construction program which includes material schedule, manpower requirement and cash
flow forecast.
5.3. Utilities
A number of utilities would be put in place in order to ensure smooth functioning of the
storage facility. These utilities include:
a) Water Supply,
b) Supplementary Electricity supply,
c) Paved Road Transportation,
d) Drainage Facility
e) Telephone line
F) Fuel
Table-Project-Implementation-Schedule
SN Activities Date
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.
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Fig Organization Structure of the Building
Board
General Manager
As clearly shown in the organizational structure, the center organization has one general
manager and two main sections. Under the general manager there are the, General Service
Department and storage Administration department. Under storage Admin dep’t there exist
two sections i.e., HRM and Finance and general service. The following section deals with
the duties and responsibilities of each department.
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He/she will plan, organize, direct and control the human and non-human resources of
the Storage facility so as to achieve the short and long run objectives of the
organization.
B. Storage Facility Administration Department
The Storage facility Administration Department of Storage facility has two main
sections (Store and Finance Section). It has responsible for undertaking the following
activities:
Manage the human resources and control employee’s activity
Will non-human resources of the project, which include: effective handling of the
different improved seeds of the storage facility, and devise strategies of controlling
against fraud and damage.
Will record and control the improved seeds inventory to the storage with right price at
the right time.
Will plan, organize direct and control the financial transaction of the storage facility by
using all the necessary documents.
Will develop sound financial control system by developing modern financial control
systems.
Will prepare the annual financial statements and prepare condensed reports for both the
General Manager and other concerned government body(farmers and union)
C. General Service department
This department organizes and supervises the responsibilities of maintenance,
gardening, cleaning, vehicle and security staffs.
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7. FINANCIAL REQUIRMENT AND ANALYSIS
34
B. Warehouse Machineries and Equipment’s
C. Vehicle
D. Office Equipment’s
35
7.1.2. Initial Working Capital
36
7.2. Operating Expense at Full Capacity1
a. Salary Expense
b. Operating Expenses
1
At 2nd year of operation
37
SN List of Items Total cost Annual Assumptions Used
Cost in br.
1 Audit and Legal fee 18,000.00 Br. 1500 br per month
2 Stationery Supplies 4,800.00 Br. 400 /Month
3 Property Insurance 69,370.00 1 % of the Building Cost
4 Cleaning Supplies 6,000.00 Br. 1200 Per month
5 Uniforms 2,160.00 Br 180 per pcs for 10
people
6 Water consumption 5,000.00 2500 M3 by 2 br
7 Electric consumption 5,800.00 10000KWH By 0.58 br
8 Fuel 125,400.00 6270 lit @ Br. 20
9 Telephone & fax 12,000.00 Br. 1000 per month
10 Repair expense 104,055.00 1.5 % of building cost
11 Miscellaneous Costs 36,000.00 Br. 3000 per month
Total 370,585.00
38
Building 5%
Building Machinery and equipment 10%
Deprecation of Vehicle 20%`
Office Equipments 10%
39
in Br
1 Storage facilities in Quintal 100,000 35 3,500,000
2 Parking Service per car 1,080. 10 10,800 3 cars park per
00 days
Total 3,510,800
Expenses
Salary Expense 477,360 505,440 561,600
Operating Expenses 370,585 370,585 370,585
Deprecation Building 346,850.00 346,850 346,850
Deprecation Bld. Machineries and 23,500 23,500
Equip 23,500.00
Deprecation of Vehicle 23,500.00 23,500 23,500
Deprecation office Equip 13,630.00 13,630 13,630
Interest Expense 595,000.00 476,000.00 357,000.00
Total Expense 1,850,425 1,759,505 1,696,665
Profit Before Tax 958,215 1,400,215 1,814,135
Tax(30% ) 287,465 420,065 544,241
Net Profit 670,751 980,151 1,269,895
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2. Cash Flow statement
Year Year 0 Year 1 Year 2 Year 3 and
after
Equity Capital 3,000,000
Loan principal 7,000,000
Net sale 0 2,808,640 3,159,720 3,510,800
Total cash in flow 10,000,000 2,808,640 3,159,720 3,510,800
cash payment
Salary expense 0 477,360 505,440 561,600
Investment 9,258,300 0 0 0
Pre operating Expense 11,950 0 0 0
Operating cost 0 370,585 370,585 370,585
loan repayment 0 1,995,000.00 1,876,000.00 1,757,000.00
Tax payment 0 287,465 420,065 544,241
Total payment 9,270,250 3,130,409 3,172,089 3,233,425
Cash surplus / Deficit 729,750 -321,769 -12,369 277,375
Cumulative cash flow 729,750 407,980 395,611 672,985
According to the projected income statement, the building will start generating profit in the
1st 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.
The investment cost and income statement projection are used to project the pay-back
period. The building’s total investment will be fully recovered at the 13 years of operation.
41