Project Proposal on International Tourist Standard 5 Star 2022

Hotel

ON;

0911249895 February, 2022

Demebcha

[Project owner] Mr.Paulos Hibistie Glaye 0911249895

 Project on International Tourist standard 5 Star Hotel

Table of Contents

Project Executive summery----------------------------------------------------------------1

Vision, mission and goals-----------------------------------------------------------------2-5

Service Description and Application--------------------------------------------------6-16

Market Study, Capacity and Production Program---------------------------------16-19

Materials and Utilities------------------------------------------------------------------19-20

Service Machinery and Equipment --------------------------------------------------20-21

Civil Engineering Cost-----------------------------------------------------------------21-26

Human Resource and Training Requirement----------------------------------------26-29

Financial Analysis----------------------------------------------------------------------29-30

Investment-----------------------------------------------------------------------------------31

Financial Evaluation--------------------------------------------------------------------31-32

Economic and Social Benefits and Justification-----------------------------------32-35

ANNEXESS ----------------------------------------------------------------------------36-47

1. Executive Summary
The envisioned project which will establish based on this proposal is an
international Tourist Standard 5 Star Hotel which exists also to serve Dembecha
town residents as their multi-generational leisure and recreation centre. The

Project Owner Wongai Granite Crusher P.L.C

 Project on International Tourist standard 5 Star Hotel

facility’s secondary role will function as a regional recreation attraction,

especially for Gojjiam. The town hopes that as a result of building this facility, as
well as the implementation of the Business Plan, this facility can also contribute to
it’s the revitalization and economic development. The primary service area is the
town of Dembecha with a 100km radius which includes 6 woredas, potential
annexation areas and neighbouring communities with a 2021 population estimate
of 1,500,187.

Demand projection divulges that there is high demand for recreational centers in
the region. Accordingly, the planned 5 Star Hotel is set to provide recreational
services.
The total investment cost of the project including working capital is estimated at
Birr 50,466,152 and creates 401 job opportunity and Birr 5,250,200 of income.

The financial result indicates that the project generates reasonable profit
beginning from the first year of operation. Moreover, the project will break even at
30.7% of capacity utilization and it wills payback fully the initial investment less
working capital in 9 years and 5 months. The result further shows that the
calculated IRR of the project is 25.1% and NPV at 18% discount of Birr
1,590,951.02. The envisaged 5 star hotel project is moderately sensitive to an
increase in cost. In addition, the proposed project possesses wide range of
economic and social benefits such as increasing the level of investment, tax
revenue, employment creation and import substitution.

In addition to this, the proposed project possesses wide range of economic and
social benefits such as increasing the level of investment, tax revenue and
employment creation.
Generally’ the project is technically feasible, financially and commercially viable
as well as socially and economically acceptable. Hence the project is worth
implementing.

2. Vision, Mission, Goal, objective, and value statements

2.1 Vision

Project Owner Wongai Granite Crusher P.L.C

 Project on International Tourist standard 5 Star Hotel

Enrich and inspire Tourists and local communities through quality experiences in
meal, Social, physical and cultural recreation activity, people and places.

2.2 Mission
o International tourist standard 5 stars Hotel will promote a healthy, liable
Tourists and local youths with opportunities for physical activity as well as
personal and cultural enrichment.
o To ensure being an International Tourist Standard 5 star Hotel service
of choice to youths, students and Dembecha town community, best choice
organization to its employees and an investment of choice to its Owner,
o To contribute positively to Tourism sector in general and Hotel Service
sector development of Dembecha town which it operates in particular.

2.3 Facility: International Tourist Standard 5 Star Hotel, “where the

community comes together”, unites the town through a celebration of the
cultural diversity and multigenerational flavour of an active and passive
recreational experience with a variety of amenities and programs.
2.4 Project Goals
 Introducing international tourist standard 5 star Hotel with a multi-
generational facility that serves people of all ages and abilities
 Offer a wide range of activities that promote social interaction, culture,
wellness, and recreation for all age groups,
 Create a multi-use facility through flexible scheduling and programs that
respond to the changing interests and growth of the town.
 Reflect a character and identity that captures the qualities and spirit of
Dembecha Town.
 Provide a strong relationship between indoor and outdoor spaces that share
similar values and goals.
2.5 Project Objectives
The objectives of the proposed recreation centre are to:
 Initiate Tourist attraction
 Promote cultural and traditional values of Gojjiam people during the project
tenure.
 expand sports and fitness recreation

Project Owner Wongai Granite Crusher P.L.C

 Project on International Tourist standard 5 Star Hotel

 facilities to meet the needs of the expanding student population;

 expand critically Tourists activity space for meetings, club activities,
 expand social activity space and create a student gathering centre for this
area of the campus;
 Link to the International Tourist Standard 5 Star Hotel; be
architecturally appropriate for the proposed uses and complementary to the
Recreation Hall; and provide outdoor recreation fields for Tourists activities.
2.6 Values
o Provide Quality service to Tourists
o Promote cultural and traditional values of the region
o Customer based
o competitiveness
o A commitment to excellent ,and quality product
o innovation, Team sprit
o diversity
o creativity
o honesty
o integrity
2.7. (SWOT Analysis)
2.7.1 Internal Environmental Analysis
A) Strength
 Well organized management and there craftsman and team skill may be our
capabilities, marketing skills, and good relations are our strengths.
 Commitment and Willingness of the regional government to work with
investors for the region development.
B) Weakness
o Our Limited financial resources, new service establishment may be the
source of our weaknesses.
2.7.2 External Environmental Analysis
C) Opportunities
 Our government current policy and support which is also applicable
for this Hotel.
 Huge demand of International Tourist Standard 5 Star Hotel by
itself in the town and its scarce supply.
Project Owner Wongai Granite Crusher P.L.C
 Project on International Tourist standard 5 Star Hotel

 Financial institutions willingness to work with investors.

 5 stars Hotel is one among from previously overlooked market
segment in the region.
D) Threats
 New competitive 5 star Hotel may enter into the market
 Land and finance loan may not supply as quick as the project time.
 It may not supply enough electric power and water consistently.
Coping mechanism
 Producing the necessary requirement and establishing constant
discussion with government Organization.
 Providing Stand by generator
3. Major Tasks to Be Conducted
Tasks Start date Duration End date
Project proposal preparation Feb-2 10 Feb 12/2022
Financial institution agreement - - -
Electricity and water facilitation - - -
The project detailed annual operating budget March 2022 12 April 2023
Facility, amenities in the building program month
described below.
The building program includes 1000 m2 of
space with the following amenities:
• Leisure Pool (with slide, zero depth entry,
water play feature, vortex, 3 lap lanes)
• Deck 500m2 additional area
• Warm Water Therapy Pool - 100 m2 (15-18
users)
• Hot Tub/Spa
• Cardiovascular Equipment
• Swimming Pool
• Health Resource Room
• Fitness Assessment Room
• Visiting/Social Services Office
• Child Watch
• Walk/Jog Track (11 laps to 1 mile)

Project Owner Wongai Granite Crusher P.L.C

 Project on International Tourist standard 5 Star Hotel

• Gymnasium (50’ x 50’)

• Community Rental Hall (divisible by 3 with
possible stage on one end)
• Commercial/Caterer’s Kitchen
• Gust House
• Party /Meeting Rooms (2)
• Multi-purpose/Arts Room
• Aerobics/ Dance Room
• Senior Lounge
• Youth/Teen Hangout
• Community Living Room/Lobby
• Technology (nodes sprinkled throughout
facility)
• Deli/Juice Cart with Café’ seating
Vending

Human Resource Management May 1 21 May 22

Start Operation September 2023

Project Owner Wongai Granite Crusher P.L.C

4. Service Description and Application
A)International Tourist Standard 5 Star Hotels are places where people get
entertainment and enjoyment. The facilities provided include various indoor and
outdoor games, swimming pools, cinema halls and facilities to stage theaters and
other shows. At the same time these facilities also serve for conducting various
cultural and traditional shows, ceremonies such as wedding, and other services
like, child walking, internet cafe and the like. Various kid games also incorporated
in this 5 star project too.

5 Star Hotel facilities where food, drinks, bed rooms and other services are
provided in an efficient, cordial and pleasant manner and style. Operating in these
businesses, especially at tourist sites, require cleanliness and neatness of services to
be provided and efficiency, cordiality and good manner on the part of hotel and
restaurant workers. Hence, the town requires Lodges for international standard to
accommodate the increasing number of tourists and conference participants of the
African Union, UNECA, and other randomly occurring meetings at different times.
Lodge consists of many different services, including accommodation, restaurants,
and cafes and catering.

The market for International Tourist Standard 5 Star Hotel, especially

classified hotels in a developing country like Ethiopia, is closely linked to the
tourism industry, because a majority of consumers for the sector services come
from international tourists.
According to the United Nations Statistical Commission, Tourism comprises the
activities of persons traveling to and staying in places outside their usual
environment for not more than one consecutive year and staying at least 24 hours
in the country visited. The total number of international tourists arriving in
Ethiopia is steadily increasing. The highest number of tourist arrival is in 2010 i.e.
227.4 thousand. As can be seen from Table 1 during the period 1997-2010 except
for the decline observed in year 1997, the number of tourists visiting the country
was consistently growing. The growth rate registered varies from year to year; the
lowest was in 2009 (2.3%) and the highest in 2010 (27.7%).
B)The 5 Star Hotel Components
 Multilingual staff with a high staff to guest ratio.
 A 24 hour reception desk, valet parking, butler services, a doorman greeting
every guest at the entrance, and separate concierge staff available at least 2/3
of the day.
 Separate elevators for guests and hotel staff.
 High speed Internet Wifi.
 Luggage storage services with enough space to store all guest luggage out of
sight - both within guest room and public spaces.
 A fine-dining restaurant and a separate lounge or bar.
 Nightly turndown and full housekeeping services each day also available to
each guest upon request at any time. Also - laundry, ironing, dry cleaning,
and shoe polishing services.
 In-room features: room service 24 hours a day, window shades with full
light blocking features, electric safe, laundry bags, full length mirror with
lighting, exercise programs, remote controlled flat screen television, national
and intl' tv channels, all electronic cables and cords hidden from view,
choice of pillows (pillow menus), high wattage hair-dryer, fully stocked
mini-bar, multiple daily newspaper choices, and more.
 Spa services with at least 4 different types of treatment - and available in-
room.
 Transfers and executive or house car services.
 All bedrooms with private bathroom. Amenities: bathrobes, slippers, brand
name toiletries, and large heavyweight towels.
 Meeting space choices with the latest AV technology, business services, and
support for in-house IT.
 Poolside amenities such as daybeds, umbrellas, lotions, ice water, attendants
on duty. Food and beverage service must be available poolside.
 Vetted child-care services.
 Currency services.
 Flawless, personalized, and consistent service.

In the future, the envisioned project will escalate the requirements for a 5 star hotel
to include:
  Any and all requests can be made through text messages directly to hotel
staff.
 Remote control panels for lighting, climate, and do not disturb accessible
from the bedside and the door.
 Even more outlets for personal electronics, especially with built in USB
plugs.
 Enhanced and upgraded coffee machines. (No Keurigs).
 TV software will be fully high speed and dedicated streaming services.
 Motion-sensitive controls.
 Bluetooth enabled door locks.

C)Tourist arrival in Ethiopia

Ethiopia did not exhaustively dig out to make tourism as a source of revenue.
There have not enough star hotel services too to host small number of tourists.
However, on average during the period under consideration tourist arrivals have
been increasing by about 8 % per annum from 1997-2010.
TABLE 4.1 TOTAL TOURIST ARRIVALS IN ETHIOPIA
# Year Number Grawth rate
1997 81,581 -
1998 93,072 11.9
1999 98,070 5.4
2000 103,336 5.4
2001 108,885 5.4
2002 139,000 27.7
2003 112,000 19.4
2004 115,000 2.7
2005 135,954 18.2
2006 148,438 9.2
2007 156,327 5.3
2008 179,910 15.1
2009 184,079 2.3
2010 227,398 23.5
Source: - Ethiopian Tourism Communion.
During the same period (1997- 2010), on average about 17% of the total number of
tourists that have visited the country were for vacation purpose while those who
visited the country for business account 22% of the total. Regarding the others,
transit accounts for 18%, visiting relative 9%, conference 11% and those who did
not stated their purpose account for 22% of the total.

Swimming Pool Facility:-Which helps to initiate swimming sport and scale up

entertainment amenities shall incorporate in the lodge facility.

As the gateway of all international inbound, outbound and transit tourists/

passengers, Dembecha town has no any share in the region tourist arrivals.
Because of the above concrete facts establishing international tourist standard
Hotel are quite necessary here in Dembecha

Accordingly, assuming 365 working days, currently international standard hotel

and Recreation Center in Dembecha Town have a total of 59,714 per annum
tourist night room capacity. Based on discussion with various private hotel
managers and other knowledgeable persons the average stay of tourists in a hotel is
assumed to be 4 days. In order to project tourist arrival in to Ethiopia, the past
trend in tourist arrival is considered. During the period 1997-2010, the total tourist
arrival in the country has registered an 8.2% average growth rate. Accordingly,
assuming that this growth rate will continue in the future and taking year 2010
figure (227,398) as a base, tourist arrival is forecasted. Moreover, in order to
compute the unsatisfied demand the total annual capacity of international standard
hotels in Dembecha Town, which computed to be 59,714 rooms per annum, is
taken as the existing capacity. The projected tourist room requirement, which is
calculated by taking the projected tourist arrival and multiplying it by the average
hotel stay of tourists (4 days), the unsatisfied demand, is huge.

4.1 Importance of 5 Star Hotels and Accommodation in Promoting Tourism

In the modern times, the way people spend their vacations has undergone a great
change. People like to spend good times with family and friend while at the same
time exploring various tourist places across the globe. As a result the tourism
industry across the globe has seen an unprecedented growth which in turn has also
resulted in tremendous growth in the hotel and accommodation facilities.

Comfortable, hotels and accommodation facilities play a very important role in

popularizing any tourist destination. If a person, who is quite far away from home,
gets to enjoy the same facilities and comforts as he enjoys at his home, then he is
bound to become attached to the place. On the other hand if the tourist ends up at a
place where the Lodges, hotels and accommodation facilities are not satisfactory, it
is quite likely that he might never return to that place.

Perhaps that is why, Lodges, hotels and accommodation facilities being made
available at different tourist’s spots have shifted focus on providing maximum
comfort to tourists at reasonable rates. It is also vital to provide comfortable
accommodation to people from diverse economical backgrounds. While Lodges
and five star hotels can cater to the needs of affluent visitors, small and medium
range hotels and lodging houses are available for use by a middle class traveler.

4.2 The Role of Destination & Attraction in Tourism

A tourist destination plays an important role in attracting tourist, a tourist
destination is a geographical location which has all the important components to
attract tourists and full fill their all demands and needs, A tourist destination
comprises of different components which are characterized as the 4 A’s. The 4 A’S
are classified as follows:
Attractions which motivate and attract tourist to visit the destination and it consist
of the man made as well as natural attraction features or cultural events.
Amenities which include a range of supporting facilities and services like
accommodation, food, entertainment and recreation which are required by tourists
at the destination.
Access in terms of development and maintenance of transport which provides the
link to the tourist destination as well as the tourist attractions at the destination.
Ancillary services which are provided to customers and industry by the destination
through a local tourist board. Gunn stated that tourism attractions form an essential
part of tourism destinations and that they are one of the four key segments of the
tourism system. Attractions are located within the destination and they form the
basis of the tourism product at the destination. A destination without potential or
real tourism attractions cannot be developed into a tourism destination. There are
various forms of attractions but not all of them can be used for tourism, therefore
those used for tourism purposes must be classified as tourism attractions. Tourism
attractions form part of the basic tourism resources and are one of the major
reasons why tourists visit a destination. Inskeep stated that tourism attractions can
be divided into 3 categories;
Nature attraction: Nature attraction consists the environment and natural
resources such as wildlife sanctuaries, sunset and sun rise viewpoints, national
parks, beaches, mountains, rivers, and other natural phenomena.
Culture attraction consists of entertainments and human activities.
Unique attraction Tourists are motivated to visit a particular destination by the
information that they receive and their own motivation ‘Push’ them to visit a
destination where their needs and wants can be satisfied. Smith (1996) stated that
the ‘push’ factors are the socio-economic factors of the tourist as well as their
motivation to travel and the ‘pull’ factors are the information received and the
resources which are provided at the destination.
Components of tourism
Tourism is a combination of sectors to form an industry. Such sectors are:
a) Attraction sector – These are nature based or manmade used for tourism
product development. There are three main types of attractions:
i) Natural attraction – are nature based ike oceans, lakes, mountains, beaches,
climate, wildlife, rivers etc.
ii) Cultural attractions – are secondary elements of attractions comprising the
way of life of indigenous community in a particular area (natural setting) having
not been highly affected by modernization. The cultural elements include rural
village, remote setting, architecture, dress, art, handicraft, beliefs, religion,
language, local food etc.
iii) Special attractions – are tertiary element of attraction consisting of built
environment by man e.g. museums, entertainment centers, aquariums, athletic
stadiums, theme parks, casinos and gambling centers, zoos and orphanages.
Lodges and camping sites can also be categorized as special attraction.
b) Transportation sector – forms dynamic element of tourism involving modes
and means of transport and travel infrastructure like ports and airports. It links
TGR and TDR. It is also a tourism product/service and determines the tourists’
experience on transit. It qualities are:
i) Reliability ii) Affordability iii) Convenience iv) Variety v) Comfort.
c) Hospitality sector – comprise of accommodation organization, catering
organization and attitudes of community towards tourists and tourism business. It
is therefore subdivided into sub-sectors like lodging subsector (accommodation),
food service subsector (catering) and entertainment. As shown below:
Lodging comprises hotels, apartments, campsites, band as, log cabins, lodges,
villas, resorts, inns and tree houses etc.
Food service subsector includes fast food operators, vending outlets, restaurants,
functional catering/institutional catering etc. Functional catering offer meals on
premises and transport them for consumptions during events like wedding,
conferences, hospitals, schools etc.
Entertainment subsectors comprise organizations that offer live or recorded
music, discotheques, clubs, traditional entertainment music etc.
d) Organization sector – comprise of all the operations within the tourism
distribution system that determine the movement of travel packages from
manufacturers to tourists through intermediaries and support services.
Accommodation is a very important part of the tourism infrastructure and
development of tourism is a function of accommodation. It creates a home away
from home for the tourist. Hotel industry is the most sophisticated industry today.
The United Nations Conference on International Travel and Tourism held in 1963,
acknowledged the importance of accommodation, both traditional (hotel, motel)
and supplementary (camps, youth hostels and so on) as incentives to International
tourism. Many countries have recognized the vital importance of the
accommodation industry in developing their tourism and have coordinated their
activities by providing big incentives and concessions to hoteliers. A hotel
provides accommodation, meals and refreshment for irregular periods of time for
those who may reserve their accommodation either in advance or on the premises.
Hotel is defined in several ways: “A place which supplies board and lodging” or
“A place for the entertainment of the travelers”. A hotel is an institution in which
lodging, meals and other services are provided for travelers. A hotel also provides
amenities like television and facilities like room services, laundry services, shops,
auto rentals, airline ticketing, reservation, and banking. A hotel is a fixed immobile
installation. Its products and services cannot move to tourists. It is an open and
unique system where the tourist moves in, consumes the product and returns with
an intangible product. At the international level, the International Hotel
Association (IHA) was founded in London in 1946. It has its headquarters in Paris
now. It brings under its network thousands of international hotels and individual
hoteliers from all over the world. It deals with various aspects of hotel
management and links them together. It tries to unite the hotel associations of all
countries and provides opportunities to discuss and solve their problems. It also
trains young workers at IHA hotels. It publishes the International Hotel Guide and
International Hotel Review every year. According to physical features the
accommodation industry can be broadly divided into: 1. Traditional (hotel)
accommodation. It includes hotels and motels. Lodges can further be subdivided
into various types: international, commercial, resort, floating, heritage. There are
different kinds of motels: roadside, city motel, tourist cabinet, tourist court.

4.3 Supplementary accommodation

It includes premises, which offer accommodation but not necessarily hotel
services. They are bungalows, dormitories, villas, youth hostels, travelers lodge,
circuit houses, and inns new accommodation concepts. These are new concepts of
accommodation, which have come into being. It has the combination of both the
types discussed earlier. They include condominiums, time-sharing pensions,
camping grounds, villas, eurotel, farm houses, and apart hotels. International hotels
are the modern western style hotels in almost all metropolitan and other big cities
as well as principal tourist centers. These hotels are luxury hotels and are classified
on the basis of internationally accepted system of classification. The hotels are
placed in star categories. There are five such categories ranging from 5 stars to one
star depending upon the facilities and services provided. Hotels belonging to
international chains are owned by public companies and controlled by a Board of
Directors. The commercial hotels cater primarily to the individual travelers as
compared to international hotels where the focus is on the group travel. Most of the
commercial hotels receive the travelers who are there on business. They are
situated in important commercial and industrial centers or in big towns or cities.
Private owners run these hotels and their success depends on their efficiency and
kind of services provided. Resort hotels cater to the need of holidaymaker, and
those tourists who travel for health or change of climate. Resort hotels are located
near the sea, mountains and other areas of natural beauty. Rest, relaxation and
entertainment are the key factors around which resorts are built. The type of
services and amenities located in resort properties include recreation facilities such
as a swimming pool, golf course, tennis courts, skiing, boating, surf riding and
other various indoor sports. Resort can be classified on the basis of climate and
topography such as summer, winter, and hill, health resorts, forest resorts and
beach resorts.
4.4 Facility Highlights
Facility Amenities Program: multi-cultural/community room (divisible by 3),
caterer’s/ kitchen, arts and crafts room, 2 multi-purpose/party/meeting rooms,
preschool rooms and aerobics/dance room.

Drop-in and additional spaces: cardiovascular and weight room, child watch,
walk/jog track, gymnasium, indoor leisure pool and therapy pool

Community social spaces: adult/senior lounge, youth/teen hangout room,

community living room/lobby, technology (nodes sprinkled throughout the
building), deli/juice cart with café’ seating and vending

Operational spaces: administration offices, guest relations, lifeguard office/first

aid, storage and mechanical also incorporated.
Child Entertainments Space: Children Play grounds will incorporate in the lodge
facility.
5. Market Study, Plant Capacity and Production Program

5.1Market Study

5.1.1Present Demand and Supply

At present the Star hotel and recreational facilities available in the various zonal
capitals of the country are very inadequate in terms of the type of service and
standards. As a matter of fact, with the decentralization of government structures
zonal capitals have become centers of important administrative functions as well as
commerce, industry, education, etc. Accordingly, the population of the urban
centers which are designated to be capitals of respective zones has increased
substantially.
For example, according to CSA, Annual Abstract (2021), the number of people
residing in Dembecha town is of 104,147, of whom 52,968 were men and 51,179
were women; all of them are urban dwellers. At the same time in this and other
urban centers of the region the population number is increasing substantially.
Nonetheless, there has not been a corresponding increase in recreational facilities.
For example, there is no Gymnasium, no cinema halls, no indoor and outdoor
games, no swimming pools, no talent shows, and no theaters ground, no spa, no
star hotels no---in the town.
If we assume that 10% of the population do pay visit to well established Star Hotel
once in a week, then the number of individuals in the target group would amount
10,414. This can be fairly assumed as the current level of demand and at the same
time suggests the existence of ample demand. Therefore, if well equipped
recreation facilities are established in one of Amhara region, west Gojjiam zone,
Dembecha, this will definitely have enough customers.

5.2 Projected Demand

The future demand for International Tourist Standard 5 Star Hotel in
Dembecha town will increases mainly due to number of Tourist visit increment.
Moreover, the growth of urbanization will attract additional traders, social workers
and families into the towns. Consequently, the numbers of individuals that do visit
the envisaged type of recreational services will also increase. In this connection if
we assume that the number of Youths, students and the town population in general
increases by 3%, the target population wills increases substantially as shown in
table 1 below.
Table 5.1: Projected Demand for International Tourist Standard 5 Star Hotel
(per month)
Year Target population
2022 10,414
2023 10,726
2024 11,047
2025 11,378
2026 11,719
2027 12,070
2028 12,432
2029 12,805
2030 13,189
2031 13,584
According to the forecasted demand presented in table 1 above, the future is very
promising provided that quality and customer centered services are rendered by the
hotel.

5.3 Pricing and Delivery

The envisaged International Tourist Standard 5 Star Hotel hosts more than 347
customers a day, as a start up will focus on providing entertainment activities such
as meal, bed room indoor and outdoor games, swimming pools, cinema halls and
facilities to stage theaters, conducting various ceremonies such as wedding,
meeting halls and internet cafe.
Facility Amenities Program and rental spaces: multi-cultural/community room
(divisible by 3), caterer’s/ kitchen, arts and crafts room, 2
multi-purpose/party/meeting rooms, Gust house and aerobics/dance room

Drop-in and additional rental spaces: cardiovascular and weight room, child watch,
walk/jog track, gymnasium, indoor leisure pool and therapy pool

Community social spaces: adult/senior lounge, youth/teen hangout room,

community living room/lobby, technology (nodes sprinkled throughout the
building), deli/juice cart with café’ seating and vending
Video games snooker, watching of video films and refreshment drinks. Moreover,
the center shall rent its hall and compound for weeding and meeting purposes.
Based on the market research result and the capacity of the envisaged plant, the
following selling price is set.
Table 5.3.1: Revenue VS Expense
Square footage 1,000m2
Revenue 17,476,865
Expense 7,217,410
Cost Recovery% 25%min -36%max
Operation Cost per Sq.t 30
Net Profit 10,259,455

5.4 Capacity
Thus, given the expected demand for the service, and the planned technology, the
envisaged service is set to attract the following more than 347 visitors.
 80 individuals a day for various cardiovascular and weight room, child
watch, walk/jog track, gymnasium, indoor leisure pool and therapy pool, and
Swimming Pool
 50 kids per day to play various games.
 120 individuals per day multi-cultural/community room (divisible by 3),
caterer’s/ kitchen, arts and crafts room, 2 multi-purpose/party/meeting
rooms, preschool rooms and aerobics/dance room..
 Accommodate 50 wedding ceremonies in a year
 Accommodate 25 meeting programs and workshops in a year that take on
average 2 days per program.
 Cater food and beverage for 100 individuals per day.

5.5 Service Delivery Program

The program is scheduled based on the consideration that the envisaged center will
work 365 days from 8 A.M till 9 P.M where the remaining days will be for
maintenance. During the first year of operation the center will operate at 70 percent
capacity and then it grows to 85 percent in the 2 nd year. The capacity will grow to
100 percent starting from the 3rd year. This consideration is developed based on the
assumption that market and logistics barriers would be eliminated gradually within
the first two years of operation.

6. Materials and Utilities

6.1 Availability and Source of Materials

Materials used in providing the Services stated earlier are mainly Grian,fruit,
beverages and various ingredients used to prepare food.
6.2 Annual Requirement and Cost of Materials and Utilities
The annual material and utility requirement and the associated cost for the
envisaged center listed in table 6.1.1 here under.

Table 6.1.1: Material and Utility Requirement

Material and Input Total material Cost
Various ingredients to prepare food and 7,500,000
Purchasing drink
Total Material Cost 7,500,000
Utility
Electricity 1,300,000
Water 200,000
Fuel 1,000,000
Total Utility Cost 2,500,000
Total Material Cost 10,000,000

According to the above table the annual cost of material and utility at full capacity
of operation is estimated to be Birr 10,000,000.
7. Service Machinery and Equipment
The machineries and equipment required for providing the various services stated
earlier is detailed in table 7.1 below;
Table 7.1: Machinery and Equipment
Machinery and Equipment Quantity
Refrigerator 4
Coffee ,milk and Tea Machine 4
Kids Game Equipments Set
Cardiovascular Equipment and Weight Room Set
Gymnasium Set
Child Watch Set
Walk/Jog Track facility Set
Swimming Pool Set
Warm Water Therapy Pool equipments Set
Hot Tub/Spa Set
Cardiovascular Equipment Set
Weight Room Set
Health Resource Room Set
The, Fitness Assessment Room Set total cost of
5 Visiting/Social Services Office Set star Hotel
Community Rental Hall (divisible Set service
by 3 with possible stage on one end Set machine and
a. Commercial/Caterer’s Kitchen equipment
b. Preschool Rooms including is
estimated to
c. Party /Meeting Rooms (2)
be about Birr
• Multi-purpose/Arts Room Set
1,000,000.
Aerobics Room Set
8. • Senior Lounge Set Civil
• Youth/Teen Hangout Set Engineering
Cost • Deli/Juice Cart with Café’ seating Set
The Total Cost 1,000,000 total site
area for the envisaged International 5 Star Ground G+5 Building is estimated to be
2,000m2 of which 1,000m2 is allocated to buildings, the main Hotel, shops various
game playing area, hall, café and related activities.1000 m 2 allocate for outdoor
services like swimming pool, Children play ground, parking and greenery to host
wedding and related ceremony for a better. The remaining space is left for Parking
and future expansion.

8.1 Cost of Building

No Building Total cost
(Birr)
5 Star Hotel Facilities Building
1 A) Sub structure
1.1 Excavation and earth work 2,316,200
1.2 Masonry wok 2,457,620
1.3 Concrete work 4,073,532
Sub total 8,847,352
2 B)Super structure

2.1 Concrete work 1,599,948

2.2 Block work 1,618,702
2.3 Roofing and flashing 173627
2.4 Plastering 1,303,141
2.5 Flooring and tiling 1,442,790
2.6 Glazing 219340
2.7 Painting 1,409,502
2.8 Carpenter and joinery 1,342,951
2.9 Metal work 1,509,164
 2.10 Sanitary installation 1,194,075
2.11 Electrical Installation 1,144,819
3 Swimming pool, park and Other 1,000,000
recreation center, walk ways etc,
1+2+3 22,805,411
Contingency 3,470,541
Grand total 26,275,952
8.2 Construction work and Technology
8.2.1 Ground G+5 5 star Hotel Building Construction schedule
The construction of the envisioned project proposed to start on March 2022, and is
expected to be finished on Sept.2023. As seen in the abbreviated construction
schedule above, a majority of the schedule's time is made up of five major
activities; concrete, building Enclosure, masonry, mechanical and Electrical install
.Concrete activities include processes such as placing foundations and slab on
deck. The Building Enclosure Phase includes erecting the scaffolding that will
allow for exterior sheathing installation and bricklaying.
Electrical installation coincides with each other due to the need for coordination
between the two divisions. Several periods of construction during the schedule in
which there are multiple construction activities occurring at the same time.
The construction site must be organized accordingly as these processes take place.
As with any construction project, the goal of the schedule was to complete all
construction activities before the required Date of completion.
This date of completion is practical based on the time of year in which the building
will be completed. The team allowed a two week contingency for any setbacks.
Typically, winter construction tends to cause unforeseen delays that negatively
impact a construction project. These conditions can and will almost undoubtedly
impact the project schedule by causing unforeseen delays and project inefficiency.
8.2.2Architectural Design & Layout
Although functional spaces for the project were laid out in significant detail, the
rest of the building had designated spaces but not set layouts. It was at the
discretion of the project promoter to devise typical layouts for the non-detailed
commercial and office spaces. To make sure that the building's layouts were
practical, the project owner researched typical architectural layouts for laboratory
and executive office spaces. The walls and partitions throughout the floor were
congruent with the structural frame and column locations.
8.2.3 Structural design
One of principle deliverables of our project is the structural design of the building.
The structural bays were coordinated with the layout of the building adjustments
were made to the bays if specific layouts are necessary. The frame was made up of
a grid with repeating standard structural bays. Included in the structural system are
bay sizes, shape and size of structural members, floor compositions and curtain
walls. These elements were established to resist gravity ad lateral loads as
appropriate.
The gravity load design was completed for two frames; one of structural steel and
one of reinforced concrete. The structural steel frame was chosen for further design
based on cost per square foot, local availability of material and constructability
considerations, such as erection and fabrication. The steel system was then
designed for lateral loading with necessary adjustment being made to framing.
8.2.4 Reinforced concrete
The project group prepared hand structural design calculations for a typical bay of
a reinforced concrete frame. In all reinforced concrete bay designs, a superimposed
dead load of 7.5 pounds per square foot was assumed for mechanical equipment,
floor coverings and ceilings.
Similarly, the design of the typical bay accounted for the use of different
commercial space, in which a live load of 125 pounds per square was assumed.
Loads were calculated based on the requirements of the minimum Design loads for
Buildings and other Structures.
8.2.5 Foundation Design
The design of a superstructure may be accurate, have considered all possibilities
and still fail because the substructure is incapable of distributing the applied loads
to the supporting soil.
Foundation design takes more into consideration than merely the loading from the
columns. While the main part of the project focused on the structural frame and its
alternate designs, a preliminary foundation plan was designed based upon
maximum load carried from the superstructure through the columns. The
foundation design conducted by the project team consisted of the selection of
foundation type, determination of the bearing capacity and the design for typical
interior and exterior spread footings.
8.2.5 Construction Plan and process
The project team developed a coordinated project schedule and construction plans
that would reflect the expectations for an actual construction project. The project
schedule was developed using the preliminary designs given to the project team.
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 mages
development by which the conceptualized need of the owners 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 owner 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.
8.2.6 Utilities
A number of utilities would be put in place in order to ensure smooth functioning
of the project. These utilities include:
 Water Supply

 Supplementary Electricity supply.

 Fuel and

 Drainage Facility

For these services the envisioned project will allocate 2,000,000 ETB.
9. Human Resource and Training Requirement

9.1Human Resource
The list of required manpower for the envisaged International Tourist Standard
5 Star Hotel is stated in table 9.1 below.

Table 9.1: Human Resource Requirement

Description No. of Monthly Annual

Persons Salary Salary
(Birr (Birr)
.1 Administration Staff
1.1 General Manager 1 18,000 216,000
.1.2 Human resource manager 2 7000 168,000
1.3 Accountant 2 7000 168,000
1.4 Supervisor 5 3000 180,000
1.5 Secretary 1 1000 12,000
1.6 Driver 1 1000 12,000
1.7 Messenger 1 800 9,600
Sub total 13 765,000
2 Gymnasium
2.1 Cardiovascular trainer 4 2,200 105,600
2.2 Aerobics' trainer 4 2,000 96,000
Sub total 8 4,200 201,600
3 Weight
3.1 Weight trainer 4 2000 96,000
3.2 Health and Physical education 4 2000 96,000
3.3 Fitness man 4 2000 96,000
3.4 Cleaner 4 800 38,400
Sub total 16 326,400
4 Multipurpose Assembly Hall
4.1 Assembly hall supervisor 1 2000 12,000
4.2 Film projector operator 3 1500 54,000
4.3 Hall attendant 8 1000 96,000
4.4 Casher 4 1,000 48,000
4.5 Cleaner 7 700 16,800
4.6 Storekeeper 2 1,100 26,400
Sub-total 20 253,200
5 Pastry and Cafeteria
5.1 Cafeteria supervisor 1 2,000 24,000
5.2 Waiter 30 1,000 360,000
5.3 Cook 20 1,908.4 458016
5.4 Coffee machine operator 2 1000 24,000
5.5 Cleaner 6 700 50,400
5.6 Pastry attendant 2 900 21,600
Sub-total 61 672,000
6 Weeding ceremony and Traditional
Restaurant
6.1 Supervisor 1 2000 24,000
6.2 Purchaser 2 1000 24,000
6.3 Driver 2 900 21,600
6.4 Cook 10 700 84,000
6.5 Waiter 20 1000 240,000
6.6 Coffee ceremony attendant 4 1000 48,000
6.7 Cleaner 8 600 57,600
Subtotal 47 499,200
7 Swimming Pool
7.1 Supervisor 1 2000 24,000
7.2 Waiter 10 1000 120,000
7.3 Coffee machine operator 2 1,000 24,000
7.4 Dessert attendant 2 900 21,600
7.5 Life sever 4 900 43,200
7.6 Cleaner 4 1400 16,800
7.7 Casher 4 700 33,600
7.8 Electrician 1 1000 12,000
7.9 Plumber 1 900 10,800
7.10 Gardner 10 700 84,000
7.11 Guard 3 700 25,200
Sub total 42 415,200
8.1 Children play-ground attendant 5 1000 60,000
8.2 Cleaner 1 700 8,400
8.3 Casher 1 1000 12,000
8.4 Greenery man 101 1000 1,212,200
8.5 Guard 3 1000 36,000
Sub total 111 1,328,400
9 Guest Room ,scanning, internet cafe
9.1 Chief receptionist 1 3000 36,000
9.2 Receptionist 4 2000 96,000
9.3 Porter 5 1000 60,000
9.4 Guestroom attendant/ cleaner 2 1000 19,200
9.5 Kids game facilitator 4 1000 43,200
9.6 IT 10 2000 240,000
Sub-total 26 493,200
Permanent total 344
Temporary (at the time of Construction) 57
Grand total 401 5,220,200

The envisaged 5 Star Hotel creates 401 job opportunity and about Birr 5,220,200
of income. The professionals and support staffs for the envisaged center shall be
recruited from West Gojjiam zone.
9.2 Training Requirement
On job training of personnel shall be conducted that primarily focuses on the
customer handling and trouble shooting. Necessary amount of budget will be
allocated for training expense.

10. Financial Analysis

10.1 Underlying Assumption

The financial analysis International Tourist Standard 5 Star Hotel is based on the
data provided in the preceding chapters and the following assumptions.
1. Project life: Ten operational years excluding implementation period
2. Capacity Utilization Rate: Starts at 70% and increases by 15% every
additional year up to attainable capacity of 100%.
3. Working days per year: 365
4. Number of shifts: at full capacity =2
5. Working hours per shift : 8, total working hours per day, 8
6. Tax holiday period: Nil,
7. Profit tax: Normal
8. Salvage value: Buildings 5%, Vehicles, Machinery, and Major Equipment,
20%.
9. Recovery rate: Full amount of the ending working capital amount,
10. Cost of Capital for discounting: 9.5%
11. Grace period: No.
12. Financial Expense on debt finance: Fixed 16 %,
13. Loan Repayment: Principal plus interest is paid per quarter within 8. years,
however, interest alone would be paid during grace period of 2 years,
14. Water average Rate Birr 7.5 Per M3
15. Power: average rate Birr 1.5 per KWH,
 16. Stationery and Communication: 3% of salary expense,
17. Marketing and Promotion: 0.5% of sales revenue,
18. Uniform and miscellaneous : Birr 400 per employee/year,
19. Miscellaneous expense birr 200,000 per annum.
20. Salary Expense: Per the schedule shown in item 42,
21. Wage: as required
22. Depreciation: Buildings 5%, Machinery, Vehicle, Equipment and furniture
20%, land lease 1% based lease life.
23. Amortization: Pre-operating expense : 20%,
24. Property Insurance premium: would be 1.75 % for the buildings cost and
2.5% for Machinery and Vehicles

10.2 Initial Investment

The total investment cost of the project including working capital is estimated at
Birr 50.466 million as shown in table 10.2.1 below. The Owner shall contribute
30% of the finance in the form of equity while the remaining 70% is to be financed
by bank loan.
Table 10.2.1: Total initial investment
Items L.C F.C Total
Land 500,000 500,000
Building and civil works 26,275,952 26,275,952
Office equipment 1,039,000 1,039,000
Generator 1,400,000 1,400,000
Vehicle 5,000,000 5,000,000
Service Machine & equipment 1,000,000 1,000,000
Total fixed investment cost 35,214,952 35,214,952
Material, Food, drink, utility 10,000,000 10,000,000
and Operation cost
Salary and Training expense 5,250,200 5,250,200
Total 50,465,152 50,465,152
11. Financial Evaluation

I. Profitability
According to the projected income statement attached in the annex part (see annex
4) the project will generate profit beginning from the first year of operation. Ratios
such as the percentage of net profit to total sales, return on equity and return on
total investment are 3%, 5% and 19% respectively in the first year and will rises
considerably in the subsequent years. Furthermore, the income statement and other
profitability indicators show that the project is viable.
II. Breakeven Analysis

The breakeven point of the project is estimated by using income statement

projection.
Accordingly, the project will break even at 30.7% of capacity utilization.

III. Payback Period

Investment cost and income statement projection are used in estimating the project
payback period. The project wills payback fully the initial investment less working
capital in 9 years and 5 months time.

IV. Simple Rate of Return

For the envisaged plant the simple rate of return equals to 23.8%.

V. Internal Rate of Return and Net Present Value

Based on cash flow statement presented in the annex part, the calculated IRR of the
project is 25 % and the net present value at 18 % discount is Birr 1,590,951.02.

12. Economic and Social Benefit and Justification

Positive Economic Impacts
Economic impact is traditionally defined as the infusion of spending, not typically
anticipated as a normal revenue stream from the immediate community; and as a
direct positive result of the facility. This infusion of monies is often described in
terms of overnight impact and daily impact. In his book Financing and Acquiring
Park and Recreation Resources,
Dr. John L. Crompton discusses the conceptual reasoning for developing economic
balance sheets. The purpose of studying the economic impact of facilities is to
measure the return to the residents.

The envisaged project possesses wide range of benefits that promotes the socio-
economic goals and objectives stated in the strategic plan of the Amhara Regional
State. It also plays a role in diversifying the economic activity of the region. These
other benefits are listed as follows

A. Profit Generation
The project is found to be financially viable and earns a profit of Birr 52 million
ETB within the project life. Such result induces the project promoters to reinvest
the profit which, therefore, increases the investment magnitude in the region.

B. Tax Revenue
In the project life under consideration, the region will collect about Birr 9.586
million from corporate tax payment alone (i.e. excluding income tax and). Such
result create additional fund for the regional government that will be used in
expanding social and other basic services in the region

C. Employment and Income Generation

The proposed project is expected to create employment opportunity to (401)

several citizens of the region. That is, it will provide permanent employment to 349
professionals as well as support stuffs and 52 temporary employments.
Consequently the project creates income of Birr 5,250,200 per year. This would be
one of the commendable accomplishments of the project.

D. Tourist Attraction

The global tourism industry has huge economic importance. It contributes 10% of
the world’s gross domestic product and 6% of exports. One billion people a year
travel somewhere in the world.
Africa’s natural and cultural points of interest give the continent tremendous
tourism potential. This shows in the numbers. In 2015, the sector generated USD$
36 billion in Africa (7% of all exports in the region), up from USD$ 10 billion in
2000. Travel and tourism also directly supports 466,000 jobs. It’s expected that by
2030 the number of tourists will reach 134 million annually.

But African countries’ tourism industries are often constrained by a lack of

infrastructure development, air connectivity and financing.

Ethiopia, in East Africa, is an example. The country has immense natural, cultural
and historical attractions, but is a largely untapped tourism market. It suffers from
a lack of infrastructure and the negative publicity the country received after the
famine in the 1980s and various conflicts. It needs to make a big effort to market
its potential and develop the measures to support the industry.

Ethiopia’s tourism sector showed a steady increase in the last decade. International
tourist arrivals rose from 64,000 in 1990 to 680,000 in 2013 and are expected to
reach 815,000 by 2024. This 2024 figure would mean a contribution of USD$2
billion to the country’s GDP. Over the next five years the sector is expected to
create over a million jobs, or 3.6% of total employment.

Comfortable hotels play a vital role in attracting tourists. After the fall of the
communist government 27 years ago, Ethiopia started privatizing most of the state
owned hotels and tourism establishments. To support this, the government adopted
a policy that allows duty-free imports of hotel furniture, fixtures and equipment. It
also provides for favorable loans to investors for the construction of new rated
hotels.

But, while the hotel industry is growing, the number of available hotel rooms is
still the lowest. In terms of room availability, Ethiopia is globally ranked 134 out
of 140, compared to Kenya, Uganda and Tanzania at positions 122, 121 and 118
respectively. Furthermore, there are few hotels of an international standard, and
many are old and unattractive. Infrastructure to support the hotels is lacking. There
are no zoning policies to establish the areas where hotels should be constructed, or
tourist activities to complement them when they are built.

Until recently, Ethiopia did not have enough hotels recognized under international
rankings or ratings – they generously awarded themselves their own stars. This
made it hard for visitors to judge the quality of a hotel. This changed in 2015 when
the Ethiopian government, with the help of World Tourism Organization, started
rating hotels in the country. Though participation in the grading process is
mandatory, the graded hotels still haven’t undergone annual audits to ensure
they’re keeping up with the standard they were awarded.

Ethiopia also only has six internationally branded and managed hotels. This is a
very low figure bearing in mind that the average number of tourists per year is
nearly 700,000 and these six hotels have a combined total of less than 1,500 rooms.
By comparison, Nairobi in neighboring Kenya already hosts most of the
international hotel brands – and expects 13 more to open their doors over the next
five years.

There are also only three five star hotels in Ethiopia and the majority of the “rated”
hotels which guarantee a certain standard of service are situated in the capital,
Addis Ababa. Other hotels, rated only by online travel agents based on the guests’
comments and with fewer than 100 rooms, are scattered throughout major towns.
This is a problem because most of the tourist attractions are located in the
countryside. There is also a scarcity of budget facilities, like youth hostels, to cater
for budget travelers and backpackers.

Another major issue is the hotel structures. After the fall of the communist regime,
from 1995, Ethiopia started privatizing. Over 287 enterprises were transferred from
the public to the private sector – out of which 34, or 11.8%, were hotels. The aim
was to improve economic efficiency, stimulate the private sector and mobilise
more foreign and domestic investment. However, the process has been weighed
down with problems which include; corruption, loss of jobs and a lack of
ownership and transparency. The state retains control of many of the most valuable
assets in the sector. These are not well maintained, as they are about to be
privatized. For example, Addis Ababa’s Hilton hotel, completed in 1987, now
needs urgent refurbishment.

Finally, the hotel industry needs to be supported by tourism infrastructure. It needs

physical facilities like car parks, sewerage and water works, transport projects and
roads. These have to be based on zoning policies, to establish where the hotels
should be built. With the exception of Addis Ababa, there are also hardly any
offerings of recreational or entertainment activities like parks, concerts or cinemas.
And there are logistical gaps like the lack of adequate ATM machines and foreign
exchange bureaus outside Addis Ababa. This means visitors need to carry large
amounts of cash in local currency, which is inconvenient and unsafe.

To spur tourism growth and development, Ethiopia must improve the hotel
industry and the infrastructure that supports it. It will take the cooperation of all
stakeholders – government, hotel professionals, hotel owners and hotel trade
associations – to achieve a competitive and sustainable sector
 ANNEXE
S
 Annex 1: Total Net Working Capital Requirements (in Birr)

CONSTRUCTION PRODUCTION
Year 1 Year 2 1 2 3 4
Capacity Utilization (%) 0 0 65% 75% 90% 100%
1. Total Inventory 0.00 0.00 524902.14 605656.32 726787.58 807541.76
Raw Materials in Stock- Total 0.00 0.00 162197.24 187150.66 224580.80 249534.22
Raw Material-Local 0.00 0.00 140204.36 161774.26 194129.12 215699.02
Raw Material-Foreign 0.00 0.00 21992.88 25376.40 30451.68 33835.20
Factory Supplies in Stock 0.00 0.00 2496.81 2880.93 3457.12 3841.24
Spare Parts in Stock and Maintenance 0.00 0.00 10750.39 12404.29 14885.15 16539.05
Work in Progress 0.00 0.00 62420.16 72023.26 86427.91 96031.01
Finished Products 0.00 0.00 124840.31 144046.51 172855.82 192062.02
2. Accounts Receivable 0.00 0.00 389716.36 449672.73 539607.27 599563.64
3. Cash in Hand 0.00 0.00 67738.39 78159.68 93791.62 104212.91
CURRENT ASSETS 0.00 0.00 820159.66 946338.06 1135605.68 1261784.09
4. Current Liabilities 0.00 0.00 389716.36 449672.73 539607.27 599563.64
Accounts Payable 0.00 0.00 389716.36 449672.73 539607.27 599563.64
TOTAL NET WORKING CAPITAL REQUIRMENTS 0.00 0.00 430443.29 496665.34 595998.40 662220.45
INCREASE IN NET WORKING CAPITAL 0.00 0.00 430443.29 66222.04 99333.07 66222.04

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

PRODUCTION
 5 6 7 8 9 10
Capacity Utilization (%) 100% 100% 100% 100% 100% 100%
1. Total Inventory 807541.76 807541.76 807541.76 807541.76 807541.76 807541.76
Raw Materials in Stock-Total 249534.22 249534.22 249534.22 249534.22 249534.22 249534.22
Raw Material-Local 215699.02 215699.02 215699.02 215699.02 215699.02 215699.02
Raw Material-Foreign 33835.20 33835.20 33835.20 33835.20 33835.20 33835.20
Factory Supplies in Stock 3841.24 3841.24 3841.24 3841.24 3841.24 3841.24
Spare Parts in Stock and Maintenance 16539.05 16539.05 16539.05 16539.05 16539.05 16539.05
Work in Progress 96031.01 96031.01 96031.01 96031.01 96031.01 96031.01
Finished Products 192062.02 192062.02 192062.02 192062.02 192062.02 192062.02
2. Accounts Receivable 599563.64 599563.64 599563.64 599563.64 599563.64 599563.64
3. Cash in Hand 104212.91 104212.91 104212.91 104212.91 104212.91 104212.91
CURRENT ASSETS 1261784.09 1261784.09 1261784.09 1261784.09 1261784.09 1261784.09
4. Current Liabilities 599563.64 599563.64 599563.64 599563.64 599563.64 599563.64
Accounts Payable 599563.64 599563.64 599563.64 599563.64 599563.64 599563.64
TOTAL NET WORKING CAPITAL 662220.45 662220.45 662220.45 662220.45 662220.45 662220.45
REQUIRMENTS
INCREASE IN NET WORKING CAPITAL 0.00 0.00 0.00 0.00 0.00 0.00

Annex 2: Cash Flow Statement (in Birr)

CONSTRUCTION PRODUCTION
Year 1 Year 2 1 2 3 4
 TOTAL CASH INFLOW 2653140.00 3315360.45 3962116.36 4181956.36 5036334.55 5555956.36
1. Inflow Funds 2653140.00 3315360.45 389716.36 59956.36 89934.55 59956.36
Total Equity 1061256.00 1326144.18 0.00 0.00 0.00 0.00
Total Long Term Loan 1591884.00 1989216.27 0.00 0.00 0.00 0.00
Total Short Term Finances 0.00 0.00 389716.36 59956.36 89934.55 59956.36
2. Inflow Operation 0.00 0.00 3572400.00 4122000.00 4946400.00 5496000.00
Sales Revenue 0.00 0.00 3572400.00 4122000.00 4946400.00 5496000.00
Interest on Securities 0.00 0.00 0.00 0.00 0.00 0.00
3. Other Income 0.00 0.00 0.00 0.00 0.00 0.00
TOTAL CASH OUTFLOW 2653140.00 2653140.00 3807662.11 3488963.76 4337650.19 4602474.93
4. Increase In Fixed Assets 2653140.00 2653140.00 0.00 0.00 0.00 0.00
Fixed Investments 2526800.00 2526800.00 0.00 0.00 0.00 0.00
Pre-production Expenditures 126340.00 126340.00 0.00 0.00 0.00 0.00
5. Increase in Current Assets 0.00 0.00 820159.66 126178.41 189267.61 126178.41
6. Operating Costs 0.00 0.00 2031675.64 2336203.28 2792994.73 3097522.37
7. Corporate Tax Paid 0.00 0.00 0.00 0.00 400427.77 495436.08
8. Interest Paid 0.00 0.00 955826.82 429732.03 358110.03 286488.02
9.Loan Repayments 0.00 0.00 0.00 596850.04 596850.04 596850.04
10.Dividends Paid 0.00 0.00 0.00 0.00 0.00 0.00
Surplus(Deficit) 0.00 662220.45 154454.25 692992.60 698684.36 953481.44
Cumulative Cash Balance 0.00 662220.45 816674.70 1509667.30 2208351.66 3161833.09

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

PRODUCTION
5 6 7 8 9 10
 TOTAL CASH INFLOW 5496000.00 5496000.00 5496000.00 5496000.00 5496000.00 5496000.00
1. Inflow Funds 0.00 0.00 0.00 0.00 0.00 0.00
Total Equity 0.00 0.00 0.00 0.00 0.00 0.00
Total Long Term Loan 0.00 0.00 0.00 0.00 0.00 0.00
Total Short Term Finances 0.00 0.00 0.00 0.00 0.00 0.00
2. Inflow Operation 5496000.00 5496000.00 5496000.00 5496000.00 5496000.00 5496000.00
Sales Revenue 5496000.00 5496000.00 5496000.00 5496000.00 5496000.00 5496000.00
Interest on Securities 0.00 0.00 0.00 0.00 0.00 0.00
3. Other Income 0.00 0.00 0.00 0.00 0.00 0.00
TOTAL CASH OUTFLOW 4426161.12 4406186.51 4356051.11 3709065.66 3709065.66 3709065.66
4. Increase In Fixed Assets 0.00 0.00 0.00 0.00 0.00 0.00
Fixed Investments 0.00 0.00 0.00 0.00 0.00 0.00
Pre-production Expenditures 0.00 0.00 0.00 0.00 0.00 0.00
5. Increase in Current Assets 0.00 0.00 0.00 0.00 0.00 0.00
6. Operating Costs 3097522.37 3097522.37 3097522.37 3097522.37 3097522.37 3097522.37
7. Corporate Tax Paid 516922.68 568570.09 590056.69 611543.29 611543.29 611543.29
8. Interest Paid 214866.02 143244.01 71622.01 0.00 0.00 0.00
9. Loan Repayments 596850.04 596850.04 596850.04 0.00 0.00 0.00
10.Dividends Paid 0.00 0.00 0.00 0.00 0.00 0.00
Surplus(Deficit) 1069838.88 1089813.49 1139948.89 1786934.34 1786934.34 1786934.34
Cumulative Cash Balance 4231671.98 5321485.46 6461434.36 8248368.70 10035303.04 11822237.38

Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED

CONSTRUCTION PRODUCTION
Year 1 Year 2 1 2 3 4
TOTAL CASH INFLOW 0.00 0.00 3572400.00 4122000.00 4946400.00 5496000.00
1. Inflow Operation 0.00 0.00 3572400.00 4122000.00 4946400.00 5496000.00
Sales Revenue 0.00 0.00 3572400.00 4122000.00 4946400.00 5496000.00
Interest on Securities 0.00 0.00 0.00 0.00 0.00 0.00
2. Other Income 0.00 0.00 0.00 0.00 0.00 0.00
TOTAL CASH OUTFLOW 2653140.00 2653140.00 2462118.93 2402425.32 2892327.80 3659180.50
3. Increase in Fixed Assets 2653140.00 2653140.00 0.00 0.00 0.00 0.00
Fixed Investments 2526800.00 2526800.00 0.00 0.00 0.00 0.00
Pre-production Expenditures 126340.00 126340.00 0.00 0.00 0.00 0.00
4. Increase in Net Working Capital 0.00 0.00 430443.29 66222.04 99333.07 66222.04
5. Operating Costs 0.00 0.00 2031675.64 2336203.28 2792994.73 3097522.37
6. Corporate Tax Paid 0.00 0.00 0.00 0.00 400427.77 495436.08
NET CASH FLOW -2653140.00 -2653140.00 1110281.07 1719574.68 2054072.20 1836819.50
CUMMULATIVE NET CASH FLOW -2653140.00 -5306280.00 -4195998.93 -2476424.26 -422352.06 1414467.45
Net Present Value (at 18%) -2653140.00 -2248423.73 797386.58 1046586.24 1059467.59 802890.73
Cumulative Net present Value -2653140.00 -4901563.73 -4104177.15 -3057590.92 -1998123.33 -1195232.59

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

PRODUCTION
5 6 7 8 9 10
TOTAL CASH INFLOW 5496000.00 5496000.00 5496000.00 5496000.00 5496000.00 5496000.00
1. Inflow Operation 5496000.00 5496000.00 5496000.00 5496000.00 5496000.00 5496000.00
Sales Revenue 5496000.00 5496000.00 5496000.00 5496000.00 5496000.00 5496000.00
Interest on Securities 0.00 0.00 0.00 0.00 0.00 0.00
2. Other Income 0.00 0.00 0.00 0.00 0.00 0.00
TOTAL CASH OUTFLOW 3614445.05 3666092.46 3687579.06 3709065.66 3709065.66 3709065.66
3. Increase in Fixed Assets 0.00 0.00 0.00 0.00 0.00 0.00
Fixed Investments 0.00 0.00 0.00 0.00 0.00 0.00
Pre-production Expenditures 0.00 0.00 0.00 0.00 0.00 0.00
4. Increase in Net Working Capital 0.00 0.00 0.00 0.00 0.00 0.00
5. Operating Costs 3097522.37 3097522.37 3097522.37 3097522.37 3097522.37 3097522.37
6. Corporate Tax Paid 516922.68 568570.09 590056.69 611543.29 611543.29 611543.29
NET CASH FLOW 1881554.95 1829907.54 1808420.94 1786934.34 1786934.34 1786934.34
CUMMULATIVE NET CASH 3296022.39 5125929.94 6934350.88 8721285.22 10508219.56 12295153.90
FLOW
Net Present Value (at 18%) 696987.29 574453.79 481108.99 402875.20 341419.66 289338.69
Cumulative Net present Value -498245.30 76208.49 557317.47 960192.67 1301612.33 1590951.02
Net Present Value (at 18%) 1,590,951.02
Internal Rate of Return 25.1%

Annex 4: NET INCOME STATEMENT ( in Birr)

PRODUCTION
1 2 3 4 5
Capacity Utilization (%) 65% 75% 90% 100% 100%
1. Total Income 3572400.00 4122000.00 4946400.00 5496000.00 5496000.00
Sales Revenue 3572400.00 4122000.00 4946400.00 5496000.00 5496000.00
Other Income 0.00 0.00 0.00 0.00 0.00
2. Less Variable Cost 1754228.04 2024109.28 2428931.13 2698812.37 2698812.37
VARIABLE MARGIN 1818171.96 2097890.72 2517468.87 2797187.63 2797187.63
(In % of Total Income) 50.89 50.89 50.89 50.89 50.89
3. Less Fixed Costs 737983.60 772630.00 824599.60 859246.00 859246.00
OPERATIONAL MARGIN 1080188.36 1325260.72 1692869.27 1937941.63 1937941.63
(In % of Total Income) 30.24 32.15 34.22 35.26 35.26
4. Less Cost of Finance 955826.82 429732.03 358110.03 286488.02 214866.02
5. GROSS PROFIT 124361.54 895528.69 1334759.24 1651453.61 1723075.61
6. Income (Corporate) Tax 0.00 0.00 400427.77 495436.08 516922.68
7. NET PROFIT 124361.54 895528.69 934331.47 1156017.53 1206152.93
RATIOS (%)
Gross Profit/Sales 3% 22% 27% 30% 31%
Net Profit After Tax/Sales 3% 22% 19% 21% 22%
Return on Investment 19% 23% 22% 24% 24%
Return on Equity 5% 38% 39% 48% 51%

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

PRODUCTION
6 7 8 9 10
Capacity Utilization (%) 100% 100% 100% 100% 100%
1. Total Income 5496000.00 5496000.00 5496000.00 5496000.00 5496000.00
 Sales Revenue 5496000.00 5496000.00 5496000.00 5496000.00 5496000.00
Other Income 0.00 0.00 0.00 0.00 0.00
2. Less Variable Cost 2698812.37 2698812.37 2698812.37 2698812.37 2698812.37
VARIABLE MARGIN 2797187.63 2797187.63 2797187.63 2797187.63 2797187.63
(In % of Total Income) 50.89 50.89 50.89 50.89 50.89
3. Less Fixed Costs 758710.00 758710.00 758710.00 758710.00 758710.00
OPERATIONAL MARGIN 2038477.63 2038477.63 2038477.63 2038477.63 2038477.63
(In % of Total Income) 37.09 37.09 37.09 37.09 37.09
4. Less Cost of Finance 143244.01 71622.01 0.00 0.00 0.00
5. GROSS PROFIT 1895233.62 1966855.62 2038477.63 2038477.63 2038477.63
6. Income (Corporate) Tax 568570.09 590056.69 611543.29 611543.29 611543.29
7. NET PROFIT 1326663.53 1376798.94 1426934.34 1426934.34 1426934.34
RATIOS (%)
Gross Profit/Sales 34% 36% 37% 37% 37%
Net Profit After Tax/Sales 24% 25% 26% 26% 26%
Return on Investment 25% 24% 24% 24% 24%
Return on Equity 56% 58% 60% 60% 60%

Annex 5: Projected Balance Sheet (in Birr)

CONSTRUCTION PRODUCTION
Year 1 Year 2 1 2 3 4
TOTAL ASSETS 2653140.00 5968500.45 6482578.36 6841213.36 7268629.33 7887753.18
1. Total Current Assets 0.00 662220.45 1636834.36 2456005.36 3343957.33 4423617.18
Inventory on Materials and Supplies 0.00 0.00 175444.43 202435.88 242923.06 269914.51
Work in Progress 0.00 0.00 62420.16 72023.26 86427.91 96031.01
 Finished Products in Stock 0.00 0.00 124840.31 144046.51 172855.82 192062.02
Accounts Receivable 0.00 0.00 389716.36 449672.73 539607.27 599563.64
Cash in Hand 0.00 0.00 67738.39 78159.68 93791.62 104212.91
Cash Surplus, Finance Available 0.00 662220.45 816674.70 1509667.30 2208351.66 3161833.09
Securities 0.00 0.00 0.00 0.00 0.00 0.00
2. Total Fixed Assets, Net of Depreciation 2653140.00 5306280.00 4845744.00 4385208.00 3924672.00 3464136.00
Fixed Investment 0.00 2526800.00 5053600.00 5053600.00 5053600.00 5053600.00
Construction in Progress 2526800.00 2526800.00 0.00 0.00 0.00 0.00
Pre-Production Expenditure 126340.00 252680.00 252680.00 252680.00 252680.00 252680.00
Less Accumulated Depreciation 0.00 0.00 460536.00 921072.00 1381608.00 1842144.00
3. Accumulated Losses Brought Forward 0.00 0.00 0.00 0.00 0.00 0.00
4. Loss in Current Year 0.00 0.00 0.00 0.00 0.00 0.00
TOTAL LIABILITIES 2653140.00 5968500.45 6482578.36 6841213.36 7268629.33 7887753.18
5. Total Current Liabilities 0.00 0.00 389716.36 449672.73 539607.27 599563.64
Accounts Payable 0.00 0.00 389716.36 449672.73 539607.27 599563.64
Bank Overdraft 0.00 0.00 0.00 0.00 0.00 0.00
6. Total Long-term Debt 1591884.00 3581100.27 3581100.27 2984250.22 2387400.18 1790550.13
Loan A 1591884.00 3581100.27 3581100.27 2984250.22 2387400.18 1790550.13
Loan B 0.00 0.00 0.00 0.00 0.00 0.00
7. Total Equity Capital 1061256.00 2387400.18 2387400.18 2387400.18 2387400.18 2387400.18
Ordinary Capital 1061256.00 2387400.18 2387400.18 2387400.18 2387400.18 2387400.18
Preference Capital 0.00 0.00 0.00 0.00 0.00 0.00
Subsidies 0.00 0.00 0.00 0.00 0.00 0.00
8. Reserves, Retained Profits Brought Forward 0.00 0.00 0.00 124361.54 1019890.23 1954221.70
9.Net Profit After Tax 0.00 0.00 124361.54 895528.69 934331.47 1156017.53
Dividends Payable 0.00 0.00 0.00 0.00 0.00 0.00
Retained Profits 0.00 0.00 124361.54 895528.69 934331.47 1156017.53
 Annex 5: Projected Balance Sheet (in Birr): Continued

PRODUCTION
5 6 7 8 9 10
TOTAL ASSETS 8497056.06 9226869.55 10006818.44 11433752.78 12860687.12 14287621.47
1. Total Current Assets 5493456.06 6583269.55 7723218.44 9510152.78 11297087.12 13084021.47
Inventory on Materials and Supplies 269914.51 269914.51 269914.51 269914.51 269914.51 269914.51
Work in Progress 96031.01 96031.01 96031.01 96031.01 96031.01 96031.01
Finished Products in Stock 192062.02 192062.02 192062.02 192062.02 192062.02 192062.02
Accounts Receivable 599563.64 599563.64 599563.64 599563.64 599563.64 599563.64
Cash in Hand 104212.91 104212.91 104212.91 104212.91 104212.91 104212.91
Cash Surplus, Finance Available 4231671.98 5321485.46 6461434.36 8248368.70 10035303.04 11822237.38
Securities 0.00 0.00 0.00 0.00 0.00 0.00
2. Total Fixed Assets, Net of Depreciation 3003600.00 2643600.00 2283600.00 1923600.00 1563600.00 1203600.00
Fixed Investment 5053600.00 5053600.00 5053600.00 5053600.00 5053600.00 5053600.00
Construction in Progress 0.00 0.00 0.00 0.00 0.00 0.00
Pre-Production Expenditure 252680.00 252680.00 252680.00 252680.00 252680.00 252680.00
Less Accumulated Depreciation 2302680.00 2662680.00 3022680.00 3382680.00 3742680.00 4102680.00
3. Accumulated Losses Brought Forward 0.00 0.00 0.00 0.00 0.00 0.00
4. Loss in Current Year 0.00 0.00 0.00 0.00 0.00 0.00
TOTAL LIABILITIES 8497056.06 9226869.55 10006818.44 11433752.78 12860687.12 14287621.47
5. Total Current Liabilities 599563.64 599563.64 599563.64 599563.64 599563.64 599563.64
Accounts Payable 599563.64 599563.64 599563.64 599563.64 599563.64 599563.64
Bank Overdraft 0.00 0.00 0.00 0.00 0.00 0.00
6. Total Long-term Debt 1193700.09 596850.04 0.00 0.00 0.00 0.00
Loan A 1193700.09 596850.04 0.00 0.00 0.00 0.00
Loan B 0.00 0.00 0.00 0.00 0.00 0.00
7. Total Equity Capital 2387400.18 2387400.18 2387400.18 2387400.18 2387400.18 2387400.18
 Ordinary Capital 2387400.18 2387400.18 2387400.18 2387400.18 2387400.18 2387400.18
Preference Capital 0.00 0.00 0.00 0.00 0.00 0.00
Subsidies 0.00 0.00 0.00 0.00 0.00 0.00
8. Reserves, Retained Profits Brought 3110239.23 4316392.16 5643055.69 7019854.63 8446788.97 9873723.31
Forward
9. Net Profit After Tax 1206152.93 1326663.53 1376798.94 1426934.34 1426934.34 1426934.34
Dividends Payable 0.00 0.00 0.00 0.00 0.00 0.00
Retained Profits 1206152.93 1326663.53 1376798.94 1426934.34 1426934.34 1426934.34