BINIYAM STEGAYIE SOFA FABRICS

PROJECT PROPOSAL ON BINIYAM TSEGAYE

SOFA FABRICS WHOLE SALE SHOP IN ADDIS ABEBA
ARADA ZONE/SUB CITY, 01 WOREDA

Phone:- +251923787523

2025

Summary information about the project

 BINIYAM STEGAYIE SOFA FABRICS

1. PROJECT TITLE: PROJECT PROPOSAL ON BINIYAM TSEGAYE

SOFA FABRICS WHOLE SALE SHOP IN ADDIS ABEBA ARADA
ZONE/SUB CITY, 01 WOREDA
2. Project DURATION PERIOD –5 (JUNUARY 2025- August 2029 G.C)
3. AREA COVERAGE (CATCHMENT AREA)
 Region:- Addis Abeba
 Zone:- Arada zone/ sub city
 Woreda:- 01 woreda
 Kebele:-

4. TYPE OF BENEFICIARIES- sofa fabrics retailer and furniture company

 Type:- the host community and un employee at large

5. CONTACT PERSON-
 BINIYAM TSEGAYE
 Tel. 0941570652

6. Capital – Awach saving and credit limited announced

7. company of organization- Private limited
8. Registration – on progress
9. Tax payer identification number – 0016285214
10.Status of the project: New
11.Year of commencement – 2025 g.c
12. TOTAL Estimated Budget of the Project :-3,000,000 at the time of the
project designed

Planned investment Birr 2,100,000

Working capital Birr 900,000
Total financial requirement Birr 3,000,000
 BINIYAM STEGAYIE SOFA FABRICS

ACRONYMS

QTY= Quantity

GPM= gross profit margin

NPV=Net present value

NPR=Net profit ratio

IRR=Internal rate of return

MT= Metric tone

1. BACK GROUND
 BINIYAM STEGAYIE SOFA FABRICS

Ethiopia fabric is an amazing all-purpose fabric that is amazing for its soft, warm,
and weaving. Alibaba.com features a wide range of different styles, materials, and
colors, it can be used for both natural and synthetic fibers. A fabric is a blend of
polyester, cotton, and wool with some of the best materials.

Today, Ethiopia is made of cotton, polyester, silk, and linen, as one of the most
commonly used materials for natural- having. Ethiopia fabric is made from cotton,
polyester, or wool, and Ethiopia is a cotton-made fabric. When it comes to natural,
the Ethiopia fabric is made from wool, and it is one of the most popular choices.
While it is made from wool, some add cotton to wool, and some add wool to the
cotton and some of them add wool to the fibers of this fabric.

Types of Ethiopia fabric

Ethiopia fabric is often made of polyester, cotton, and silk. Among other materials,
the Ethiopia polyester fabric is made from silk, wool, and linen, which can be
made from a blend of different fibers. The Ethiopia fabric is often made of
polyester, cotton, and silk.

Today, Ethiopia fabric is one of the most commonly used in knitted cotton,
Ethiopia silk is a fabric that is commonly used in knitted cotton. However,
synthetic fibers are more commonly used in woven and. A fabric made of natural,
synthetic fibers, such as silk, polyester, and linen,

A fabric sofa is a piece of furniture that can seat multiple people simultaneously.
Furniture makers use several different types of fabrics for sofa material, including
natural fibers made from wool, linen, cotton, or silk. The business opportunities in
the Ethiopian sofa Fabric, textile- and apparel sector are huge. With a large set of
incentive schemes to attract FDI the Ethiopian government is determined to make
 BINIYAM STEGAYIE SOFA FABRICS

the industry sector flourish. The need for capacity building, knowledge transfer and
further coordinated growth offer large potential for mid scaled foreign investors.
This report aims to give an introduction on the Ethiopian sofa fabric textile- and
apparel industry, provide insights in governmental regulations and offers as well as
to indicate which profiles of investors would presumably have a great possibility to
be successful in this new market. Ethiopian government not only attracts foreign
engineers, dye house masters and chemical technicians to gain insights in the
production process efficiency but offers wide spread investment potential for those
who want to engage in garment manufacturing. The Ethiopian government has
approved of loans at interest rates as low as 3-4% to upgrade the technology of the
sector and come on par with international garment production standards on green
manufacturing, water- and waste management, lean manufacturing and water
treatment plants. Since the Ethiopian sector is considered to be in an “infant” stage
the extensive technology experience and marketing knowledge of Dutch
companies could be very profitable for long term collaboration and mutual
business development with Ethiopian companies.

Ethiopia’s economy is primarily based on agriculture (46% of GDP) but over the
last 5 years the government has been determined to diversify the exports with a
priority set for strategic sectors like light manufacturing, textile- and garment
manufacturing. The Ethiopian FABRICS – and apparel industry has grown an
average of 51% over the last 5-6 years and some 65 international textile investment
projects have been licensed for foreign investors. Retailers like H&M, Primark and
Tesco have established offices in 2012 and are buying clothing- finished products-
from Ethiopian manufacturers. The foreign direct investments (FDI) in the fabrics-
and apparel industry have grown significantly over the last 4 years of which the
inauguration in 2010 of Ayka Addis, the Ethiopian subsidiary of the Turkish textile
 BINIYAM STEGAYIE SOFA FABRICS

giant Ayka Textiles, at a cost of USD 140 million is the most renown. As the
majority of Ethiopian garment manufacturers currently produce standard garments
where competition is primarily based on price, Ethiopia faces stiff competition
from other developing countries of South and South East Asia (India, Bangladesh,
Pakistan, Indonesia, Cambodia, Laos and Vietnam). China has emerged as a
dominant force in the global apparel industry with its massive supply capability
and low costs of production. These countries have a lower ranking in terms of cost
of production in comparison to Ethiopia. Given this situation, there is a need for
Ethiopia to move to the top end of the market as a reputable and dependable
supplier of garment with an industry able to produce good quality products and
increased labor productivity. Even though Ethiopia’s advantages of low labor cost,
competitors who have higher wage cost structures are more competitive because of
their high levels of productivity. In general, Ethiopian fabric garments
manufacturers have been estimated to have a substantially lower level of
productivity than their main Asian competitors. In addition, Ethiopia has not yet
been able to build an “upstream” supply chain element, and most components,
fabrics and accessories have to be imported, thereby increasing prices and
decreasing efficiency and speed to markets. In this context, an increasing number
of SMEs are emerging. They are commonly referred to as CMT’s (Cut Make and
Trims), which also applies to the 11 companies that have benefited from this
project. These enterprises culminated often because of retrenched workers from the
clothing and textile industry starting their own businesses. A major concern is that
they lack of successful implementation of quality management culminating in a
degradation of the quality of the industry.

Economic developments – Economic indicators

 BINIYAM STEGAYIE SOFA FABRICS

The economic indicators for Ethiopia are very encouraging. In the fiscal year
2012/13 Ethiopia’s economy grew by 9, 7%. Average annual GDP growth rate for
the last decade was 10, 9%. Agriculture, which accounts for 42,9 % of GDP grew
by 7,1% in 2012/ 2013. Industry, accounting for 12,3 % of GDP rose by 18,5% and
services, with 45% of GDP increased with 9,9%. This momentum is expected to
continue for 2014/2015.

Ethiopian government

The Ethiopian government has set an industrial development strategy for Ethiopia
after the liberation struggle from 1994 onwards. This to date has resulted in sector
development programs and five year development plans like GTP. In view of the
low levels of industrialization and private sector development and in view of the
worldwide competition to attract investment, designing incentives and policies has
become key priority. Foreign investment was welcomed in all sectors, with the
exception of telecommunication and finance. Further exclusion applies to micro-
crediting and insurance industries. They are either state owned or restricted to
domestic investors. Since 2004 the Ethiopian government has targeted Turkey,
India and China as sources of FDI in manufacturing. The country’s improved
economic performance, expanding domestic market and cheap labor were key
attractions for those nations where labor costs went up. In addition, the
Netherlands government has provided incentives for floriculture firms that invest
in Ethiopia while China has supported the establishment of an industrial park. The
key thought behind this is the strengthening of the indigenous private sector from a
long term perspective. The main aim is capacity building and infrastructural
development for the identified key industries. The Ethiopian Revenue and Customs
Authority (ERCA) has a strong monitoring role for export growth indicators and
foreign currency retention
 BINIYAM STEGAYIE SOFA FABRICS

Industrial Parks

The Ethiopian Industrial Development Zones Cooperation was established in 2014.

Initially Indian and Chinese investors set off to construct such zones but due to
lack of speed and the height of rental prices Ethiopians were displeased with the 9
results and few tenant companies invested. The government decided to overtake
those initiatives and launch the Industrial Parks itself. Industry parks can still be
undertaken by any developer whether it is foreign or state owned. Bole Lemi 1 and
Bole Lemi 2 have been constructed and are now fully occupied and have 20 large
prefabricated rental Factories (called “sheds” in Ethiopian terminology). In Bole
Lemi 1 factory rental has a renewable 10-year term with the rental charge of USD
1/ m2 in the first five years and a USD 1,25 /m2 rate the following 5 years. This is
extremely cheap.

Advantages of Sofa fabric in Ethiopia

Sofa fabrics have become increasingly popular in the world of furniture,

particularly in the manufacturing of sofas. This is because fabric sofa offers
numerous benefits compared to traditional natural fabrics.

 Durability: One of the biggest benefits of fabric sofa is its durability.

fabrics such as cotton or linen, polyester is resistant to wear and tear,
meaning it can withstand regular use and still look as good as new. Fabric
sofa is also resistant to fading, so your sofa will stay brighter for longer.
 Easy Maintenance: Another advantage of fabric sofa is its ease of
maintenance. Natural fabrics and polyester is easy to clean and doesn't
require any special treatments or dry cleaning. Simply wipe it down with a
damp cloth (or invest in and follow the instructions on our guardsman
product care packs for near perfect results) to clean any spills or animal dirt
 BINIYAM STEGAYIE SOFA FABRICS

marks. This is particularly beneficial for those with busy lifestyles or

families with children and pets.
 Stain Resistance: sofa fabric is also highly resistant to stains. natural
fabrics, and polyester repels liquids, making it an ideal choice for those who
want to avoid the hassle of cleaning up spills and stains.
 Affordability: sofa fabric is more affordable, making it a cost-effective
option for those who want to upgrade their sofa without stretching their
budgets.
This project is named as BINIYAM TSEGAYE SOFA FABRIC WHOLE
SALLER SHOPE project. Though the feasibility of an investment project largely
depends on its competitiveness in the market evaluating all good opportunities and
reengineering for benefit of the project is also an important task. It should have
become that the successful project is not just reliant on sound technical input, but
also on business management, finance and law, while project skills consist of
planning, estimating, monitoring and control.

In addition, the investment policy of Ethiopia which motivates domestic and

foreign investor was declared, policy of investment activities was prepared,
requirements of standard investment service delivery projects and ranking methods
were also adopted. Bank loan and tax holiday for feasible and local government
support attracted the owner of this project to invest his money and knowledge in
the creation of environmentally friendly, sound able and achievable projects.

1.1 DEFINITION OF THE PROJECT

 BINIYAM STEGAYIE SOFA FABRICS

Project is an interrelated set of activities that has a definite starting and ending
point and results the accomplishment of unique and major outcome. Our project is
an interesting idea to provide quality Different kind of sofa fabric which is natural
sofa fabric and polyester sofa fabric to the local markets starting from 2025 GC to
2028GC.

1.2 Scope of the project

The project will undertake on small scale whole seller and retailer natural and
polyester sofa fabric in Addis Abeba and Different regional City’s. The site
location has already been identified and proposed in Addis Abeba which is
“ARADA zone/sub city, 01 Woreda”.
1.3 Vision

“To be highly competitive and financially strong import-export company in

Ethiopia by providing quality POLISTER AND NATURAL sofa fabric product
to local and international market”
1.4 Mission
“This business will export natural and polyester sofa fabric and its products to local
market and to the foreign market at a quality and competitive manner to make
profits while maintaining a competitive and attractive employment opportunities.
2. OBJECTIVE OF THE PROJECT

The general objective of the business is “making profits and generating hard
currency for the nation by exporting quality natural and polyester sofa fabric at a
competitive market strategy”.
Specifically, the objectives of the company include:
 Providing quality natural and polyester sofa fabric to local and foreign
markets.
 Creating employment opportunities.
 BINIYAM STEGAYIE SOFA FABRICS

 Providing practical business experience to interested groups

 Increasing the availability of sofa fabrics products
 Improve the financial capacity of low income groups
 Create market for furniture commodities and other services like textile.
 Create well trained, productive, skilled manpower for fabric sector
 To engage generally in any other trade or business conducive to the
Attainment of its objectives
3. JUSTIFICATION OF THE PROJECT

It is obvious that there is high rate of capital flow in Addis Abeba town in the
country. The town is center of trade and destination of many tourists having its
own historic cultural heritage and the town is considered as “industrial zone for
different factory”. There is an increasing demand for sofa fabric by product and
pork not only in this town but also in other parts of the nation because of general
improvement of living standard of the people. Currently the price of sofa fabric
and textile products is dramatically increasing from time to time.

In addition many fabrics product imputes are not available like the major inputs of
production are lint cotton, chemical, and dyestuffs. Lint cotton is found locally
which is nearest to capital city of Addis Abeba away from different factory site.
Chemicals & dyestuffs are imported from abroad. The inputs are available at any
time. So this project should be contributing for the production of sofa fabrics
products.
 BINIYAM STEGAYIE SOFA FABRICS

Main types of products/services / activities

The current product mix consists of the shop:

- 100% polyester fabric

- Upholstery sofa Valuate fabric

- Natural sofa fabrics

-Different kind width sofa fabric

Our Products are distributed to all regions and most of the Products are distributed
to the northern, east, west and south part of Ethiopia. The Products are distributed
by distributor (Whole Sellers)

This project supports its own contribution for creation well trained Marketing
officer, and skill up product and productivity. The needs for industrial
transformation are justified by the importance of industrial in terms of contribution
to GDP, job creation, export market, and raw material for industry. In order to
achieve the transformation goal these projects introduce different natural and
polyester sofa fabrics products giving service with reasonable price for the
community, Furniture Company and retailer.

4. PROMOTER’S HISTORY

The owners of this proposed project, named BINIYA TESEGAYE who lives
in Addis Ababa. The promoters have currently engaged in varied business ventures
such as Trade house hold and office furniture accessory and appliance activities.
The owner has rich experience in managing business activities in different
marketing events.
 BINIYAM STEGAYIE SOFA FABRICS

5. PROJECT LOCATION

The proposed natural and polyester sofa fabrics whole sellers project will
planned to be located in the Addis Abeba federal state of Ethiopia. In the 2007
census, the city's population was estimated to be 2,739,551 inhabitants. Addis
Ababa is a highly developed and important cultural, artistic, financial and
administrative center of Ethiopia.

As mentioned before the project will be located in Addis Abeba administrative.

The location is chosen for a number of reasons. Some the reasons are:-

 Growth demand of fabric product and textile trade, social interaction and
number of investors coming to the town.
 Since the town is “industry area”, the will be a number of opportunities for
business.
 The geographical location of the towns nearest to different adjacent factory.
 Availability of frequently needed fabric materials at reasonable cost
throughout the year.
 Besides these there are well established and accessible infrastructures in the
town.
6. SITE OF THE PROJECT

The site location has already been identified and proposed in ADDIS ABEBA
which is Capital city of Ethiopia “zone sub city Arada wereda 01”. The total
command area required to implement the promoter’s idea is about 25 square
meters shop and 75 square meter store, which is expected to be obtained by the
rental.
 BINIYAM STEGAYIE SOFA FABRICS

The project building is intended to be located approximately 50-60 km away from

the fabric company. The area is generally in proximity to major transportation
routes and away from risks. The proposed project site location is bordered with

7. GENERAL FEATURE OF THE TOWN

Addis Ababa lies at an elevation of 2,355 meters (7,726 ft.) and is

a grassland biome, located at 9°1′48″N 38°44′24″E.[60] The city lies at the foot
of Mount Entoto and forms part of the watershed for the Awash. From its lowest
point, around Bole International Airport, at 2,326 meters (7,631 ft.) above sea level
in the southern periphery, Addis Ababa rises to over 3,000 meters (9,800 ft.) in
the Entoto Mountains to the north.The city is divided into 10 boroughs, called
subcities (Amharic, kifle ketema), and 99 wards (Amharic: kebele).

As of the 2007 population census conducted by the Ethiopian national statistics

authorities, Addis Ababa has a total population of 2,739,551 urban and rural
inhabitants. For the capital city 662,728 households were counted living in 628,984
housing units, which results in an average of 5.3 persons to a household. Although
all Ethiopian ethnic groups are represented in Addis Ababa because it is the capital
of the country, the largest groups include
the Amhara (47.05%), Oromo (19.51%), Gurage (16.34%), Tigrayan (6.18%), Silte
(2.94%),and Gamo (1.68%). Languages spoken as mother tongues
include Amharic (70.99%), AfaanOromo (10.72%), Gurage (8.37%), Tigrinya (3.6
0%), Silt'e (1.82%) and Gamo (1.03%). The religion with the most believers in
Addis Ababa is Ethiopian Orthodox with 74.66% of the population, while 16.21%
are Muslim, 7.77% Protestant, and 0.48% Catholic.
 BINIYAM STEGAYIE SOFA FABRICS

8. Feasibility of the project

There is no a well-established quantitative data to clearly see the future streams of

demand and supply. The data is completely qualitative. In most cases the first step
in project analysis is to estimate the potential size the market for proposed product
or service to be offered. Consequently it is possible to get an idea about the market
that is likely to be captured.

8.1 DEMAND ANALYSIS

Following the structure network along with existence of regional government, a

massive inflow of government and non-government employees to the town as
supplemented by natural increase of the population, the rise of business community
and rural urban migration have intensified population explosion to the maximal,
ended creation dramatic shortage of economic and social institution.

As the town is the heart of investment sites large number of people is flowing to
the town which means tourists inflow to the town to visit these and other sites
demands a minimum of 3 days to stay in the town. Finally the quantity supplied
become diminishes and prices rise apparently as a result of unbalanced growth.
Even some times, natural and polyester fabrics may not be found in the market
because of high price and inadequate supply sources.

8.2 Supply Analysis

In a study like this, the availability of similar organization and their capacity must
be first examined. Then assessments of quantities currently available are examined.
The envisaged project is expected to fill the scarcity of supply and provide other
services which were not given before like reasonable price service. Therefore the
project expected face insignificant problem of competition. Thus the project is said
to be reliable.
 BINIYAM STEGAYIE SOFA FABRICS

8.3 Market analysis

Since the town is Addis Ababa, there is high potential of market opportunity .The
selling price natural and polyester sofa fabric product is high and it is still
profitable. The natural and polyester sofa fabric price recently becomes
dramatically increasing and it’s also still profitable.

The country’s huge infrastructure expansion and urban remarkable building

construction activities provided an opportunity for rapid increase in demand for
furniture materials. The issue of potential wood product supply is becoming
important proportionately with rapidly growing building construction at regional
and national level (AFDB, 2010).

Potential size of the market is limited to the sofa fabrics users like Awassa Textile
Share Company, Komblcha Textile Share Company, BAHIR DAR TEXTILE
SHARE COMPANY, Ethio-Japanese Synthetic Textiles S. Co. Profile, Arbaminch
Textile Share Company, Dire Dawa Textile Factory (D.D.T.F), and other private
Textile uses especially that use sofa fabrics to take advantage of printing on their
own design and their customer needs. The expected growth rate in the local market
is very low because of the inflow of finished fabrics to the market. The anticipated
advantage of the enterprise in comparison to the competitors is the capability of
producing best quality sofa fabrics especially polyester sofa fabric / natural sofa
fabrics since it is equipped with the latest technology machinery.
 BINIYAM STEGAYIE SOFA FABRICS

Pricing

The current price of natural sofa fabric is 600 birr per meter and polyester sofa
fabric 580 birr per meter respectively in Addis Ababa and adjacent town but the
project plan is give discount for customers and more production so the project plan
is to sale natural sofa fabric 420 Birr per meter and polyester sofa fabric 550 Birr
per meter in Addis Ababa and respectively.

Competition

Potential size of Market and expected growth rate the demand and Supply of the
textile Products in the Country are largely far apart. The Population of the
Country is more than 60 Million whereas the fabric and textile industry sectors
are few. Thus not satisfy the need of the People. If Products are supplied
according to the need of the People in quality there is a wide Market size with the
respective growth of the People. Anticipated advantage of the enterprise in
Comparison to the Competition, therefore there is no competitors in the area as
well as in Addis Ababa because the demand is very high from day viable.

8.4 SOCIAL FEASIBILITY

Always keeping our sights on the betterment of the conditions of life in the area,
this project will help local people with tremendous multiplier effects, and will help
them to enhance their capacity of finding out other promising income generating
projects, through the provision of essential community demands and through
facilitating the processes of earning profit and commercialization of the product in
consideration.
 BINIYAM STEGAYIE SOFA FABRICS

8.5 ECONOMICAL FEASIBILITY

As it will be established, we are dealing with an activity that is profitable and that
furthermore holds great potential for future growth. It is an activity that has been
unfolding in the area for many years and, due to this, the people involved in its
practice possess a high level of knowledge and management skill. It add up
considerable significance to the economic progress of the town specifically and the
nation at large.

8.6 ENVIRONMENTAL FEASIBILITY

Some positive externalities of the project are:

 Provide quality natural and polyester sofa fabric product to the society
 Create employment
 Support and fill the gap on fabric sector
 Support the country’s development
 Share new a fabric technology with society……etc
Some negative externalities of the project are:

 Environmental spoilage
 Displacement of inhabitants
 Shortage of resources like water in the area.
 Depletion of resources…..etc
8.7 RISK ANALYSIS

Based on the proposed project size, and necessary accommodations of the project,
the likely risks that will potentially threaten the project are identified as follows;

Personal risk; this is associated with interpersonal relation among the manager
and employees in the project area. To overcome staff turnovers and to maintain
 BINIYAM STEGAYIE SOFA FABRICS

high quality of staff caliber, there should be conducive working environment and
appropriate incentive mechanisms.

Business risk: Poor quality image of fabric products limit the factory to penetrate
into the export market and from the demand supply analysis, it is clear that there is
a need to fill the gap via establishing such a project in the area. Competitions in the
proposed business area are very limited, so that the sofa fabric whole seller shop is
profitable.

However, for these all and other risks preparedness measures have been designed
and the business will respond accordingly.

9. ORGANIZATION AND MANAGEMENT

9.1 ADMINISTRATIVE STRUCTURE

The man power structure of the project will be organized in the three main
departments and supporting offices starting from the first year of operation on
words. In general the staff is divided into two groups the technical staff and
administrative staff. Again the technical staff divided into machine operator
personnel and animal husbandry expert operator sub groups. The general manager
will have the necessary qualification and experience which enables him to manage
the whole work of the project. He will be assisted by qualified and experienced
staff members who are responsible for the smooth operation and running of the
business.

The Administrative staff on the other hand will undertake the day to administration
and finance related activities, security, supply of raw materials, handling legal
matters and others. The organizational chart of the firm is proposed as
 BINIYAM STEGAYIE SOFA FABRICS

Manager
Technical staff
Administration &
finance head

Purchaser Trade and promotion Shop seller

Loading
Store keeper unloading

Customers

Or farmers

Security Guard Fabric experts

Auditor

Fig1: Administrator structure of the project

 BINIYAM STEGAYIE SOFA FABRICS

The recruitment of man power required by the proposed project will be employed
through proper and formal way. As a result the project creates job opportunities for
a number of individuals which will in turn add up to the total economic value of
the country. The type of vacancy for number of individual’s required and monthly
salary will be announced through media and the format is stated as follows.

Academic Monthly Total Total

rank salary for monthly annual
Job title Quantity individual salary salary

Manager 1 B.A 7000 7000 84000

Guard 2 Gread 8 4000 8000 96000

Store keeper 2 Tvt level v 5000 10000 120000

Grand total 4 300,000.00

Table 2: Educational qualification of employees

Though the above job title and assignment is given, starting from the General
Manager to the lowest ran worker expected to assist the busiest worker after
finishing their work. Promotional and motivation technical will give due
consideration for such workers.

Form the totality of workers 70% is administrative and the remaining 30% are
technical. In order to attract trained and competent employees a better pay is
assumed.
 BINIYAM STEGAYIE SOFA FABRICS

10. TECHNICAL ASSESSMENT

The Project will have its rental shop with built up area of 25 m2 . The total land
requirement for the project is estimated to be 100m 2 store shade for the
construction of various buildings.

Hence starting from its establishment, the project operates at rental buildings
compounds at suitable site.

The compound of proposed for fabric shop, store, guard house and loading
unloading project activity. The operation of the project will not have negative
effect on the surrounding social and natural environment since all the wastes of
sewerages are properly disposed and will enable the surrounding community to use
the waste for their activities as a reusable.
 BINIYAM STEGAYIE SOFA FABRICS

Technical assumptions used in preparing the project

1. Project life ...............................................................……….………5 years

2. Purchase price of natural sofa fabrics .....................……….…. 300 Birr /m
3. Purchase price of polyester sofa fabric....................……….…..350 birr / m
4. Purchase price different width polyester sofa fabric……….…..350 birr / m
5. Average annual natural sofa fabrics …………………………….….5000 m
6. Average annual polyester sofa fabrics.....................…………..…... 8286m.
7. Average annual different width polyester sofa fabric………….……..4605 m
8. Average annual Sells natural sofa fabrics................…………..………5000m
9. Average annual Sells polyester sofa fabrics.............…………………10000m
10.Average annual sell different width polyester sofa fabric………….....4605 m
11.Coast of rental shop ………………………………………10,000 birr /month
12.Coast of rental store………………………………………40,000 birr /month
13.Cost of fuel for machinery ........................................……….birr 86 per hour
14.Sells of natural sofa fabrics......................................,,……………..650birr/m
15. Sells of polyester sofa fabrics...................................……………..650birr/m
16.Sells of different width polyester sofa fabrics……..……………...birr650/m
17.Uniforms .................................................................…………birr 10000/year
18. the required rate of return per period .....................……...………..…......5%
 BINIYAM STEGAYIE SOFA FABRICS

11. MAIN SERVICE AND PRODUCTS

The main services and products that will be provided by the poultry project activity
when it operates of its full capacity are:-

 Natural sofa fabrics

 Polyester sofa fabrics
 Different width sofa fabrics
1.2 Financial analysis

Net financial requirement

Planned investment Birr 2,100,000.00

Working capital Birr 900,000.00

Total financial requirement Birr 3,000,000.00

Source of Finance

Out of the total project cost of birr 30% (900,000.00) is from Owners equity and the
remaining 2,100,000 (70%) is expected to be financed by local banks through long
term loan.

Loan= 2,100,000.00

Contingency= 70,000.00 (10%) of the total investment cost of the project

 BINIYAM STEGAYIE SOFA FABRICS

12.1 Fund Allocation

Description Total Own Bank Loan

project cost contribution (Birr)
Birr Birr
Building and construction - - -
Machinery and equipment 66,000.00 66,000 -
Office furniture 110,000.00 110,000 -
Vehicle - - -
Working capital requirement 2,824,000.00 724,000.00 2,100,000.00

Total 3,000,000.00 900,000.00 2,100,000.00

Percentage 100% 30% 70%
Table 3: Fund allocation of the project

12.2 Planned Investment

 BINIYAM STEGAYIE SOFA FABRICS

12.2.1. Building and constructions

Unit Qty U. price Total .value

Guard house M2 9 5000 45000
Store shelf M2 500 400 200,000
shop shelf M2 50 400 20,000
Water tank M3 1 lumpsum 35,500
Water tankers with stand No 1 15,000 15,000
Subtotal Birr 350,000
Total 315,000.00
12.2.2. Machinery and equipment
Scissors Set 5 1000 5,000.00
Meter Set 5 500 2,500.00
Display Pcs 1 20,000 20,000.00
Calculator Pcs 2 1000 2,000.00
cash register machine Pcs 1 15000 15,000.00
rop Lumpsu 1 20000 20000.00
m
computer Pcs 1 20000 20000
Sub total Pcs 1 60,000.00
Total 145,000.00
Office furniture Sum - - 440,00.00
Grand total investment 585,000.00
Table 4: planned investment

12.3. Project revenue projection

 BINIYAM STEGAYIE SOFA FABRICS

Description Y1
Quantity natural sofa fabrics for sale 5500
Price/m3 (Birr) 650
Revenue from sales of natural sofa fabrics 3,575,000.00
Quantity polyester sofa fabrics for sale 5000
Price/m3 (Birr ) 650
Revenue from sales of polyester sofa fabrics 3,250,000.00
Different type of width sofa fabrics 5000
Price/m3 (Birr ) 650
Revenue from sales of Different type of width 3,250,000.00
sofa fabrics
Grand total sales 10,075,000.00
Table5: project revenue project

12.4 Operation cost estimates

 BINIYAM STEGAYIE SOFA FABRICS

No Item Y1
.
1 Purchase of natural sofa fabrics 660,000
2 Purchase of polyester sofa fabrics 500,000
3 Purchase of different width sofa fabrics 500,000
5 Salary 300,000
6 Rental shop 120,000
6 Uniform 20,000
Sub total 2,100,000.00
Total operation costs 2,100,000.00
Table 6: Estimated operating cost of the project
 BINIYAM STEGAYIE SOFA FABRICS

12.5 Loan repayment schedule

Year Principal Interest repayment Outstanding balance (birr)
repayment birr birr
0 2,100,000.00
1 420,000.00 252000 1,680,000.00
2 420,000.00 201,600 1,260,000.00
3 420,000.00 151,200 840,000.00
4 420,000.00 100,800 420,000.00
5 420,000.00 84,000 --
Table 6: loan repayment schedule

Bank Loan Repayment Schedule

Loan= 2,100,000.00

Contingency= 100000 (10%) of the total investment cost of the project

Interest rate = 12%

Principal repayment=20%

Mode of payment= annually at equal installment amount

Period = 5 year.

12.6 Repair and maintenance costs

 BINIYAM STEGAYIE SOFA FABRICS

No. Description Actual Rate Estimated cost birr

value birr
1 Building and construction 315,000.00 2% 63,000
2 Machinery and equipment 145,000.00 3% 43,500
3 Office furniture 440,000.00 3% 132,000
4 Vehicle - - -
Total 900,000.00 238,500.00
Table 7: Repair and maintenance costs

12.7 Depreciation schedule

No. Description Estimated Depreciation Annual Dep.

value (birr) rate % Value (birr)
1 Building and construction 315,000.00 5% 15,750
2 Machinery and 145,000.00 10% 14,500
equipment
3 Office furniture’s 440,000.00 5% 22,000
4 Vehicle - - -
Total 900,000.00 52,250.00
Table 8: Depreciation schedule

12.8 Project income statement

 BINIYAM STEGAYIE SOFA FABRICS

Project years
Description 1 Total
Gross revenue (grand sale) 10,075,000.00
Less 15% VAT 1,511,250
Revenue after VAT 8,563,750
Less operating costs 2,100,000.00
Income before interest tax and Depr. 6,463,750
Less Depression 52,250.00
Profit before tax and interest 6,411,500
Less interest 252000
Profit before tax(Gross) 6,159,500
Less tax ( 35%-7950) 2,155,825
Net profit 4,003,675 4,003,675
Cumulative net profit 4,003,675
GP= 4,003,675 Birr

Table9: Project income statement

12.9. Project cash flow statement

 BINIYAM STEGAYIE SOFA FABRICS

Project years
Description 0 1
Cash inflow
Owner’s equity 90000
Medium term loan 210000
Net profit 4,003,675
Deprecation 52,250
Total cash inflow 300000 4,055,925
Cash out flow
W.capital increase 2,415,000
Fixed assets 585,000
Loan repayment 420000.0
Total out flow 300000 420000.0
Net inflow 300000 3,635,925
Cumulative net inf - 3,635,925
Table 10; project cash flow

12.10 Project balance sheet

 BINIYAM STEGAYIE SOFA FABRICS

Project years
Description 0 1
Current assets cash 900000

Working capital 210000

Total current assets 210000 3000000

Fixed assets
Building and const (5%) 315,000.00 15,750
Machinery and equb. (10%) 145,000.00 14,500
Office furniture’s (5%) 440,000.00 22,000
Vehicle (12%) - -
Total fixed assets 900000 52250
Total assets 300000 3052250
Liability 210000 210000
Owners’ equity 900000 900000

Retained earthlings 4,003,675

Total capital 900000 4,903,675
Total liability and capital 3,000,000.00 7,003,675.00
Table11: project balance sheet

A=L+OEExample:foryear1
3000000=2100000+900000…..5414039.6=3000000
 BINIYAM STEGAYIE SOFA FABRICS

13. Appraisal Criteria (viability indicators)

1. Gross profit margin= Goss profit /total sale*100

2. Net profit ratio=Net profit/Sale*100

3. Net present value: Thus we have the following two formulas for the
calculation of NPV.

When cash inflows are even:

NPV = R 1 − (1 + i)-n
− Initial Investment
× I

R is the net cash inflow expected to be received in each period;

i is the required rate of return per period;
n are the number of periods during which the project is expected to operate and
generate cash inflows.
When cash inflows are uneven:
NPV R1 R2 R3
+ + + ... − Initial Investment
= (1 + i)1 (1 + i)2 (1 + i)3
Where,
i is the target rate of return per period;
R1 is the net cash inflow during the first period;
R2 is the net cash inflow during the second period;
R3 is the net cash inflow during the third period, and so on
4. Internal rate of return (IRR): The Internal rate of return (IRR) is a
rate of return on an investment. The IRR of an investment is the interest rate that
will give it a net present value of zero. To find the internal rate of return of the
above investment we find the value(s) of r that satisfies the following equation:
 BINIYAM STEGAYIE SOFA FABRICS

N
Ct
NPV= CO+∑ t =0 OR
t =1 (1+ r)

R1 R2 R3
+ +
(1 + r)1 (1 + r)2 (1 + r)3

IRR=r, Co= initial

investment, R= net cash inflow
Illustration of the project profitablity

1. Gross profit margin=GP

GP * 100

GPM= Sale

= 4,003,675 * 100
10,075,000
GPM=39.7%

Since the GPM is >1 and positive, the project is acceptable.

2. Net profit ratio = NPR

NPR= NP * 100

Sale
NPR= 4,003,675 * 100
10,075,000
NPR=39%

As like of the GPM, NPR indicates that the project will be profitable.

4. Internal Rate of Return (IRR)

 BINIYAM STEGAYIE SOFA FABRICS

To find IRR for the above project, we must find the value of (r) that satisfies the
following equation
N
Ct
NPV= CO+∑ t =0
t =1 (1+ r)

(Ref.http://en.wikipedia.org/wiki/Internal_rate_of_return)

N
Ct
NPV= -CO+∑ t =0
t =1 (1+ r)

,,
NPV= .+ ==0
(1 + r)5

By taking r=IRR, we can determine it as follows

IRR=r20%

The IRR indicates the actual profit rate of the total investment outlay. It also
indicates the maximum tolerable point at which the project will undergo. It also
indicates the maximum loan interest rate that could be paid without creating any
losses for the project. The IRR for the project is 25 %. Since IRR for the proposed
project is higher than the discount rate, the project is acceptable and viable.

6. Payback period=PBP
 BINIYAM STEGAYIE SOFA FABRICS

Payback period is the number of years required to recover investment costs of the
project. It can be computed by summing up the returns of each year till the project
recover from its initial investment. Payback period covers the period that
commutating projected annual benefits till the sum become equal to initial
investment outlay. By these method payback period becomes 4 years which is
approximately 5 years.

14. Implementation of the project

The major tasks under the sofa fabric shop development and establishment of the
project are the following

1. Provide sofa fabrics

2. Construction of shelter for guard house, shelf , and others
3. Purchase and Deliver different kind of sofa fabrics
15. CONCLUSION

Miss biniyamtsegaye are promoters of this sofa fabrics project in Arada zone/ sub
city Woreda 01, they have vast experiences in varied commerce activities. The
Project will have its known RENTAL building with built up area of 150m2 The
total land requirement for the project is estimated to be 25 m 2 for the shop , which
is expected to be obtained by the rental.
 The vision of the project is “to be highly competitive and financially strong
import-export companies in Ethiopia by providing quality sofa fabric to
local and international market”
 “This business will export sofa fabrics and its products to local market and
to the foreign market at a quality and competitive manner to make profits
while maintaining a competitive and attractive employment opportunities.
 The general objective of the business is “making profits and generating hard
currency for the nation by exporting quality fabrics product at a competitive
market strategy”.
 BINIYAM STEGAYIE SOFA FABRICS

 The total amount of investment capital required for the project is estimated
All in all, biniyam tsegayie SOFA FABRICS project is financially strong,
profitable and vital for the country’s development.
16. Recommendation

 Any concerned government or non-government organizations are expected

to extend their sincere assistance to the promoter for implementing the
project as per the scheduled indicated in feasibility study of the project
document.
 The project owner and others should have strong commitment and should be
alerted for the implementation of the project.
 Any organization which is interested to work with the project should create
close relationship with the owner and management body of the project.
Generally, all individuals, organization, community, and the
government should understand the overall goal of the project and should
give their hand for its implementation.

17. References
 CSA manufacturing survey report, 2004 EC
 Project management for business and Engineering, 2nd edition.
Project Management, Planning and Control,5th edition