Project Proposal on Mineral Water Bottling Plant

PROJECT PROPOSAL

FOR

MINERAL WATER BOTTLING PLANT

PROJECT TO BE IMPLEMENTED IN OROMIA REGIONAL STATE,

OROMIA SPECIAL ZONE SURROUNDING FINFINE,

WALMARA DISTRICT, GABA ROBI KEBELE

PROMOTER: - SHIMALLIS WORKU

OCT, 2020

FINFINNE, ETHIPIA

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 Project Proposal on Mineral Water Bottling Plant

Table of contents
I. Executive Summary

1. Introduction
1.1 Background …………………………………….…………………………….……….7
1.2 Objectives of the product ……………………………………………..…...…………..8
1.3 The project Description and Application ……………….…...……….……………...10
1.4 Location Map of the Area …………………………….……………………..……….10
2. General Market Study and Plant Capacity
2.1 Past Supply and Present Demand…………………………………………….………12
2.2 Project Demand ………………………………………………..……………………..12
2.3 Pricing and Distribution …………………………………………….…………….…13
2.4 Plant Capacity and Production Programmed ……………………………..………..13
2.5 Material and Inputs…………………………………………………………………..14
2.6 Land requirement and land use plan……………………………………..…….....…15
2.7 Technology and Engineering…………………………..……………………….....….16
2.8 Bottling Line Process Flow Diagram………………………………………….………
17
3. Organization Structure, Management and Manpower
3.1 Man power Requirement ………………………………………………...............…..18
3.2 Organizational Structure……………………………………………………...…..….20
3.3 Organizational Management duties and Responsibilities……………………....…....22
4. Financial Requirement and Analysis

4.1. Total Initial Investment Cost………………………………………………………...24

4.1.1. Fixed Investment …………………………………………………………24

4.1.2. Initial Working Capital………………………………………………..…27
4.2. Financial Analysis and Statements ………………………………………..………...28

4.2.1. Underlying
Assumption………………………............................................28
4.2.2. Source of Fund …………………………………………………………...29
4.2.3. Loan Repayment Schedule …………………………………………….....29
4.2.4. Annual depreciation schedule of the fixed asset ( birr)………………....30
4.2.5. Balance Sheet (Beginning)………………………………………………..30
4.2.6. Revenue Projection……………………………………………………......31
4.2.7. Income/Loss …………………………………………………………...…32
4.2.8. Cash Flow Analysis……………………………………………………….32

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4.2.9. Profitability……………………………………………………...……..….33
4.2.10. Pay-Back Period……………………………………………………….….33
5. Environmental Impact of the project

5.1 Socio Economics Environments …………………………………………………….…...….33

5.2 Environmental Impact Assessment of the Project …………………………………...……...33
I. EXECUTIVE SUMMARY

1 Project Type Mineral Water Bottling Plant

1.1. Status New

1.2. Sector Industry ( Water Bottling)

2 Project Owner Shimallis Worku

3 Nationality Ethiopian

4 Project Location Oromia Region,

OSZSF Zone,

Walmara District

5 Project Accommodation  Water Treatment Plan

 Bottled Blowing
 Rinsing - Filling – Capping
 Labeling
 Heat Shrinking
 Shrink Wrapping machine
 Defence & aerospace,
 Medical and healthcare,

6 Premises Required  2.78Hek. , which is equivalent to 27,800 M2

7 Total Capital  The total of birr 34,150,000 is required.

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 Project Proposal on Mineral Water Bottling Plant

 From this 30% (birr 10,245,000.00) will be covered by the

promoter of the project,
 While the rest 70% (birr 23,905,000.00) `will be covered by
bank loan.
 Loan Repayment Period:- 5 years
 Interest Rate:- 8-12 %

The total manpower requirement for the plant will be 160 employees
at full capacity.
8 Employment
Opportunity  Permanent Workers 104
 Skilled 50
 Unskilled 54
 Temporary Worker 106
 Skilled 6
 Unskilled 50

9 Benefits of the factory Produce and supply Mineral Water Bottling Plant Source of revenue,
for the region/ country create employment opportunity, save foreign currency, benefit for the
local community, stimulate the local economy and transfer
technology

10 Proposes of expansion To add line of products and upgrading existing the project so the land
Land uses is not success full to start the project.

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 Project Proposal on Mineral Water Bottling Plant

1. INTRODUCTION

Manufacturing Sector make up the largest and the most important segment of the industrial
sector in Ethiopia. Besides, development of such industries accelerates the fast economic growth
of Ethiopia and will help the nation lay its economy foundation on strong industrial base.

The government of Ethiopia has developed a conductive investment policy packages and other
sect oral reforms at federal and regional level to attract a huge private investment for the
wellbeing of the nation and its citizens as a whole. Besides, it is also currently implementing the
five years growth and transformation plan gave a special focused for manufacturing industries.

In this regard, oromia regional state government has been exerting its maximum effort to expand
investment opportunities in the region, so as to foster the economic development of the region
and subduing the region’s big enemy that is the trap of poverty. Therefore, the regional
government has been preparing a viable business environment to attract many domestic and
foreign investors so that the dream of making poverty history turns to be true.

Therefore, the lucrative market potential an those viable investment policies attracted the owners
of this project to engage in the production of purified mineral water in walmara town, special
Zone surrounding Finfinne, Oromia regional State.

The owners of the envisaged plant have a good business experiences and knees to extend these
assets to this plant. Therefore, the owner is very determined to establish the project and considers
getting the required support from regional government by considering the existing facts and the
multi benefits of this project.

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1.1 Background

Bottled mineral water plant is a material of any wide ranges of synthetic or semi-synthetic solids
that are_moldable. Chemically Bottled are typically_organic polymers_of high_molecular mass,
but they often contain other substances. They are usually synthetic, most commonly derived
from_petrochemicals but many are partially natural. One of the key functions of Bottled mineral
water is packaging, which according to evidences accounts for over 35 per cent of the global
Bottled mineral water. Amongst the individual Bottled, the type known as Polyolefin accounted
for 53 per cent of the total consumption, which accounts for 16.5 per cent.

Ethiopia has a range of business doing opportunities around the country and at the same time
ample scope for industrial investment. Presently, Small Scale Bottled mineral water in Ethiopia
has noteworthy contribution. The industry is also believed to provide opportunities ahead as the
country continues to grow.

Regional Government of Oromia investment commission was established in 1985 E.C as a focal
organization to promote investment and handle all investment issues in the regional state of
Oromia. Oromia Special Zone Surrounding Finfinne is one of the zones of the Oromia Region in
Ethiopia. It was created at 2008 parts of Semien (North) Shewa Sululta, Misraq (East) Shewa
Dukem, Debub Mirab (Southwest) Shewa Sebeta and Mirab (West) Shewa Burayu Zones. This
zone is surrounding the capital of Ethiopia, Addis Ababa, which is called Finfinne in the Oromo
language. The main reason for creating this special zone was to ease the co-operation and
development of surrounding areas of Addis Ababa and to control the urban sprawl of this city on
the lands of Oromia. The administrative center of this zone is in Addis Ababa. The owner of the
project, Orosmart trading plc has been under taking different activities for several years .during
her stay in business she has accumulated diversified skills and also adopted working with many
people. Hence it is accumulative experience which entities him to Bottled mineral water in
expanstion grow thing burayu town. Burayu is a town and separate woreda in central Ethiopia.

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Located in the Oromia Special Zone Surrounding Finfinne of the Oromia Region, this town has a
latitude and longitude of 8°55′N 38°37′E and an elevation of 2,356 meters (7,730 feet) above sea
level. The oromia investment commission has been exporting it is maximum effort to expand
investment opportunities in the region so has to faster the development of the region and sub
during the city being enemy that is the trap of poverty. Therefore aside with the government
duties and responsibility visited on it.

Holata town investment office has been preparing available business environment to attract many
domestic and foreign investor so that the drime of making poverty history tern to been true.
Since it is this available investment police which invited Mr. Shimallis Worku to develop the
interest and motivation of opening the Bottled mineral water plant in area aforementioned.

1.2 Objectives of the Project

The main objective of the project is to satisfy the growing demand of highly purified mineral
water and beverage by supplying quality product type. More specifically the project is intended
to:-

 Exploit Ethiopian ground water resources for commercial bottling purpose

 Produce highly purified bottle water to the ideal capacity of the factory and thereby it
could be possible to satisfy the demand of local and international market (for the future)
 Employ highly advanced technology and machinery
 Create
 job opportunities to the local population and the community
 Generate revenue to the government in the form of taxes and
 Last but least to gate reasonable profit from the investment.

To establish bottled mineral water production plant in Ethiopian to provide high quality and
original bottled water. The proposed product line will consist of bottles of 0.3 L, 0.6 L, 1 L, 1.5L,
2L, 5L and Jarr (20) Liters. In the initial phase of the project only 0.6 and 2 liters bottles will be
introduced in the market. After successful introduction of new brand of bottled water the product
category may be fulfill the rest 1 L, 1.5L, 5L and Jarr (20) Liters if the demand of the customers
and consumers becomes high bottled water is coming to have the most dynamic market share of
the food and beverage industry.

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Different materials are used for the packing of bottled water, glass, PET bottle, Aluminum,
plastic like pouch or steel cans. These packing have different shapes, colors and capacities. They
are an essential part of the bottled water marketing. In some cases it is evens possible to
recognize the brand of the bottled water only thanks to the shape and color of its packing

Bottled water consumption reflects a certain way of life. There is a long tradition in Europe for
drinking bottled water. Nowadays, this habit has reach the rest of the world .why do consumers
choose to drink bottled water. In many case bottled water is the best alternative to being strong
and health. Consumers think they perceive it as being safer and better quality. They also look for
security , food scandals in industrialized countries and water borne diseases in developing
country have a great impact on their attitude . Bottled water is perceived as pure and safe
although water to feel well. Bottled water is a health alternative than other beverages because it
is a real natural free from alcohol and other ingredients. Changes in ways of life also explain this
boost of water sales. Increasing urbanization causing tap water quality to decline , can explain
this situation . In particular, natural mineral water cannot be treated, nor added any element. It is
therefore perceive as “natural” by city dweller looking for genuine products. Increasing
standards of living and greater use cars enables peoples to bring home without pain a higher
number of bottled water. The use of polyethylene therphatlet /PET/ makes bottled lighter and
easier to carry than when they were only made of glass. The expansion of shopping centers,
outside city centers, provides consumers with a greater choice in bottled water brands. Working
habits changes in developed countries with the decline of agriculture and industry. Most people
have office works and the bottle of water is now a common element on a desk, next to the
computer and telephone drinking bottled water is a sign of the social scale. Above all bottled
water is a huge marketing success. The market for bottled water has been showing a mushroom
growth trend over the last few years, the country market is very small on a global scale. The last
three years have shown more growth and the market have been wider, demand is coming high
and the supply is still insufficient for the market. The project can bottle 60,000 liters of water per
day, the size of bottles be 0.3L, 0.6L, 1L, 1.5 and 2 litters to make the water convenient and
attractive to end users and the other machine can bottled 60,000 of water per day the size of
bottles be 5L and Jarr to end users. The sale at 100% capacity utilization will be in all regions of
Ethiopian. The project would be set up in the nearest of center city or its surround where all the

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 Project Proposal on Mineral Water Bottling Plant

required infrastructure and amenities are available besides environmentally it shall be free from
pollution.

1.3 The Product Description and Application

The simple definition of water is that it is the liquid that descents from the cloud as rain, forms
streams, lakes and seas, issues from the ground in form of springs and is a major constituent of
all living matter and that when pure consists of an oxide of hydrogen H2O or (H2O)x in the
proportion of 2 atoms of hydrogen to one atom of oxygen and is an odorless, tasteless, very
slightly compressible liquid. Water freezes at 0oC and boils at 100oC, reacts neutrally and
constitutes a poor conductor of electricity, a good ionizing agent and a good solvent.
According to Quality and Standard Authority of Ethiopia (QSAE), industrially processed and
bottled water can be classified into two major groups: bottled drinking water (ES 597:2001) and
mineral water (ES 621:2001). The former is further classified into carbonated “sparkling” natural
water and non-carbonated “still” natural water. If water has been made after possible treatment,
effervescent by addition of carbon dioxide then it is called carbonated natural water. Non-
carbonated water is by nature and after possible treatment does not contain free CO2, in excess
of the amount necessary to keep dissolved the hydrogen carbonates salts that are present in the
water. In this study, the non-carbonated “still” natural water has been considered

1.4 Location Map of the Area.

The project understudy is planned to be located in Oromia National Regional State, OSZSF zone,
at wamara town on the east part of the country. The town is located at about 38 kms away from
the capital of the country/Addis Ababa. The total land required for the project is about M 2
27,800.

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 Project Proposal on Mineral Water Bottling Plant

Infrastructure of the area is well developed (road, Electric power, at the area and banking,
insurance, health facilities, education, etc at the holata town). Some of the reasons behind
selecting the area are:-

 Proximity to the major potential market for the out put

 Availability of relatively raw material and infrastructure facilities such as

 Transportation net works which connect it to Addis Ababa and all the regional parts of
the country.
 Public utilities such as electricity, telecommunication, services, financial institutions, and
other social infrastructures such as schools, hotel, health centers and the like.
 Availability of skilled and semi skilled man power,
 Prospective of future development.

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2. GENERAL MARKET STUDY AND PLANT CAPACITY

2. MARKET STUDY

2.1. Past Supply and Present Demand

The country’s requirement for purified water is met through domestic production and imports.
Domestic production, imports and total supply averaged at 404,950 hectoliters, 789 hectoliters
and 405,740 hectoliters, respectively. Thus, domestic production, on the average, accounted for
99.8 percent of the total supply of purified water in the domestic market, revealing the relatively
limited share of imports (0.20%) in the total supply of the product

During the period 1997-2006, the maximum total supply (apparent consumption) of purified
water was 448,983 hectoliters in the year 2006, while a minimum of 376,755 hectoliters was
registered in year 1997. In the remaining years, apparent consumption was fluctuating between
these two extremes quantities. The mean of the total supply was 405,740 hectoliters and the
average growth rate during the period under reference was 2%.

Accordingly, due to the fluctuating nature of the products total supply, it appears more
appropriate to consider the average of the last four years of the period under reference (2003 –
2006) which was 418,931 hectoliters as the effective demand for the product for the year 2007.
In estimating the present (2008) effective demand for the product, since the consumption of
purified water is associated with the urban population, the demand for the product is assumed to
grow at the rate of 4% which corresponds to the annual growth rate of urbanization in the
Country. Accordingly, the present effective demand for purified water is, thus, estimated at
435,688 hectoliters.

2.2. Projected Demand

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The future demand for purified water is a function of income, urban population growth and
growth of catering and recreational establishments. Accordingly, the demand for purified water
is forecasted to grow at a rate of 4% which is equivalent to the growth rate of urban population.
Moreover, assuming that existing domestic producers will maintain their current production
(year 2006) for the future, the unsatisfied demand for the product. After considering all the above
factors, the demand for mineral water is forecasted to grow at a rate higher than the growth of the
urban population in order to take account of effects of growth in income and other demand
determining variables. Accordingly, an annual growth rate of 5.4% seems to be a reasonable
growth rate to project future demand, and the result is as shown in Table 3.

Table 3: Projected demand for mineral water

S/No. Year Projected Demand Projected Demand
(Liter) Gap (Liter)
1 2012 119,249,718.10 6,109,568.10
2 2013 125,689,202.88 6,439,484.78
3 2014 132,476,419.84 6,787,216.96
4 2015 139,630,146.51 7,153,726.67
5 2016 147,170,174.42 7,540,027.91
6 2017 155,117,363.84 7,947,189.42
7 2018 163,493,701.49 8,376,337.65
2.3. Pricing and Distribution

Currently, the retail price of domestically produced purified water average is Birr7 per liter.
Allowing 40 per cent for wholesale and retail margin, the factory-gate price for the product of
the envisaged plant is estimated at Birr 5 per liter. The envisaged plant can distribute its product
through the existing wholesale and retail network, which includes department stores,
merchandise shops and super markets.

2.4. PLANT CAPACITY & PRODUCTION PROGRAMME (liters)

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The annual production capacity of the envisaged plant on three machines is determined to be
54,000,000 of mineral water on a basis of 60,000 liter per Day one machine 3 shifts of 8 hours
each, per day and 300 days per annum.

S/ Bottled of per day production

N Size (8 hrs * 3 shift) Production Capacity
*working days (300)
Per day Working 1st year 2st year 3st year
day
1 0.3 Ltr. 60,000 18,000,000 18,000,000 18,000,000
0.6 Ltr.
1 Ltr.
1.5 Ltr. 300

2 Ltr.
2 5 Ltr. 60,000 - 18,000,000 18,000,000
3 Jarr (20) Ltr 60,000 - - 18,000,000
Total 18,000,000 36,000,000 54,000,000 ltr
4 Utilization of rated capacity (%) 75% 85% 100%

2.5. Material and Inputs

A. Raw and Auxiliary Materials

The source of raw water for the proposed project is ground water, which is abundantly available
in the foot of the escarpment of Holata town. Raw water shall be supplied from a deep-well near
the processing plant. The major auxiliary materials are polyethylene terephtalate (PET) bottles
with pilfer proof caps, labels, polypropylene rolls and different chemicals required to sanitation,
disinfection and other purposes. PET bottles shall be imported in performs and preheated and

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blown to final sizes. Caustic soda and Common salt is locally available while the other raw
materials will be imported.

The raw materials required are PET Pre, PET Pre, Pilfer – proof caps ,Label , Polypropylene for
wrapping bottles, Rolls Caustic Soda, Dive rite Deformer Common salt , Brill tak , Filter
candle , Glue , Hydrochloric Acid , Hypochlorite, Largo Medicated, P3 special, P3 stabilon m
Porcelain ring . Silica Gel , Sulphuric Acid, Filter paper, Manganese Greensand .

B. Utilities

The major utilities of the envisaged plant are electricity, water, furnace oil, dry air and
compressed air. There are two sources of water, i.e., municipality and own source. Raw water
used for processing shall be supplied by a submersible pump, installed at the project site.

2.6. Land requirement and land use plan

The area of land required for the proposed project is estimated to be 27,800 m2. The land
requirement of the project has been decided by taking the dimension of building and for other
facilities. The detail information is as follows:

 Production Hall -------------------------------------------------------------- 10,700 m2

 Office building ---------------------------------------------------------------- 500 m2
 Guard house------------------------------------------------------------------- 100 m2
 Toilet and shower room---------------------------------------------------------100 m2
 Warehouse -------------------------------------------------------------------- 1,000 m2
 Raw material Store ---------------------------------------------------------- 1,000 m2
 End product Store ---------------------------------------------------------- 500 m2
 Show room -------------------------------------------------------------------600 m2
 Parking and others ----------------------------------------------------------- 300 m2
Total land requirement ---------------------------------------------------- 20,800 M 2

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2.7. Technology and Engineering

The processing technologies of mineral water are more or less similar. The major difference
arises from the type of bottles, glass or plastic. The glass bottles are normally reused, about 6 to
7 times before they are discarded. The type of plastic used for bottle making is known as
polyethylene terephtalate (PET). They are thin and shatter-proof containers, with glass-like
transparence and exceptional strength which results in increased safety.

Each type of bottling has its own advantages and drawbacks. The glass bottles, for example, are
heavier, i.e., costly to transports, are brittle and have danger of breakage and need be washed
thoroughly. On the other hand, they are reusable. Therefore, it has lower production cost. The
PET bottles have some drawbacks such as relatively high production cost and larger factory floor
area for their manufacturing. However, they are lighter in weight and thus cheaper for
transportation less damaged while filling and easy for handling. Therefore, either of the
alternatives can be used based on the preference of the project owner. In this study the plastic
bottle has been considered.

The production and bottling of purified water in PET bottles involves processes like raw water
storage and treatment, filling and capping, labeling and wrapping. The major operation in water
storage and treatment unit include water color removal, raw water pumping and storage,
chemical dosage, filtration using different types of filters, ultraviolet water disinfection ozone
generation with recirculation system. After proper water treatment, the PET bottles are
automatically conveyed and transferred to the rinsing rotor where they are subject to rinsing jets.

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Then the bottles are transferred to the filling and capping rotors. After labeling and sealing,
bottles are transferred to the discharge conveyor. The production process does not have any
adverse impact on the environment.

2.8. Bottling Line Process Flow Diagram

Bottle Unsrumbler

Rising filling and capping

machine 12000bph

Label inserting machine

15000bph

Heat Shrink Tunnel

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Date code printer

Shrink Wrapper 12000bph

3. MANPOWER, OGANIZATION STRUCTURE AND MANAGEMENT

3.1 Man Power

At the top of the organization structure, there will be a general manager with the responsibility of
supervising the overall activity of the plant. It is always true that Organization and Management
of the project plays a key role and bear direct impact on the success and profitability of the
project. The opportunities of being serviced by well skilled professionals well enable the
company to evaluate the internal weakness and strength of the company as well as to assess the
global opportunity and risks in the world market so that the company can cope up with the
dynamics of the market situation.

Therefore, it must particularly to the project under consideration, to give especial affection to
select and recruit the appropriate total manpower requirement for the plant will be employees at
full capacity.

I) Permanent Workers :- 104

 Skilled :-50
 Unskilled:-54
II) Temporary Workers:-56
 Skilled :-6
 Unskilled:-50

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The total number of manpower, manpower list, qualification, and salary and sex composition are
listed in the table below.

 S/R Work Title Qualification Number Monthly Annual Salary

  Permanents      salary head  Expense
1 4,000 4,000
1 Plant Manager Msc In Management
Degree holder in water
sant.& water resource 3 3,000 9,000
2 Production Head
5 1,500 7,500
3 Secretary Secretarial science
2 2,500 5,000
4 Personal HRM
1 2,500 2,500
5 Finance head Accounting & Publ. fina,
5 1,200 6,000
6 Accountant BA. acct.
10 1,500 15,000
7 Cashier Dip. Accounting
20 1,000 20,000
8 Sales man Dip. Purchasing
3 1,200 3,600
9 Marketing Head Marketing
3 2,250 6,750
10 Quality Control Chemistry
11 Production Worker 10+2 and above 15 1,500 22,500

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production
3 2,000 6,000
12 Supervisor Bs management
42 1,200 50,400
13 Packing Worker 10+2 and above
5 1,200 6,000
14 Purchaser Puch.mgt
4 1,400 5,600
15 Store keeper Diploma Accounting
Technique electrics or
5 2,000 10,000
16 Machine operator Automotive
20 1,200 24,000
17 Driver and load Technique Automotive
4 1,200 4,800
18 Cleaner Grade 10
3 1,500 4,500
19 Guards Grade 10
154 33,850 5,212,900
  Sub Total  
  Temporary        

Diploma in Auto
6 2,800 16,800
1 Auto Mechanic Mechanic
106 4,000 424,000
  Sub Total  
160 37,850 4,920,500
  Grand Total  

3.2. 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.

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Employees under each unit will be supervised by the department head that is accountable for the
general manager. General Manager is appointed by the owners.

Owner

General Manager

Executive
Secretary

Production
Department Admin & Finance Commercial
Department Department

Pre- Packing Admin. & Financial

treatment HRM

Inspection
Marketing Sales

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Fig: Organizational Structure

Hence the following section deals with the duties and responsibilities of some departments.

3.3. Organizational Management Duties and responsibilities

1. General Manager
Duties and responsibilities

 She/he will plan, organize, direct and control the overall activities of the factory
 She/he will devise policies and strategies that will enable the factory 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.
2. The Manufacturing Department
Duties and responsibilities:-

It is the core department of the project center and has the following responsibilities.

 Use modern manufacture, processing and technologies that will enhance the quality
of those products.
 Produce quality product that will enable the center competent both in the domestic
and international market.
 Use appropriate technology to manage its products.
 Control on the quality of raw materials, inputs, quality of the product and also the
overall production process.

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 Produce products in least cost so that the profitability of the center is guaranteed.
 Moreover control over the quality of the final products
3. Administration and Finance Department
Duties and responsibilities:-

 Will plan, organize direct and control the financial transaction of the plant by using the
entire necessary document.
 Will develop sound financial control system by developing modern financial control
systems.
 Will prepare the annual financial statements and prepare condensed reports for the
general manager, owner and other concerned government body.
 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.
 Manage and execute The promoter national and international procurement procedure
 Administer and control The promoter logistic resource
 Effectively administer the promoter Procurement process domestically as well as
internationally.
 Manage the public relation of The promoter/factory with external parties/stakeholders
 Provide and manage general supportive service to the plant.
4. Commercial Department
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 ...
 Gather information on new product design, profile
 Approval of new products profile & brand plan analyzes market research.
 Plan and execute sales.
 Will develop effective customer handling strategies
 Will design and implement effective advertisement and promotion schemes

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 Project Proposal on Mineral Water Bottling Plant

 Will develop the marketing strategies for future project center’s development.
 Conduct both foreign and domestic market research for expanding the sales of The
promoter
All workers have responsibilities on each activity they assigned for.

4. FINANCIAL REQUIREMENT AND ANALYSIS

4.1. Total Initial Investment Cost

The total cost of money that is required to estimated the envisaged mineral water bottled plant is
to be birr 34,150,000.

Table Total Initial Investment Capital

No Description Cost
1 Land, Building and Construction 10,812,848 00
2 Machinery and Factory Equipments 13,375,000 00
3 Office Equipments 316,750 00
4 Vehicles and Motors 3,300,000 00
Total Fixed Investment Cost 27,804,598 00
5 Initial Working Capital 3,015,357 00
6 Pre Service Expense 225,500 00
Total 31,045,455 00
Contingency (10%) 3,104,545 00
Total Initial Investment Cost 34,150,000 00
4.1.1. Fixed Investment

A. Building and Construction

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No Description Land requirement Unit cost Total Cost in

(M2) in Br. Br.
1 Production Hall 2550 2,100 5,355,000
2 Warehouse 1400 2,050 2,870,000
3 Office Building and Show rooms 300 2,400 720,000
4 Waste Accumulation 175 900 157,500
5 Green area ,loading unloading and 575 300
parking 172,500
6 Fences 200,000
7 Site Development 100,000
8 Design and Supervision 550,000
9 Land lease initial (10% and 1 year
payment) 568,848
Total 0 21,625,695
B. Required Machinery
Machinery and Equipment cost
No Description Unit Qty Unit Total Cost (Birr)
1
Water Treatment L/sum 4 1,600,000.00 3,200,000.00
Feed tank
Feed pump
Multi-media filter
Cartridge filter
Middle tank
Middle pump
Fine filter
Micron filter
Final tank
Final pump
Ozone system
Pipes, valves and accessories
Control equipment
2
Filling, Capping, and Packing Unit L/sum 4 2,700,000.00 5,400,000
Rinser, filler and capper
Accessories for the above machine
Light checking box
Caps sterilizing cabinet
Shrink labeling m/c
Inkjet printer
Conveyor with drive motor
Extension for conveyor
Label inserting table
Air compressor
3
Plastic Caps production Line L/sum 4 2,327,500 4,655,000
Plastic injection machine

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Auto Loader
Auto Loader
Moulds for caps
4 PET stretch Blow Molding Unit and caps
production line L/sum 4 60,000.00 120,000
Stretch blow molding m/c including 2 high
pressure air compressors, 1 air receiving tank, 2
air filters, 1 air drier, spare parts and tools
Mould for 0.3, 0.6, 1, 1.5 and 2 liter PET bottle
Mould for 5 liter PET bottle
Mould for Jarr or 20 liter PET bottle
Total 13,375,000

C. Vehicles

SN Description Qty Unit Price Total Price(Birr) Remark

1 Pick Up 1 1,200,000 1,200,000 Duty Free
2 Worker Service bus 1 1,150,000 1,150,000 Duty Free
3 Forklift 1 500,000 500,000 Duty Free
Total 500000

D. Office Equipments

SN Description UOM Qty Unit cost (Br). Total cost (Br)

1 Managerial chair with tables Unit 1 5,500 16,500
2 Secretarial chairs with table Unit 1 6,000 6,000
3 Office Chairs with tables Unit 15 3,500 52,500
4 Managerial chair Unit 3 4,500 13,500
5 Computer with printer Unit 5 15,000 75,000
6 Shelf Unit 3 7,500 22,500
7 Filing Cabinets Unit 1 4,500 6,750
8 Curtain and Carpet Ls 55,000
9 Telephone Line Unit 2 2,000 4,000

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10 Assembly chair and table Set  1  70,000 35,000

11 Other Misc. Office equipment     30,000
Total     72000

4.1.2. Initial Working Capital

The initial working capital is established to be 6,030,714.00 birr

A. Pre -Service Expense

SN Description Cost in br.

1 Project proposal 10,000
2 Environmental impact Assessment 15,000
3 Licensing fee and others 500
4 Promotion and adverting 150,000
5 Workers capacity Building 50,000
  Total 225,500
B. Raw materials and Inputs

SN Description Unit Annual Unit cost Total

Requirement (Birr)
1 PE5lt) Tpre from (0.3lt) PCS 2.5
560,000 1,400,000
2 PET pre from (0.6,0lit) PCS 1.7
1,120,000 1,904,000
3 PET pre from (1lit) PCS 1.8
2,224,000 4,003,200
4 PET pre from (1.5lt) PCS 2
1,680,000 3,360,000
5 PET pre from (2ltr) PCS 2,180,000 1.6 3,488,000

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6 PET pre from (5ltr) PCS 1.3

1,050,000 1,365,000
7 PET pre from (20ltr) PCS 2.45
620,000 1,519,000
8 Pilfer-proof caps PCS 0.185
5,600,000 1,036,000
9 Label PCS 0.100
64,724,100 6,472,410
10 Polypropylene for wrapping bottles Rolls 13.5
5,600,000 95,400
11 Caustic soda and different Kg
chemical    
5,040,240
Total
29,683,250

C. Salary Expense

As indicated in part three of this study, the total cost of salary and wage is estimated to be
4,920,500 birr.

D. Other Operating Expenses

SN Description Annual Cost in Br. Assumption Used

1 Property Insurance 278,046 10% of Fixed investment cost
2 Audit and Legal Fee 60,000 10% of Salary
3 Uniforms 37,800 1% of FC
4 Telephone, Fax and Postal 18,000 1000per month
5 Cleaning Gods Supplies 24,000 70*60br
6 Repair and Maintenance 695,115 900 per month
7 Advertisement 400,000 1000 per month
9 Stationery and other office 700 per month
supplies 21,000
10 Electricity 125,000 0.45*150,000W per year
11 Water 10,000 2*1000 m3 per year
12 Fuel 190,000 6500 lit*20 per year
13 Oil and lubricant 19,000 10% of fuel cost
14 Miscellaneous Expense 60,000 3,000 br month
  Total 1,937,961  

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4.2. Financial Analysis and Statements

4.2.1. Underlying Assumption

The financial analysis of the envisioned mineral water bottling plant 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
 Bank interest rate ……………………………………………………………………10 %
 Tax holidays ……………………………………………………………………2 years
 Operating costs increase by…………………………………………………………2%
 Operating costs and raw material increased by……………………………………5%
 Utilities and operation expense …………………increase 3% per annum after 2ndyear
 Wages and Salary increase……………………Increase 3% Per annum after 2 nd year

 Sales …………………………………………..increase by 5 % per annum after 2nd year

B. Depreciation
 Building…………………………………………………………………………….5%
 Machinery and Equipment ………………………………………………………..10%
 Office Furniture……………………………………………………………………10%

 Vehicles ………………………………………………………………………..…..20%

C. Working Capital
 Accounts Receivable…………………………………………………………….30 days
 Raw material Local …………………………………………………………..…..30 days
 Work in progress…………………………………………………………………5 days

 Finished Production ……………………………………………………………..30 days

 Cash in hand ……………………………………………………………………...5 days
 Accounts payable …………………………………………………………….…..30 days
4.2.2. Source of Fund
SN Description % share Amount(in birr)
1 Owners Share 30 10,245,000

2 Bank Loan 70 23,905,000

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Total 100 100

4.2.3. Loan Repayment Schedule

Year Principal Payment Interest (10%) Total Annual Payment Remaining Balance
0 0 0 0 10,245,000
1 1,024,500 1,024,500 2,049,000 9,220,500
2 1,024,500 922,050 1,946,550 8,196,000
3 1,024,500 819,600 1,844,100 7,171,500
4 1,024,500 717,150 1,741,650 6,147,000
5 1,024,500 614,700 1,639,200 5,122,500
6 1,024,500 512,250 1,536,750 4,098,000
7 1,024,500 409,800 1,434,300 3,073,500
8 1,024,500 307,350 1,331,850 2,049,000
9 1,024,500 204,900 1,229,400 1,024,500
10 1,024,500 102,450 1,126,950 0

4.2.4. Annual depreciation schedule of the fixed Asset ( birr)

Description Initial value Annual depreciation

Rate Value
Building & construction 10,812,848 5% 540,643

Machinery& Equipment 13,145,364 10% 1,337,537

Office furniture & equipment 316,750 10% 31,675

Vehicles 3,300,378 20% 660,000

Total - - 2,569,817

4.2.5. Balance Sheet (Beginning)

Asset
Current Asset Value in Br

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Cash
3,330,046
Inventory of raw material and input
3,015,371
Total Current Asset
6,345,416
Fixed Asset
-
Land, Building and Construction
10,812,848
Machineries and Equipment
13,375,000
Office Equipment
316,750
Vehicles
3,300,000
Total Fixed Asset
27,804,598
Total Asset
34,150,000
Liability
-
Account Payable
23,905,000
Owner Equity
-
Capital
10,245,000
Total Liability and Owners Equity
34,150,000

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4.2.6. Revenue Projection

Based on the assumption of plant capacity, production program and pricing of this paper, the revenue of the project at full capacity
projected in the table below
 
      Project Year
  Description Measurement 1 2 3 4 5 6 7 8 9 10

Production Lit 60,0000 1,000,000 1,100,000.00 1,210,000.00 1,331,000.00 1,343,100.00 1,477,410.00 1,625,151.00 1,787,666.10 1,966,432.71
of 2 liter
1 bottle Price/liter 8 8 8.25 8.50 8.75 9.00 9.25 9.50 9.75 10.00
   
    Total revenue 480,0000 8,000,000 9,075,000.00 10,285,000.00 11,646,250.00 12,087,900.00 13,666,042.50 15,438,934.50 17,429,744.48 19,664,327.10
Production
of 1.5 liter Lit 600,000 1,000,000 1,100,000.00 1,210,000.00 1,331,000.00 1,343,100.00 1,477,410.00 1,625,151.00 1,787,666.10 1,966,432.71
2 bottle
    Price/liter 7 7 7.25 7.50 7.75 8.00 8.25 8.50 8.75 9.00
    Total revenue 4,200,000 7,000,000 7975000 9075000 10315250 10744800 12188632.5 13813783.5 15642078.38 17697894.39
Production
of 1 liter Lit 1,200,000 2,000,000 2,200,000.00 2,420,000.00 2,662,000.00 2,686,200.00 2,954,820.00 3,250,302.00 3,575,332.20 3,932,865.42
3 bottle
    Price/liter 5 5 5.25 5.50 5.75 6.00 6.25 6.50 6.75 7.00
    Total revenue 6,000,000 10,000,000 11550000 13310000 15306500 16117200 18467625 21126963 24133492.35 27530057.94
Production
of 0.5 liter Lit 600,000 1,000,000 1,100,000.00 1,210,000.00 1,331,000.00 1,343,100.00 1,477,410.00 1,625,151.00 1,787,666.10 1,966,432.71
4 bottle
    Price/liter 3 3 3.25 3.50 3.75 4.00 4.25 4.50 4.75 5.00
    Total revenue 1,800,000 3,000,000 3575000 4235000 4991250 5372400 6278992.5 7313179.5 8491413.975 9832163.55
Total
annual
  revenue   16,800,000.00 28,000,000.00 32,175,000.00 36,905,000.00 42,259,250.00 44,322,300.00 50,601,292.50 57,692,860.50 65,696,729.18 74,724,442.98
 Assumption :- Annual production in the 1st year is 2,520,000 liter and increase by 10% annually after the 2nd year.

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4.2.7. Income/Loss Statement

Year(E.C)
S.N Description 1 2 3 and after
1 Sales Revenues 63,600,000 84,800,000 106,000,000
2 Purchase of raw material 35,619,900 47,493,200 59,366,500
3 Gross Profit 27980100 37306800 46633500
4 Salary expense 7872768 37306800 46633500
5 Other operating expenses 50,000 50,000 50,000
Depreciation Building and 1,081,28 1,081,28
6 construction 5 5 1,081,285
7 Depreciation vehicles 1,120,151 1,120,151 1,120,151
8 Depreciation machinery equipment 629,073 629,073 629,073
9 Depreciation office equipment 63,350 63,350 63,350
10 Interest Expense 478099 4302899 2151450
11 Lease Payment 250695 250695 250695
12 Profit before tax 21920019 22,426015 21258661
13 Income tax (30%) 7,612,451
 14 Net profit 6,060,080 14,880,784 17,762,386
4.2.8. Cash Flow Statement.
The liquidity position of the project can be seen from the project cash flow statement. According
to this projection the project will be healthy financial position to repay all its debts. This is
because the analysis shows that the project will have positive cash flow throughout the
anticipated life.

Description Year 0 Year 1 Year 2 Year 3

Equity capital 10,245,000
Loan principle 23,905,000
Net sale - 31,800,000 42,400,000 53,000,000
Total cash in flow 34,150,000 31,800,000 42,400,000 53,000,000
Cash payment - - - -
Purchase of raw
materials - 17,809,950 23,746,600 29,683,250
Salary Expense - 3,936,384 4,428,432 4,920,480
Pre Operating Expense 225,500 - - -
Investment 27,804,598 - - -
Other operating Cost - 1,937,961 1,937,961 237,941
Loan Repayment - 4,781,000 4,541,950 3,466,225
Lease payment 687,848 125,348 125,348 125,348
Tax Payment - - - 3,806,226
Total Payment 28,717,945 28,590,642 34,780,290 42,239,469
Cash Surplus/Deficit 5,432,055 3,209,358 7,619,710 10,760,531
Cumulative Cash Flow 3,209,358 10,829,067 21,589,598

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4.2.9. Profitability

According to the projected income statement, the project 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.

4.2.10. 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 at the 3 years of operation.

5. ENVIRONMENTAL IMPACT ASSESSMENT OF THE PROJECT

5.1 Socio Economics Environments

The owner will provide the land on bases and all required compensation will be paid for the
project. The livelihood of the local people around the project area is rural dweller of various
occupation and economic background.

5.2 Environmental Impact Assessment of the Project

Environmental aspects are fundamental for the sustainability assessment of the current
competition marketing related plant. In this regard the factory will undertake a separate and
detail Environmental impact Assessment.

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