KUNAP'S Final Feasibility Study

KUNIFIRA AGRO-PROCESSING PLC (KUNAP) – FEASIBILITY STUDY
KUNIFIRA AGRO-PROCESSING PLC

(KUNAP)
FEASIBILITY STUDY
FOR
ESTABLISHMENT OF EDIBLE SOYABEAN OIL

PROCESSING FACTORY
January, 2013
KUNIFIRA AGRO-PROCESSING PLC (KUNAP) – Feasibility Study
TABLE OF CONTENTS
EXECUTIVE SUMMARY..............................................................................................................................5
1. PROJECT DESCRIPTION....................................................................................................................7
1.1 Benefits and Advantages of Soya Bean foods and Soya Bean Oil......................................................7
1.2 Importance of soybean and soy oil production in Ethiopia.................................................................8
2. PROJECT DESCRIPTION...................................................................................................................11
2.1 Location and Address.......................................................................................................................11
2.2 Project objective...............................................................................................................................11
2.3 Product Description and Application................................................................................................12
2.4 Opportunity Rationale......................................................................................................................12
2.5 Project activities...............................................................................................................................12
2.6 Plant Capacity..................................................................................................................................13
2.7 Project Cost Summary......................................................................................................................13
2.8 Implementation Time Schedule........................................................................................................14
3. MARKET ANALYSIS...........................................................................................................................15
3.1 Past Supply and Present demand of Edible Oil................................................................................15
3.2 Consumer Attitudes – Acceptance of Soybean oil and Nutritious food............................................18
3.3 Projected Demand............................................................................................................................18
3.4 Market Segmentation.......................................................................................................................19
3.5 Target Marketing Strategy................................................................................................................19
3.6 Pricing Strategy................................................................................................................................20
4. OPERATIONAL ANALYSIS...............................................................................................................21
4.1 Plant Capacity and Capacity Utilization...........................................................................................21
4.2 Production Process...........................................................................................................................21
4.3 Raw Materials and Inputs.................................................................................................................24
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4.4 Utilities.............................................................................................................................................26
5. ORGANIZATION AND MANAMENT...............................................................................................27
5.1 Establishment and Objectives...........................................................................................................27
5.2 Vision of the Company....................................................................................................................27
5.3 Mission Statement............................................................................................................................27
5.4 The Management..............................................................................................................................27
5.5 Organizational Structure...................................................................................................................31
5.6 Human Resource Requirement.........................................................................................................33
6. SWOT ANALYSIS................................................................................................................................35
7. FINANCIAL PLAN...............................................................................................................................36
7.1 Pre Operating Costs..........................................................................................................................36
7.2 Building & civil works.....................................................................................................................36
7.3 Plant, Equipment and Machinery.....................................................................................................38
7.4 Vehicles............................................................................................................................................40
7.5 Office Furniture and Other Equipment.............................................................................................40
7.6 Working Capital Requirement..........................................................................................................41
7.7 Source of Fund.................................................................................................................................41
8. FINANCIAL ANALYSIS......................................................................................................................42
8.1 Financial Projections and Assumptions............................................................................................42
8.2 Sales revenue....................................................................................................................................42
8.3 Costs & Expenses.............................................................................................................................44
9. PROJECTED FINANCIAL STATEMENTS......................................................................................45
9.1 Projected Profit & Loss Statement...................................................................................................45
9.2 Forecasted Cash flow statement.......................................................................................................47
9.3 Loan Repayment Schedule...............................................................................................................48
10. CONCLUSION AND RECOMMENDATION................................................................................49
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10.1 Profitability......................................................................................................................................49
10.2 Viability...........................................................................................................................................49
10.3 Payback Period.................................................................................................................................49
10.4 Sensitivity Analysis..........................................................................................................................49
10.5 Conclusion.......................................................................................................................................49
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EXECUTIVE SUMMARY
This feasibility study report is prepared by KUNIFIRA Agro-Processing PLC (KUNAP) to complete
a project for establishment of edible soya bean oil processing factory with a capacity of processing
6,600 tons of soybeans for production of 860,000 liters of soy oil and 5,214 tons of defatted
soybeans annually, in Oromiya national regional state, Gelan town.
The Promoters of the project, KUNAP’s founders, have an extensive business background and have
developed a variety of businesses with long years of experience and intimate knowledge of the oil
and food processing sector. Currently in desiring to expand their business, they wishes to implement
this edible soya oil and defatted soya bean processing plant.
Ethiopia with almost 80 million inhabitants is a large market for edible oil. The combination of a
growing GDP with an annually population growth of 2.6% makes it even more relevant that the
availability of good quality oil, such as soybean oil is required.
According to the data obtained from ministry of industry (FAO and ITC in 1997/8 – 1999/2000 E.C)
the annual consumption of edible oil for the country is estimated 174, 000 tons out of this 80,000 ton
(46%) is from own production and 94,000 (54%) was imported. Taking the population in the same
period per capita Production was 1 k.g and per capita consumption was 2.2 k,g. Thus the per capita
supply is lower than per capita supply by 54.5%
There is also a strong demand for defatted soybeans from the supplementary food industries;
factories that supply to the World Food Program alone have a total annual demand of 60,000 tons to
cater for soy blends for the food insecure and malnutrition affected areas.
Thus, the project’s overall objective is to establish modern plant for edible soya bean oil processing
to supply quality edible soya bean oil and defatted soy bean products mainly for local market.
The project major activities are therefore completing construction of building for oil processing plant
and warehouse, procurement and installation of the required machinery and equipment as well as
infrastructure facilities, procurement of vehicles to transport raw material and factory products,
recruitment of the required employees to deliver customers quality edible soy oil and defatted
soybeans products.
The foundation for the project is a preliminary survey, upon which the operating and marketing
strategies are built. Discussions and interviews were held with a variety of individuals involved in
other similar businesses to develop the Performa data, review the market potential, and competitive
situation.
After the project become operational, it will create additional permanent job opportunity for about
49 persons, and other contractual employees required on seasonal basis.
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The project is environmentally friendly and the social and economic benefits are immense as it is
geared to notably substitute the huge imports of edible oil. In addition, it will generate Birr 73.5
million income to the government in the form of taxes.
The market assessment for this project justifies the implementation of the intended project. The plan
shows annual sales of Birr 52,932,436 for the first year of operation and Birr 168,145,433 by the end
of year ten with net profits of Birr 3,987,722.97 and Birr 20,133,895.50 respectively.
The total project cost is Birr 23,456,453.06 before bank interest, out of the total Birr 6,923,867.34
(30%) will be covered by the owners and the remaining amount Birr 16,532,585.72 (70%) will be
covered through bank financing.
The project has positive cash flow throughout the assumed project life; it starts with 2,746,937.63 in
the first year and reached to Birr 24,556,065.99 at the end of year ten. The IRR of the project is 32%
as shown in the detail financial analysis of the project.
In conclusion, this feasibility study shows in detail that the project is financially viable, technically
feasible, and economically sound and will have no market problems.
Our Keys to Success are:
 Existence of Conducive investment policy in the country towards manufacturing and

processing industries.
 Bringing the new facility to maximum production within three years of operation.
 Effectively communicating, to potential customers, the position of the company as a

differentiated provider of the highest quality of refined edible oil with reasonable price.
 Controlled overhead and operational costs
 Regular monitoring on the quality and safety aspect of the products
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1. PROJECT DESCRIPTION
1.1 Benefits and Advantages of Soya Bean foods and Soya Bean Oil
Several nutritional advantages could be obtained by incorporating soybean based foods in the
diet. Soybean represents an excellent source of high quality protein with a low content in
saturated fat, with no cholesterol, and a great amount of dietary fiber. Therefore, the possible
use of soybean in functional food design is very promising, since the consumption of soybean
protein and dietary fiber seems to reduce the risk of cardiovascular diseases and to improve
glycemic control.
Furthermore, soybean and several of its components have shown in various in vitro, in vivo,
and human clinical studies their effectiveness and potential role in the prevention and treatment
of different diseases. The use of soybean in food form for several centuries assures us of its
safety and nutritive value for human health. Consequently, it is imperative for all the conscious
societies to incorporate this abundantly available ‘treasure of functionality’ in their daily diet
and harness the complete benefit of this yellow ‘miracle’ seed.
Soybean oil is a vegetable oil extracted from the seeds of the soybean (Glycine max). It is one
of the world’s most widely used edible oils. The following are the major advantages of soy oil.
1.1 Versatile
Soybean oil’s clean, natural taste and nearly imperceptible aroma support and enhance the
natural flavors of prepared foods. Whether used as a shortening for an old-fashioned pie crust
or blended with flavored vinegar for a new dressing, soybean oil’s neutral flavor lets the real
taste of the food product come through.
Adaptable to nearly every fat or oil application in the food industry, soybean oil works well
with other ingredients including other fats and oils, making it very suitable for use in salad
dressings, sauces and baked foods. Soybean oil is available with OSI (Oil Stability Index)
stability levels ranging from 7 to over 60 hours, and it is a proven performer in the wide range
of applications required by snack food manufacturers, bakeries, foodservice providers and
more.
Liquid soybean oil is used in 100% formulations for cooking oil and to create mayonnaise,
salad dressings and sauces. Soybean oil can turn 2 ounces of olive oil into a whole pint of
flavored oil for dressings. The distinctive olive oil aroma will be evident, even though the bulk
of the dressing’s oil component comes from inexpensive soybean oil. Oils that are flavorful,
such as olive, peanut and walnut, are generally expensive and it only takes a small amount in a
blend with soybean oil to make a large quantity of flavored oil. Chefs and food companies have
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long practiced oil blending to gain the benefits of flavored oils and save money on ingredient
costs.
Soybean oil also is found in breads, crackers, and barbecue sauce and non-dairy creamers.
Soybean oil is used in prepared foods such as whipped toppings, potato chips and battered and
breaded snacks and vegetables.
Compared to other vegetable oils, soybean oil has good emulsifying ability. This makes it an
appropriate ingredient in mayonnaise, and the first choice of the general food industry.
1.2 Nutritionally Balanced
Liquid soybean oil is among the healthiest of all edible oils and has a very favorable fatty acid
profile. It is relatively low in saturated fat, high in polyunsaturated fat and contains
monounsaturated fat. The Institute of Medicine’s Dietary Reference Intakes (DRI)
acknowledges that unsaturated fatty acids reduce blood cholesterol and lower the risk of heart
disease when they replace saturated fats in the diet, and recommends intakes for both linoleic
and alpha-linoleic acid (ALA).
1.3 Rich Source of omega-3 and omega-6 fatty acids for heart health
Soybean oil is one of the few non-fish sources of omega-3 polyunsaturated fatty acids, which
have various physiological benefits including cardio protective effects.
While fish oil is the preferred source of omega-3s because of the bioavailability of
eicosapentaenoic (EPA) and docosahexaenoic acid (DHA), the ALA in soybean oil is the
principal source of omega-3s.
Omega-6 fatty acids, found naturally in soybean oil, may also decrease risk of heart disease,
according to a science advisory published by the American Heart Association in January 2009.
Containing about 50% omega-6s, conventional soybean oil is one of the most concentrated
sources of this polyunsaturated fat.
1.4 Rich Source of Vitamin E
Soybean oil is the primary commercial source of alphatocopherol, also known as vitamin E.
Vitamin E is the body’s primary lipid-soluble antioxidant defense against free radical induced
cell damage, which has been linked to a number of cancers, heart disease, cataracts, premature
aging and arthritis.
1.2 Importance of soybean and soy oil production in Ethiopia

Currently Ethiopia has an estimated human population of 80 million and is projected to
increase to 140 million in the coming 25 years. Addis Ababa, the capital city, has an estimated
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population of about 3 million with an annual growth rate of well over 5%. (CSA 2010) This
population constitutes 4% of the country’s total and about 28% the urban population. The daily
food requirements of the city will increase substantially in the coming years.
Hence soybean is a multipurpose crop, which can be used for a variety of purposes including
preparation of different kinds of soybean foods, soybean oil, animal feed, soy milk, raw
material for the processing industry
As it is mentioned above, using soy bean foods and soybean oil is advantageous for its
versatility, availability and competitive pricing, neutral flavor and well-balanced fatty acid
profile. In addition it is a desirable ingredient for a variety of applications ranging from baked
foods to salad dressings.
According to a study on oilseeds business opportunities in Ethiopia by Royal Netherlands

Embassy commissioned in 2009, it is highly recommended to promote soy bean production
and processing in Ethiopia for the following reasons.
1- Import substitution
Ethiopia imports large quantities of soybean and palm oil. The value of imported edible oil is
40 to 50% of the export earnings of oilseeds. Oil seed crushers produce around 20% of the
domestic consumption of edible oil: 80% is imported mainly as palm oil and soybean oil.
Increased domestic edible oil production can substitute these imports and improve the trade
balance. In addition to edible oil, a significant amount of soy blended food is imported to
Ethiopia; implying a further potential for import substitution.
2- Satisfy growing domestic demand
Ethiopia with almost 80 million inhabitants is a large market for edible oil. The combination of
a growing GDP with an annually population growth of 2.6% makes it even more relevant that
the availability of good quality oil, such as soybean and sunflower oil, is improved. There is
also a large scarcity in high protein animal feed for the booming dairy, export beef and poultry
sectors. Similarly, there is strong demand from the nutritious food industries; factories that
supply to the World Food Program alone have a total annual demand of 60,000 tons to cater for
soy blends for the food insecure and malnutrition affected areas.
3- Contribute to food security and commercialization of small holders
Soybean is a multipurpose crop, which can be used for a variety of purposes including
preparation of different kinds of soybean foods, animal feed, soy milk, raw material for the
processing industry, and it counter effects depletion of plant nutrients in the soil resulting from
continuous mono-cropping of cereals, especially maize and sorghum, thereby contributing to
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increasing soy fertility. There is also a potential to intercrop soybean with long stem crops such
as maize and sugarcane.
Food insecurity and malnutrition are among the urgent challenges that developing countries
face these days. The major staple food crop of most developing Sub-Saharan African
Countries, maize, contains low protein (5.2-13.7 %). The challenges are especially acute in
Ethiopia and relatively more serious in the rural than urban areas, mainly because of a low
level of understanding of a balanced diet and lack of capacity to purchase animal source
proteins. Producing and consuming more soy would improve the situation as soy provides a
nutritious combination of both calorie and protein intake: it is the most nutritionally rich crop,
as its dry seed contains the highest protein and oil content among grain legumes (40 to 42%
protein) with a good balance of the essential amino acids and has 18-20% oil on a dry seed
weight basis. It is cheap and rich source of protein for poor farmers, who have less access to
animal source protein, because of their low purchasing capacity.
There are favorable climatic and soil conditions for production in South and Western Ethiopia;
therefore, soybean can be easily produced both for commercial purposes as well as for
subsistence farming.
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2. PROJECT DESCRIPTION
2.1 Location and Address
Plant location is a compromise between the availability of market, raw materials, labor, energy
and water. KUNIFIRA Agro-processing PLC (KUNAP) is located in Oromiya national
regional state at Gelan Town which is situated at a distance of about 30 kilometers from Addis
Ababa along the main road to Adama Town and the Port of Djibouti. The specific address of
the factory is as follows:
Region Oromiya
Town Gelan Town
P. O. Box 10332
Telephone No. 0911-207912
Email: [email protected]
2.2 Project objective

The primary objective of this project of KUNIFIRA Agro-processing PLC (KUNAP) - soy oil
Production factory is to establish a plant for the production of 860,000 liters of soy oil and
5,214 tons of defatted soybeans annually.
The demand for soy oil products has been growing continuously over the past several years.
Now it has reached a point that the already existing factories are unable to meet orders with
their existing production capacity. As a result, the management of KUNAP is now in the
process of undertaking investment to establish a new factory to fill the widening demand and
supply gap.
Specifically:
 Provide excellent soy edible oil products with particular emphasis on quality and
customer satisfaction,
 Maximize profit of the company by using large market opportunity and competitive
price advantage.
 Providing job opportunities to additional employees at all levels of production and

distribution,
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 To increase its contribution of the revenue generation of the state in the form of
taxation and significant amount of foreign currency saving by import substitution and
to contribute in the growth of the country as a whole and the region and town in
particular.
2.3 Product Description and Application

The following are the typical characteristics and quality of KUNAP’s soy oil products:
 The oil will be clean, natural taste and enhance the natural flavors of prepared foods
 Adaptable to nearly every fat or oil application in the food industry
 Works well with other ingredients including other fats and oils
The Soybean oil can be used for wide range of applications required by snack food
manufacturers, bakeries, foodservice providers and more. It can be also used in breads,
crackers, and barbecue sauce and non-dairy creamers. It can also be used in prepared foods
such as whipped toppings, potato chips and battered and breaded snacks and vegetables.
2.4 Opportunity Rationale

The rationale for the project is highlighted below.
 The experience and exposure in the refined edible oil industry
 The policy direction of the Government to foster manufacturing and processing

industry
 The huge capacity of KUNIFIRA Agro-processing PLC (KUNAP) - soy oil

Production factory that can generate attractive returns if optimally utilized.
 The huge and ever growing demand for edible oil mainly Soy oil that goes with the
growing population and living standard of the country.
 The future intention of the Government to put the manufacturing industry as a lead in
the overall macroeconomic structure of the country which will bring complementary
growth to the edible oil industry.
2.5 Project activities

The investment involves establishment of a factory that processes edible oil. The building
construction is being undertaken and about 59% of the construction work has been completed.
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It is anticipated that the edible oil and defatted soya bean production will start operation in a
year’s time.
The main activities to be undertaken before the commencing of edible soy oil production are
completing the factory building, procurement and installation of machinery and equipment’s,
procurement of vehicles to transport raw material to the factory and factory products to market
and recruitment of the required skilled and unskilled man power.
The refined edible soy oil production process involves several distinct operations, drying and
cleaning, decorticated, cooking and conditioning and screw presses. Each process is briefly
described in operational plan section of this document.
2.6 Plant Capacity

The proposed factory has a capacity of processing 6,600 tons of soybeans for production of
860,000 liters of soy oil and 5,214 tons of defatted soybeans annually.
The attainment of the project capacity will depend upon the factors like involvement of the
management to facilitate production, marketing and quality of the product, and the skills and
motivation of the labor force involved in the production of products. As described in this
document the company management and staff have vast experience in this regard. The detailed
production program and capacity utilization assumptions are mentioned in the operational
analysis section of this document.
2.7 Project Cost Summary

The project owners seek improvement of additional funds from financial institutions/banks/for
the activities mentioned above as summarized on the table 2.1.
Table 2.1 Project Cost Summary
No Project Costs Amount

1 Pre Operating Costs - Others 885,500.00
2 Pre Operating Costs - Interest and Bank Charge 1,462,591.78
3 Building and Civil Works 6,311,390.00
4 Machinery & Equipment 9,550,155.37
5 Vehicle 1,247,000.00
5 Office and Other Equipment 237,900.00
7 Working Capital 3,761,915.91
Total Investment 23,456,453.05
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2.8 Implementation Time Schedule

It is expected that the company will complete the implementation of the project and start
operation one year after securing additional required fund /loan/ from the bank. The major
activities after securing land and the additional fund for this project and the sequences of their
implementation during the initial year are as follows.
Table 2.2 Project Implementation Schedule
1 2 3 4 5 6 7 8 9 10 11 12
Securing additional fund
Building Completion
Activities
Procurement and
installation (Machinery,
Vehicle)
Manpower Recruitment
Project operations
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3. MARKET ANALYSIS
3.1 Past Supply and Present demand of Edible Oil
Various studies indicate that the demand for edible oil products is increasing as a result of
increase in number of population in Ethiopia mainly in urban areas and as a result of fast
urbanization in Ethiopia.
Currently Ethiopia has an estimated human population of 80 million and is projected to

increase to 140 million in the coming 25 years. Addis Ababa, the capital city, has an estimated
population of about 3 million with an annual growth rate of well over 5%. This population
constitutes 4% of the country’s total and about 28% the urban population. The daily food
requirements of the city will increase substantially in the coming years.
Thus the demand for edible oil is also expected to grow as Ethiopia’s population expands and
demographic changes result in an increasingly urbanized population. Ethiopia, the fastest-
urbanizing country in Africa with 4.3 percent growth per year, has unmet demand for edible oil
products. The combination of a growing GDP with an annually population growth of 2.6% and
fast urbanization in the country makes it even more relevant that the availability of good
quality oil, such as soybean oil, is improved.
According to the data obtained from ministry of trade and industry (FAO and ITC in 1997/8 –
1999/2000 E.C) the annual consumption of edible oil for the country is estimated 174, 000 tons
out of this 80,000 ton (46%) is from own production and 90,000 (54%) was imported. Taking
the population in the same period per capita Production was 1 k.g and per capita consumption
was 2.3 k,g. Thus the per capita supply is lower than per capita supply by 130%
Furthermore, when comparing the per capita consumption in of Ethiopia for edible oil with
other countries of Africa and the world, it is very low and indicates consumption in Ethiopia
will be increased significantly in the coming years as a result of economic development (GDP
growth), population growth, and urbanization. The following table (3.1) shows per capita
comparison with other countries:
Table 3.1 – Ethiopia Edible oil Per capita consumption Comparison with other countries:
Country Per Capita Consumption

Egypt 17.91 K.g
China 17 K.g
Kenya 11.6 K.g
India 11.5 K.g
Tanzania 10.8 K.g
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Ethiopia 2.3 K.g

Hence, to meet this ever growing demand of edible oil, Ethiopia imports large quantities of
soybean and palm oil. The value of imported edible oil is 40 to 50% of the export earnings of
oilseeds. Oil seed crushers produce around 20% of the domestic consumption of edible oil:
80% is imported mainly as palm oil and soybean oil. (Royal Netherlands Embassy in Ethiopia
commissioned study in 2009).
According to the information obtained from the Ethiopian Revenue and Customs Authority’s
trade statistical database department, over the period 1997-2010, Ethiopia's import of edible oil
has been showing an increasing trend with an average annual growth rate of 6.8% and 21.1%
in volume and value terms respectively. Ethiopia's import of edible oil has shown an increasing
trend over the 1997-2010 periods. Accordingly, import volume increased from 13,000 MT in
1997 to 252,000 MT in 2010. Similarly, the foreign exchange cost of the import has in general
been showing an increasing trend from 7.6 million USD in 1997 to 255 million USD in
2010. /See Table 3.2 and Figure 1 for details/
Table 3.2 – Ethiopia Edible oil Import 1997- 2010
Annual Average
Annual Average
Yea growth Rate in growth Rate in
r Quantity (in Kg) Value in ETB Value in USD Quantity (%) Value (%)
1997 13,048,522 51,165,708.45 7,623,246.90
1998 9,683,917 68,184,183.94 9,582,082.68 -34.7 25
1999 43,461,168 157,660,657.01 19,852,255.45 77.7 56.8
2000 31,766,180 173,466,826.02 21,109,954.11 -36.8 9.1
2001 38,431,041 259,961,718.05 30,733,784.72 17.3 33.3
2002 25,939,010 161,265,733.00 18,822,303.68 -48.2 -61.2
2003 135,761,783 546,932,811.68 63,597,578.05 80.9 70.5
2004 82,375,819 512,234,355.70 59,311,094.41 -64.8 -6.8
2005 92,102,380 677,364,271.50 77,388,295.35 10.6 24.4
2006 89,084,343 590,998,387.64 67,275,875.98 -3.4 -14.6
2007 115,254,493 949,633,243.58 104,958,524.67 22.7 37.8
2008 173,033,103 2,403,787,060.55 248,140,542.13 33.4 60.5
2009 244,465,602 2,826,760,865.27 238,085,123.69 22.9 15
2010 252,517,466 3,726,478,398.52 255,860,372.72 11.1 24.1
88.7 273.8
Average Annual Growth Rate, % 6.8 21.1
Source: Ethiopian Revenue and Customs Authority, Trade Statistical Database Department,
2010
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Fig. 3.1 – Ethiopia Edible oil Import 1997- 2010
This shows the major foreign exchange that the country has to allocate for the import of edible
oil in to the country. Though no reliable data could be obtained, there is said to be large of
informal import of edible oil into the country in addition to what is obtained from official
sources.
Therefore, increased domestic edible oil production can substitute these imports and improve
the trade balance.
As it shown above there is a large demand supply variance for edible oil products in Ethiopia
indicating the untapped potential for development of edible oil production plants. Edible oil
production factories have tremendous potential for development and play a significant role in
minimizing the acute shortage of edible oil products in Ethiopia.
KUNIFIRA Agro-Processing PLC (KUNAP) aimed to respond to this huge demand-supply

gap assessed above in edible oil products in Ethiopia.
The ideal location of the company (assessed in section 1.1), the quality of products to be
delivered and the demand- supply gap in Ethiopia assessed above will enable our company to
have a significant market share from Ethiopia mainly from the capital Addis Ababa and the
surrounding area.
Furthermore, aware of the fact that operating in such a market is largely dependent on good
marketing; the company intends to establish networks and strategic relationships with various
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edible oil products consumers such as hotels, distributers such as supermarkets, shops, etc to
ensure a steady stream of clients. However in so doing we intend to ensure that the product will
deliver is of extremely high quality.
3.2 Consumer Attitudes – Acceptance of Soybean oil and Nutritious food

Soy has earned a positive reputation for the many health benefits it may offer consumers,
including the prevention of some cancers and coronary heart disease. In fact, the FDA awarded
a health claim for soy’s cholesterol lowering properties in 1999. Soy protein’s reputation
appears to extend a “halo effect” to soybean oil, too.
According to the United Soybean Board’s (USB) 2012 Consumer Attitudes about Nutrition
survey, soybean oil was among the top three oils ranked “very healthy” by consumers, along
with olive and flaxseed oils.
In Ethiopia also Soya oil is the second largest edible oil type imported for a number of years
next to palm oil. According to the data obtained from ministry of industry from a total of
102,000 tons of Edible oil produced about 8,218 ton was soya oil. Thus KUNAP total
production will substitute 10.5 of annual import soy oil.
In addition to edible oil, a significant amount of soy blended food is imported to Ethiopia;
implying a further potential for import substitution. According to Royal Netherlands Embassy
in Ethiopia commissioned study in 2009, there is also strong demand from the nutritious food
industries; factories that supply to the World Food Program alone have a total annual demand
of 60,000 tons to cater for soy blends for the food insecure and malnutrition affected areas.
The drought and famine in the horn of Africa has created a huge market for the local nutritious
food processors; World Food Program is buying a big volume of soy for the food-insecure
people in Somalia and Darfur.
3.3 Projected Demand

The demand for edible oil is directly related with food consumption or growth in standard of
living and population. Food consumption of families increases with growth in income. Since in
poorest countries like Ethiopia most of the people are undernourished due to the lowest level of
per capita income, the growth in income for families will result in growth in consumption of
edible oil and food. Thus, the demand for edible oil is projected with a slight modification of
the country growth rate at average is 11.5 %.
For this plant output, refined edible oil has increasing demand due to increase in population,
urbanization and standard of living.
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In contrast to the highly growing demand of edible oil products, currently much of the country
consumption for such products is covered through import. Hence due to, the ever increase in
price of imported edible oil products and due to the limited production in the country there is
untouched market for this product due to greater tax saving and price competiveness
advantage.
Therefore, investing in this sector is not only to fill the gap between demand and supply of
edible oil products for local consumption but also needs to play a significant role as import
substitution to save foreign currency and keeps the trade balance healthy. In order to do this,
Ethiopia, needs to further establish numerous edible oil products and processing plants.
Conclusion
In summary there is no significant competition for Soy edible oil and defatted soya bean
products in Ethiopia mainly due to increase in number of population in Ethiopia mainly in
urban areas and the higher price of the imported products while there is uncompromised
quality of products mentioned on the product description of this study.
Moreover our assessment shows there is a higher and ever increasing demand for these
products due the wide social and macro-economic changes in Ethiopia.
Thus marketing strategies will build on these facts, taking advantage of precipitating events,
fostering word-of-mouth recommendations, and creating satisfaction through supply of quality
soy oil and defatted soybeans products.
3.4 Market Segmentation

Based on the above demand-supply gap in edible oil products in Ethiopia, we will be focusing
mainly in all Ethiopian urban area market to sale large quantity. Accordingly the potential
customers groups for our products mainly consist:
 Institutional - (Food manufacturers, Hotels, Restaurants, military, Educational

institutions etc.)
 Supermarkets
 Retail consumer shops Kiosks
Hence the need to professionally market ourselves and the products we will make available are
uncompromised nature.
3.5 Target Marketing Strategy
19
Our competitive edge comes from the advantage of having wide and superior experience in
edible oil products. Our marketing strategy will be based mainly on making the right products
available to the right target customer.
We will ensure that our products' prices take into consideration peoples' budgets and very
lower than imported edible oil, and that these people know that we exist, appreciate the value
of our products, and how to contact us. The marketing will convey the sense of quality in every
picture, every promotion, and every publication.
We realize the need to focus our marketing message and our product offerings. We need to
develop our message, communicate it, and make good on it. The decision to establish strategic
alliances with several edible oil products consumers, hotels, restaurants and edible oil
distribution channels (supermarkets and food items retail shops and distributers) are aimed at
tapping our target market effectively and efficiently. The marketing strategy is also subject to
change upon customer’s feedback and surveys.
Consequently our Marketing Strategies includes:
 Pro-active selling which will include employing a suitable sales persons and visits to
the large customers.
 Attractive advertisement on selected media (Television, Radio, Newspaper etc.) will be

performed
 Cross advertising will be performed with other local attractions
 Selected direct consumers, institutions, individuals, and Kiosks will be given our
products for free on a limited basis to aid referrals.
3.6 Pricing Strategy

The company will apply the minimum profit per unit and maximum volume sales strategy. I.e.
we will ensure that we get a minimum profit per unit of products sold and sale more units per
day.
The recommended price for the envisaged project for soy oil per liter is Birr 42.00, and
defatted soya bean Birr 940 per quintal. Hence edible oil should be available in the nearest
retail shop for households; to the consumer's convenience, intensive distribution through
delivery to the retailers as well as its own shops in selected centers is recommended.
20
4. OPERATIONAL ANALYSIS
4.1 Plant Capacity and Capacity Utilization
Based on the market study, minimum economies of scale and availability of raw material, the
envisaged plant is proposed to have a capacity of processing 6,600 tons of soybeans for
production of 860,000 liters of soy oil and 5,214 tons of defatted soybeans based on 300
working days per annum and three shifts of 8 hours per day.
The maximum attainable capacity which is 90% will be reached in the third year and onwards.
It is assumed that the plant will achieve 70% and 80% capacity utilization rate in the first,
second year, respectively. Table 4.1 summarizes plant capacity and capacity utilization.
Table 4-1 Product Mix, Plant Capacity and capacity utilization
Year
Description Year 1 Year 2 Year 3 Year 4 & Onwards
Capacity Utilization % 70% 80% 90% 90% 90%
Soya Bean Crushing Capacity Per 5,2 5,94 5
annum (tons) 4,620 80 0 ,940 5,940
Refined Soya oil Production Capacity 60 688, 774,78 774 7
per annum (Liters) 2,609 696 3 ,783 74,783
Defatted Soybean Flour Production 3,9 4,39 4
Capacity per annum (tones) 3,419 07 6 ,396 4,396
4.2 Production Process

5.1.2. Oil production process
In the mechanical press production cleaned seeds are crushed into thin flakes (about .25 cm
thick) to make it easily permeable to steam in the cooking operations. Flakes are then cooked
or conditioned in horizontal cookers at 110 oC for 20 minutes before expression. The oils
removed by the presses subsequently screened, cooled, filtered and stored for refining process.
In the solvent extraction process hexane is sprayed onto the flakes in buckets moving
horizontally in the extractor, countercurrent to the hexane. Hexane-oil mixture is then pumped
to the evaporator unit where hexane is separated and condensed for recycling in the system.
Extracted oil is then pumped to the storage bin for further refining process while the meal is
conveyed to the outer section of the extractor and is normally used as animal feed.
21
De-gumming: The crude oil undergoes de-gumming process to remove gummy matter such as
phospholipids and lipoproteins. It is accomplished by exposing the oil to water and adding the
phosphoric acid at 50oC.As a result precipitate of gum and soap is generated and removed by
centrifugation.
Bleaching: The purpose of oil bleaching is to eliminate its coloring pigments through the
adsorption on bleaching earth. Fuller’s earth is used for bleaching because of its excellent
adsorption power. The bleached oil containing fuller’s earth is passed through a series of filter
presses to remove the spent earth.
Hydrogenation: Hydrogen process is the hardening of oil to reduce its un-saturation. At the
same time, it improves the stability of the product against its oxidation, Chemically, the degree
of un-saturation decreases by passing hydrogen gas through oil in the presence of nickel
catalyst at 1500C. The objective of the hydrogenation process is not only to raise the melting
point but to greatly improve the keeping quality, taste and odor for many oils.
Deodorization: Most of the odorous substances along with FFA, sterols, tocopherols, saturated
and un-saturated hydrocarbons are stripped out by injecting dry steam into oil at 235-245 0C.
Citric acid is also added to remove the odor. After deodorization, the deodorized oil is cooled
in the de cooler to about 850C. The remaining odorous substances are removed during the de
cooling under vacuum.
22
Figure 4.1 Process Flowchart of Oil productions
Oil seed preparation Raw Seeds
Expelled Cake
Pressing Solvent extraction Extracted Meal
Filtration
Crude oil storage
Soap Stock Degumming Phosphoric Acid at

500C
Removes Bleaching
Bleaching Earth
Color
Ghee Hydrogenation
Removes Odor Deodorization Dr Steam at 235-2450C
Refined oil
Packaging
23
4.3 Raw Materials and Inputs

The raw materials required by the plant are soya bean and packaging materials. Table 4.2 and
Table 4.3 below depict the annual requirement of direct raw materials and packaging at 100%
capacity. Accordingly, the total annual cost of raw materials at 100% capacity is estimated to
be Birr 52.8 million for soya bean and for packaging is estimated to 2,445,971. Thus table 4.4
depicts the summery of annual raw material and packaging costs. The price of raw material is
assumed to be increased 10% per annum.
Table 4.2 The Annual Requirement and Cost of Soya Bean /Raw seeds/
No Description QTY (tones) Unit price Total Amount
1 Soya bean (Tones) 6600 8,000 52,800,000
Total 52,800,000
Table 4.3 The Annual Requirement and Costs of Packaging Materials

Total Soya Oil
Plastic
Package Production Allowance
Container Total Unit Cost Total Cost
(Liter)
Requirement (Birr) (Birr)
Size Requirem for Damage
(Liter) ent (pcs) (0.05%)
1 602,609 602,609 12052.18 614,661 2.6 1,598,119
5 172,174 34,435 688.696 35,123 8 280,988
20 86,087 4,304 86.087 4,390 12 52,685
Packing Material - Cartoon -
50,217 1004.3 51,222 7.4 379,041
for 1 Liter
Packing Material - Cartoon -
8,609 172.174 8,781 12.4 108,883
for 5 Liter
Packing material Defatted
3,960 79.2 4,039 6.5 26,255
Soybean Flour (Plastic Bag)
G/Total 860,870 704,134 14,083 718,217 49 2,445,971
24
Table 4.4 Summary of Annual Direct Raw materials Requirement and Cost.
No Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
1 Soya bean
40,656,000.00 51,110,400.00 63,249,120.00 69,574,032.00 76,531,435.20 84,184,578.72 92,603,036.59 101,863,340.25 112,049,674.28 123,254,641.70
2 Packing material
1,712,179.69 2,152,454.46 2,663,662.40 2,930,028.64 3,223,031.50 3,545,334.65 3,899,868.11 4,289,854.92 4,718,840.42 5,190,724.46
Total 42,368,179.69 53,262,854.46 65,912,782.40 72,504,060.64 79,754,466.70 87,729,913.37 96,502,904.71 106,153,195.18 116,768,514.69 128,445,366.16
4.4 Utilities
Electricity, furnace oil and water are utilities of the proposed project. Table 3.5 indicates the
annual utility requirements and cost at the assumed initial capacity for utilities and other
expenses. The summary of all annual costs and expenses is depicted in cost and expenses
section of this document.
Table 3.5 Project other costs and expenses assumptions.
No. Description QTY Cost (‘000 Birr)

1 Electricity (120kwh) 267,142 187
2 Water (M3) 2500 25
3 Repair & Maintenance Req. 60
Communication Expense (Telephone, fax,
4 Req. 66
Postal etc.)
Fuel, Grease, (Liters) 40km per day for each
5 72,000 122.4
car @ 17
6 Professional Fee (Legal, Audits, etc.) Req. 65
7 Sales and Promotion Expense Req. 42.368
Other General and Admin. Expenses
8 Req.
(insurance, Stationary, Etc.) 182
5. ORGANIZATION AND MANAMENT
5.1 Establishment and Objectives
KUNIFIRA Agro-processing PLC (KUNAP) is a company established in 2011 (G.C.) as supplementary
and soy oil food processing company with the main objective of producing soy oil and nutritionally
enriched foods for the consumption by children, particularly infants, and adults with special emphasis
on undernourished segment of the population.
Currently the company is intended to implement an oil processing plant with 6,600 tons of soybeans
producing 860,000 liters of soy oil and 5,214 tons of defatted soybeans.
5.2 Vision of the Company

The vision of the company is to be one of the leading soy and nutritionally enriched food processing
establishments in the country.
5.3 Mission Statement

The business of the company is producing and supplying supplementary food and edible oil to the
Ethiopian market. As it is customer oriented, the company recognizes that its success hinges on how
effectively it meets its responsibilities to its customers and to other important group of stakeholders.
The missions and operating philosophy of the company are summarized as follows:
 It requires that the entire organization be continuously customer oriented as the company’s future
success is dependent on meeting the customers’ needs better than its competitors.
 It maintains a marketing concept and distribution capability to identify the needs of the market and
undertakes effective promotions of its products.
 It strives to provide its customers with continuous offerings of quality health food products,
competitively priced—stressing value for money.
 It plans to constantly maintain and upgrade its facilities as modern and clean to make them
conducive for supply of products of high standard quality appropriate for consumption for health.
 It will maintain a sound financial plan that provides capital for growth of the business and provides
optimum return for its owners.
5.4 The Management

The extensive experience and intimate knowledge of the food processing sector by KUNAP’s founders
is the main factor that would determine success of the new company. The management members,
which also include the shareholders of the company, have extensive experience and exposure in
27
management, marketing, and processing of food products. Brief background of the management and
senior staff of the company are given below:
1- Ato Deresse Kassu Wolde Tensae, General Manager
Ato Deresse has M.Sc degree and a B.Sc degree (Distinction) in Agricultural Economics from Alemaya
University. He has also taken, locally and abroad, several management skill development training
courses. His experience adds up to more than 20 years working at senior managerial posts in different
business organizations. The list of senior positions he held include:
 General Manager of Faffa Food Share Company
 General Manager of Health Care Food Manufacturers
 General Manager of Tea Production and Marketing Enterprise
 Interim Commissioner and Program Director of Ethiopian Orthodox Church-Development &

Inter Church Aid Commission
 Planning and Policy Advisor of Ministry of State Farms Coffee and Tea Development
 Board Member of several public enterprises
Ato Deresse has travelled extensively on business trips to different countries including to UK, Italy,
Spain, Japan, Russia, Germany, Kuwait, Kenya, Djibouti, Lesotho and China.
2- Ato Tilahun Bekele Gezmu, Technical and Production Manager
Ato Tilahun is a food processing technologist specialising in weaning food processing, supplementary
food processing, ready–to use therapeutic food processing, food safety and quality management and
food and nutrition training.
He is educated in food science with Mphil in Food Technology from Dept. of Food Science,
Humberside College of Higher Education, England. He has also obtained Postgraduate Diploma from
the same college. His first degree is B.Sc in Biology from Addis Ababa University. He has also taken
several training courses related to food processing including in:
 Soya Processing for Soymilk, Weaning Food and Extruded Products
 The use of Irradiation to Reduce Post-harvest Food Losses in Africa
 Techno-Economic Feasibility of Food Irradiation
 ISO 9000 Quality Management System
 Environmental Economics
 Indigenous Food Processing Technology
 Food Management
28
 Quality system, Traceability, HACCP and Production of Plumpy nut
 Food Safety Management System Quality Inspection
He has gained extensive experience in food processing working for different business establishments as
senior technical staff. He has worked in senior positions including as:
 Lecturer, Addis Ababa University, Faculty of Science, Food Science and Nutrition Program
 Production, Quality and Technical Manager, Hilina Enriched Foods Processing Center PLC
 Senior Food Technologist, Addis Industries Ltd .Sh. Co.
 Head Technology Team, Industrial Development Promotion Department, Ministry of Trade

and Industry
 Senior Expert, Industrial Development Promotion Department, Ministry of Trade and Industry
 Food Technologist, Research Department, Food Research and Development Centre (FRDC)
 Training for food industry technicians, quality control personnel and production supervisors
 Food Technology Expert, Food Science and Nutrition Department, Ethiopian Nutrition
Institute (ENI)
3- Ato Kumsa Shanko Angasa, Commercial Manager
Ato Kumsa is one of the major shareholders of the company. He has completed secondary education.
He has also taken entrepreneurship Course. He has more than 17 years of experience working for one
of the major food processing enterprise. The specific assignments that he has undertaken include:
 As Special advisor to the General Manager
 As Production head
 As Accountant
 As Assistant administrator
 As Purchaser
 Production Forman
4- Ato Abiy Admassu Dadi, Production Head
Ato Abiy Admassu is a chemical engineer with a B.Sc Degree from Addis Ababa University. Having
completed required courses for M. Sc in Chemical Engineering (Food Engineering), he is preparing his
theses in fulfillment of the M. Sc degree. He has also taken training in Food Safety Management
System (ISO 22000:2005) and Food Safety Management System Audit Training (ISO 22000:2005).
29
His previous experiences include:
 As Food Production Process & Quality Improvement Expert
 As Food Safety Management System Team Facilitator
 As Safety Chairman
 As Production & Quality Advisor
 As Food Safety Management System Team Advisor
5- Ato Tinkishu Debebe, Technical Advisor
Ato Tinkishu is a graduate of Addis Ababa University, Technology Faculty, with B.Sc. degree in
Mechanical Engineering. He has also obtained additional training in Electro Mechanical Systems,
Production and technical management of various machineries in France by International Development
Department of NU triset in December 2008.
He has considerable experience in technical and production operations, which includes the following:
 Technical Manager for two Years.
 Production and Technical Department Manager for two Years.
 One and half year as sales representative on various Agricultural and construction materials.
 Technical Advisor of Kunifira Agro processing PLC since November, 2011.
 Manage the Technical Departments i.e
 (Machineries and equipments and Man Power)
 Planning the preventive maintenance Annual Program and managing the activities to be
performed.
 Corrective maintenance and improvements to be done on various machineries of the industry.
 Design and manufacturing of various machinery parts of the industry.
6- Hussien Mohammed Rebo, Finance and Administration Head
Ato Hussien has a Diploma in Book Keeping and Accounting from Entoto Vocational Technical School
as well as Advanced Diploma from Admas University College in Accounting. Currently, he is
attending his final year in Addis Ababa University to complete the requirement for B. Sc degree
program in accounting. He has comprehensive working skill in Peachtree Accounting as well as
application of Microsoft Word and Excel.
30
He has more than 20 years of experience at job positions ranging from Junior Accountant to Deputy
Manager in different organizations. The organization he served includes Ethiopian Retail Trade
Corporation and Arsi Agricultural Mechanization Service. His specific experience includes positions:
 As a Junior Accountant
 As a Senior Accountant
 As an Administration & Finance Head
 As Grain Purchasing and Sales Head
 As Mechanized Farm Head
 As a Deputy Manager
 As a Project Coordinator
5.5 Organizational Structure

The organizational structure of our company after the implementation of the intended project
will be as follows.
31
General Manager
Administration & Finance Sales & supplies

Production & Technic
Personnel Administration
Finance Technic Sales & Distribution Logistics
& General service
Production & Supervision
32
5.6 Human Resource Requirement

The proposed manpower requirement of the project and the estimated annual labor cost
including the fringe benefits are given in Table 4.1. The total number of manpower is 49
persons and casual labor will be hired as required.
Having a general manger at the top, different additional professional and non-professional
staff will be hired for the successful implementation of the proposed project.
List of the required man power with expected salary expense is summarized in table 4.1.
Periodically external auditors shall be employed to audit the company’s account.
33
Table 5.1- List of Project man power and expected salary expense
Monthly
S/N Position Title No of Pos. Yearly Salary
Salary
1 General Manager's Office
1.1 General Manager 1 15000 180,000
1.2 Secretary 1 2500 30,000
1.3 Quality Assurance Officer 1 4000 48,000
Sub total 3 21500 258,000
Production and Technical
2
Department
2.1 Production & Technical Head 1 6000 72,000
2.2 Mechanical Engineer 1 5500 66,000
2.3 Shift Supervisor 2 2500 60,000
2.4 Mechanics 2 2200 52,800
2.5 Milling Operator 3 2200 79,200
2.6 Electrician 2 2500 60,000
2.7 Packing Operator 6 1500 108,000
2.8 Laborers--Oil Filling 6 1200 86,400
2.9 Press Machine Operator 2 1200 28,800
Sub total 25 23600 613,200
3 Finance and Administration
3.1 Head, Administration & Finance 1 6000 72,000
3.3 Senior Accountant 1 3500 42,000
3.4 Accountants 1 2800 33,600
3.5 Personnel Officer 1 3500 42,000
3.6 Clerical Staff 1 1550 18,600
3.7 Drivers 3 1300 46,800
3.8 Guards 6 950 68,400
3.9 Cleaners 3 900 32,400
Sub total 17 20500 355,800
4 Marketing and Sales
4.1 Head, Marketing and Sales 1 6000 72,000
4.2 Salesmen 2 2500 60,000
4.3 Storekeepers 1 1600 19,200
Sub total 4 10100 484,800
75,700 1,711,8
Total 49
.00 00.00
Employee Benefits (25%) 427,950.00
Grand Total 49 85800 2,139,750.00
34
6. SWOT ANALYSIS
Strengths Weaknesses
 Advanced Soy edible oil Production and  Shortage sufficient working capital for
packing technology and plant facilities long term sustainability
capable of producing high quality
products.
 Dedicated Management and staff running
the business
 Excellent marketing strategies,
Opportunities Threats
 Government focus on improving  High cost of fixed investment- building

Ethiopia’s manufacturing and processing materials and machinery and others
sector. (like fuel. Spares, currency exchange
 Though intense collateral requirements, rates)
bank credit is available with relative ease.  High production costs such as soy bean,
 High and increasing demand for edible Packaging materials, spare parts etc.
oil products and Soy foods.
 Market is relatively easy and competition
from the formal market will be least,
 Open economy and growth that help
enhance purchasing power.
 Encouraging manufacturing and
investment policy
35
7. FINANCIAL PLAN
7.1 Pre Operating Costs
Pre operating Costs includes Bank interest during grace period, other costs which are
expected to be incurred before the factory starts operation. The following table shows the list
of estimated pre operating costs of the factory.
No. Description Cost in Birr

1 License & Registration 6,000.00
2 Project Feasibility Study 50,000.00
3 Project Travel and Transport 180,000.00
4 Project Staff Salary 288,000.00
5 Telephone & communication 36,000.00
6 Water & Other utilities 15,000.00
7 Design and Engineering 30,000.00
8 Land Lease 150,000.00
9 Legal, Attorney etc. 50,000.00
10 Other (10%) 80,500.00
11 Interest and Bank Charges 1,462,591.78
Total 2,348,091.78
7.2 Building & civil works

The factory is located in Gelan Town along the road to Adama Town and Djibouti Port. The
factory site is located on a plot of land of 3,000m2, which the company acquired on lease at a
rate of Birr 1.25/m2 per year for a period of 40 years which is totalled to Birr 150,000. Its
location has provided the factory easy access to infrastructures such as electricity, water, and
transport. The buildings and other civil works are under constructions. The total cost of
buildings and other civil works is estimated at about Birr 6.3 million. Of the building
construction about Birr 3.6 million has been already constructed. Table 7.1 below presents
summary of cost of construction undertaken and construction yet to be undertaken.
36
Table 7.1- Summary of Building and construction work
S/N Item Description Total Cost Works Done Work to be Done

2,686,212.0
1 Factory Building 1,944,160.00 742,052.00
0
707,194.0
2 Office Building 707,194.00 -
0
276,486.0
3 Changing Room 123,830.00 152,656.00
0
79,924.0
4 Guard House - 79,924.00
0
123,250.0
5 Power House 66,468.00 56,782.00
0
433,376.0
6 Store 433,376.00 -
0
125,800.0
7 Fence Work 125,800.00 -
0
800,000.0
8 Compound Work - 800,000.00
0
84,506.0
9 Septic Tank - 84,506.00
0
373,810.0
10 Site Sanitary Work 56,072.00 317,738.00
0
620,832.0
11 Site Electrical 155,208.00 465,624.00
0
Total 6,311,390.00 3,612,108.00 2,699,282.00
37
7.3 Plant, Equipment and Machinery

Machinery and equipment required for processing about 6,600 tons of soy beans are listed in Table
7.2 and 7.3. The total cost of machinery and equipment is estimated to be Birr 9.5 Million.
Table 7.2 - TPH Soya Bean Express Module
(ITEM NUMBERS REFER TO DRAWING 110712-1-S-EXP REV B)

CLEANING
ITEM UNIT TOTAL Total Price
NO: DESCRIPTION HP QTY PRICE PRICE (ETB)
1 DESTONER (850mm X 1200mm) 1 120000 120,000.00

Gravity Separator (1100mm x
2 2500mm) 1.5 1 180000 180,000.00
3 Grader (1250mm x 2500mm) 1 220000 220,000.00
4 Fan with cyclone 1 75000 75,000.00
5 Bin (2000mm x 2000 x 2000) 1 85000 85,000.00
6 Bin (1000mm x 1000 x 900) 1 15000 15,000.00
7 Elevator (9200mm) 2 1 50000 50,000.00
8 Elivator 5200 mm 2 2 46000 92,000.00
9 Elivator (7200 mm) 2 1 48000 48,000.00
10 Electrical Work 1 40000 40,000.00
11 Concrete work 1 30000 30,000.00
12 Installation and Erection Costs 1 45000 45,000.00
TOTAL PRICE CLEANING: 1,000,000.00
Hammer Mill EXPRESS
BUCKET ELEVATOR TO
13 HAMMER MILL 1 1 7,179.00 7,179.00 131,016.75
3' X 3' HAMMER MILL SURGE
14 BIN 1 3,946.00 3,946.00 72,014.50
BLISS E-22095-TF HAMMER
15 MILL 16 1 6,579.60 6,579.60 120,077.70
16 6"X10' SCREW CONVEYOR 1.75 1 4,434.00 4,434.00 80,920.50
BUCKET ELEVATOR TO
17 EXTRUSION 1 1 7,179.00 7,179.00 131,016.75
18 4' X 4' EXTRUDER SURGE BIN 1 4,673.00 4,673.00 85,282.25
INSTA-PRO SERIES 2000
19 EXTRUDER 127 1 49,551.00 49,551.00 904,305.75
20 STEAM VENTILATION 2 1 5,202.00 5,202.00 94,936.50
INSTA-PRO 6" X 15' VENTED
21 SCREW CONVEYOR 1 1 10,543.00 10,543.00 192,409.75
INSTA-PRO MODEL 2000 OIL
22 PRESS 34 1 62,869.00 62,869.00 1,147,359.25
23 9" X 15' CUT & FOLD PRESS 1 1 7,778.00 7,778.00 141,948.50
DISCHARGE SCREW
38
CONVEYOR
INSTA-PRO MODEL 850 OIL
24 SCREENING TANK W/PUMP 0.75 1 39,760.00 39,760.00 725,620.00
INSTA-PRO MODEL 900 DRUM
25 COOLER W/ AIR SYSTEM 4 1 22,837.00 22,837.00 416,775.25
6" X 10' COOLER DISCHARGE
26 SCREW CONVEYOR 1 1 4,434.00 4,434.00 80,920.50
MIX-MILL SENTRY 1000
27 HAMMER MILL 5 1 6,579.00 6,579.00 120,066.75
SPARE PARTS PACKAGE FOR
28 EXTRUDER 1 4,202.00 4,202.00 76,686.50
SPARE PARTS PACKAGE FOR
29 OIL PRESS 1 5,711.00 5,711.00 104,225.75
30 INSTA-PRO SCREW PULLER 1 1 7,237.00 7,237.00 132,075.25
TOTAL Hammer Mill EXPRESS: 176.75 231,376.00 4,757,658.20

31 Fright and Transport 1 15,856.00 15,856.00 289,372.03
START-UP & TRAINING
32 SERVICE 1 3,500.00 3,500.00 63,875.01
Total Charges TBH Express 19,356.00 5,110,905.23
Table 7.3 Oil Refinery

Item Unit Total Price Total Price
Description HP QTY
No. Price (USD) (ETB)
Oil Refinery, Filling and
1 1 $105,000 $105,000
Packing 1,916,250.17
Installation and Erection
2 1 $4,000 $4,000.00
Costs 73,000.01
Total $109,000 1,989,250.17
Table 7.4 Other Costs – Machinery and Equipment

Item Total Price
Description HP QTY Unit Price Total Price (ETB)
No. (USD)
1 Inland Transport 1 200,000.00 200,000.00
2 Transformer 1 800,000.00 800,000.00
Erection and Installation -
3 1 450,000.00
Local Cost 450,000.00
Total 1,450,000.00
39
7.4 Vehicles
The project intends to buy the following three vehicles at a total cost of about Birr 1,247,000.00 as
shown below:
Table 7.5 Types and Cost of Project Vehicles
NO Description Unit QTY Cost

1 Pick-up Double Cabin Each 1 590,000.00
2 Mini Bus: Each 1 657,000.00
Total 1,247,000.00
7.5 Office Furniture and Other Equipment

No Description Estimated Value
1 Office furniture and equipment 172,900.00
2 Other Office Equipment 65,000.00
Total 237,900.00
40
7.6 Working Capital Requirement

Annual and one month working capital requirements are depicted below:
No Description Monthly requirements One month requirements

1 Direct Costs &Expenses 43,406,679.69 3,617,223.31
2 General administration & selling Expenses 1,736,311.20 144,692.60
Total 45,142,990.89 3,761,915.91
7.7 Source of Fund

Equity and Loan
The total project cost is Birr 23,456,453.09 out of the total Birr 6,923,867.34 (30%) will be
covered by the owners and the remaining amount Birr 16,532,585.75 (70%) will be covered
through bank financing.
No. Description Equity Bank Loan Total

1 Building and Civil Works 3,612,108.00 2,699,282.00 6,311,390.00
2 Machinery & Equipment 9,550,155.40 9,550,155.40
3 Vehicle 1,247,000.00 1,247,000.00
4 Office and Other Equipment 237,900.00 237,900.00
5 Working Capital 725,767.56 3,036,148.35 3,761,915.91
6 Pre Operating Costs - Others 885,500.00 885,500.00
Pre Operating Costs - Interest and Bank 1,462,591.78 1,462,591.78
7 Charges
Total 6,923,867.34 16,532,585.75 23,456,453.09
Percentage (%) 30 70 100
41
8. FINANCIAL ANALYSIS
8.1 Financial Projections and Assumptions
These Financial Projections are based on estimates and assumptions set forth therein, and
have been delivered for the information and convenience of persons who wish to evaluate the
feasibility of the project and goals. Anyone who has received the feasibility study realizes
that financial projections are inherently speculative.
The financial analysis of the project is based on the data presented in the previous chapters
and the following underlying assumptions:-
1. The project life is assumed to be 10 years for evaluation purpose
2. Annual working days are taken to be 300 days.
3. Operating expenses are expected to increase by 10% per annum.
4. Bank loan is estimated to be paid within 5 years’ time at 9.5% on Monthly basis for
each year and 1 year grace period.
5. Straight line method of depreciation has been used to calculate depreciation expense
as per the following details:
Depreciation/Year
Description Useful
Life Cost
Building and Civil Works 20 6,311,390.00 315,569.50
Machinery and Equipment 5 years 9,550,155.40 1,910,031.08
Vehicle 5 Years 1,247,000.00 249,400.00
Furniture and Fixtures 10 years 172,900.00 34,580.00
Other Equipment 5 Years 65,000.00 13,000.00
Pre Operating Costs 10 years 885,500.00 88,550.00
Total 11,920,555.40 2,611,130.58
8.2 Sales revenue
The company will generate revenue mainly from sales of soy edible oil and defatted soya
bean. The price of is assumed to be increased by 10% annually. The revenue over the
assumed project life is illustrated in the following table:
42
Estimated Sales Revenue – Summary
Annual Sales Assumptions - Soya bean oil
Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Beginning
Inventory 0 60,261 68,870 77,478 77,478 77,478.30 77478.3 77478.3 77478.3 77478.3
Soya Bean oil
Production
(tons) 602,609 688,696 774,783 774,783 774,783 774,783.00 774,783.00 774,783.00 774,783.00 774,783.00
Ending
Inventory 60,261 68,870 77,478 77,478 77,478 77,478.30 77,478.30 77,478.30 77,478.30 77,478.30
Annual Sales
(QTY) 542,348.10 680,087.30 766,174.30 774,783.00 774,783.00 774,783.00 774,783.00 774,783.00 774,783.00 774,783.00
Soya Bean oil
Unit Price
Liter 42.00 46.20 50.82 55.90 61.49 67.64 74.41 81.85 90.03 99.03
Annual Sales
(ETB) 22,778,620.20 31,420,033.26 38,936,977.93 43,311,919.27 47,643,111.19 52,407,422.31 57,648,164.54 63,412,981.00 69,754,279.10 76,729,707.01
Annual Sales Assumptions – Defatted Soy Flour
Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Beginning
Inventory 0 342 391 440 440 440
Defatted
Soybean flour
(tons) 3,419 3,907 4,396 4,396 4,396 4,396 4,395.60 4,395.60 4,395.60 4,395.60
Ending
Inventory 341.88 391 440 440 440 440 440 440 440 440
Annual Sales 3,076.92 3,858.36 4,346.76 4,395.60 4,395.60 4,395.60 3,956.04 3,956.04 3,956.04 3,956.04
43
Defatted Soya
Per Unit Price 9,800.00 10,780.00 11,858.00 13,043.80 14,348.18 15,783.00 17,361.30 19,097.43 21,007.17 23,107.89
Annual Sales
(ETB) 30,153,816.00 41,593,120.80 51,543,880.08 57,335,327.28 63,068,860.01 69,375,746.01 68,681,988.55 75,550,187.40 83,105,206.14 91,415,726.76
8.3 Costs & Expenses

9.3.1. Estimated Operational Costs & Expenses Summary
Description
Year
1 2 3 4 5 6 7 8 9 10
Production Cost
96,502,904.7 106,153,195.1
Raw Material Cost 42,368,179.69 53,262,854.46 65,912,782.40 72,504,060.64 79,754,466.70 87,729,913.37 1 8 116,768,514.69 128,445,366.16
1,357,901.5 1,493,691.6
Direct Labor 766,500.00 843,150.00 927,465.00 1,020,211.50 1,122,232.65 1,234,455.92 1 6 1,643,060.82 1,807,366.91
Utility (electricity, 375,570.9 413,128.0
water etc.) 212,000.00 233,200.00 256,520.00 282,172.00 310,389.20 341,428.12 3 3 454,440.83 499,884.91
106,293.6 116,923.0
Repair & Maintenance 60,000.00 66,000.00 72,600.00 79,860.00 87,846.00 96,630.60 6 3 128,615.33 141,476.86
Total 43,406,679.69 54,405,204.46 67,169,367.40 73,886,304.14 81,274,934.55 89,402,428.00 98,342,670.80 108,176,937.88 118,994,631.67 130,894,094.84
GENERAL & ADMIN
EXPENSE
General and Amin Staff 2,432,796.1 2,676,075.7
Salary 1,373,250.00 1,510,575.00 1,661,632.50 1,827,795.75 2,010,575.33 2,211,632.86 4 6 2,943,683.33 3,238,051.67
Communication
Expense (Telephone, 116,923.0 128,615.3
fax, Postal etc.) 66,000.00 72,600.00 79,860.00 87,846.00 96,630.60 106,293.66 3 3 141,476.86 155,624.55
Fuel, Grease, car
Maintenance 61.20 67.32 74.05 81.46 89.60 98.56 108.42 119.26 131.19 144.31
Professional Fee (Legal, 115,151.4 126,666.6
Audits, etc.) 65,000.00 71,500.00 78,650.00 86,515.00 95,166.50 104,683.15 7 1 139,333.27 153,266.60
Sales and Promotion 88,578.0 97,435.8
Expense 50,000.00 55,000.00 60,500.00 66,550.00 73,205.00 80,525.50 5 6 107,179.44 117,897.38
Other General and 322,424.1 354,666.5
Admin. Expenses 182,000.00 200,200.00 220,220.00 242,242.00 266,466.20 293,112.82 0 1 390,133.16 429,146.48
Sub Total 1,736,311.20 1,909,942.32 2,100,936.55 2,311,030.21 2,542,133.23 2,796,346.55 3,075,981.21 3,383,579.33 3,721,937.26 4,094,130.98
2,611,130.5 2,611,130.5
Depreciation expense 2,611,130.58 2,611,130.58 2,611,130.58 2,611,130.58 2,611,130.58 2,611,130.58 8 8 2,611,130.58 2,611,130.58
44
Grand Total
47,754,121.47 58,926,277.36 71,881,434.53 78,808,464.92 86,428,198.36 94,809,905.13 104,029,782.59 114,171,647.79 125,327,699.51 137,599,356.41
9. PROJECTED FINANCIAL STATEMENTS

9.1 Projected Profit & Loss Statement
Description Year 1 year 2 year 3 Year 4 Year 5 year 6 year 7 year 8 year 9 year 10
52,932,43 73,013,15 90,480,8 100,647,24 110,711,971 121,783,16 126,330,153. 138,963,168. 152,859,48 168,145,433.
Sales Revenue 6.20 4.06 58.01 6.55 .20 8.32 09 40 5.24 77
Direct Raw Material 42,368,17 53,262,85 65,912,7 72,504,06 79,754,466 87,729,91 96,502,904. 106,153,195. 116,768,51 128,445,366.
Cost 9.69 4.46 82.40 0.64 .70 3.37 71 18 4.69 16
766,50 843,15 927,4 1,020,21 1,122,232 1,234,45 1,357,901. 1,493,691. 1,643,06 1,807,366.
Direct Labor 0.00 0.00 65.00 1.50 .65 5.92 51 66 0.82 91
Utility (electricity, 212,00 233,20 256,5 282,17 310,389 341,42 375,570. 413,128. 454,44 499,884.
water etc.) 0.00 0.00 20.00 2.00 .20 8.12 93 03 0.83 91
Repair & 60,00 66,00 72,6 79,86 87,846 96,63 106,293. 116,923. 128,61 141,476.
Maintenance 0.00 0.00 00.00 0.00 .00 0.60 66 03 5.33 86
43,406,67 54,405,20 67,169,3 73,886,30 81,274,934 89,402,42 98,342,670. 108,176,937. 118,994,63 130,894,094.
Total 9.69 4.46 67.40 4.14 .55 8.00 80 88 1.67 84
9,525,75 18,607,94 23,311,4 26,760,94 29,437,036 32,380,74 27,987,482. 30,786,230. 33,864,85 37,251,338.
Gross Profit 6.51 9.60 90.61 2.41 .65 0.32 29 52 3.57 92
General and
Administration
Expense
General and Amin 1,373,25 1,510,57 1,661,6 1,827,79 2,010,575 2,211,63 2,432,796. 2,676,075. 2,943,68 3,238,051.
Staff Salary 0.00 5.00 32.50 5.75 .33 2.86 14 76 3.33 67
Communication
Expense (Telephone, 66,00 72,60 79,8 87,84 96,630 106,29 116,923. 128,615. 141,47 155,624.
fax, Postal etc.) 0.00 0.00 60.00 6.00 .60 3.66 03 33 6.86 55
Fuel, Grease, car 6 6 8 89 9 108. 119. 13 144.
Maintenance 1.20 7.32 74.05 1.46 .60 8.56 42 26 1.19 31
Professional Fee 65,00 71,50 78,6 86,51 95,166 104,68 115,151. 126,666. 139,33 153,266.
(Legal, Audits, etc.) 0.00 0.00 50.00 5.00 .50 3.15 47 61 3.27 60
45
50,00 55,00 60,5 66,55 73,205 80,52 88,578. 97,435. 107,17 117,897.
Sales Expense 0.00 0.00 00.00 0.00 .00 5.50 05 86 9.44 38
Other General and 182,00 200,20 220,2 242,24 266,466 293,11 322,424. 354,666. 390,13 429,146.
admin. Expenses 0.00 0.00 20.00 2.00 .20 2.82 10 51 3.16 48
1,554,31 1,709,74 1,880,7 2,068,78 2,275,667 2,503,23 2,753,557. 3,028,912. 3,331,80 3,664,984.
Total 1.20 2.32 16.55 8.21 .03 3.73 10 81 4.10 51
Profit before
interest and 7,971,44 16,898,20 21,430,7 24,692,15 27,161,369 29,877,50 25,233,925. 27,757,317. 30,533,04 33,586,354.
depreciation 5.31 7.28 74.06 4.20 .62 6.59 18 70 9.47 42
2,611,13 2,611,13 2,611,1 2,611,13 2,611,130 2,611,13 2,611,130. 2,611,130. 2,611,13 2,611,130.
Deprecation 0.58 0.58 30.58 0.58 .58 0.58 58 58 0.58 58
Profit before 5,360,31 14,287,07 18,819,6 22,081,02 24,550,239 27,266,37 22,622,794. 25,146,187. 27,921,91 30,975,223.
interest expense 4.73 6.70 43.48 3.62 .04 6.01 60 12 8.89 84
1,462,59 1,346,45 1,019,1 659,63 264,717
Interest expense 1.78 6.70 53.45 1.04 .86
3,897,72 12,940,62 17,800,4 21,421,39 24,285,521 27,266,37 22,622,794. 25,146,187. 27,921,91 30,975,223.
Profit before tax 2.96 0.00 90.02 2.58 .19 6.01 60 12 8.89 84
4,529,21 6,230,1 7,497,48 8,499,932 9,543,23 7,917,978. 8,801,165. 9,772,67 10,841,328.
Tax expense - 7.00 71.51 7.40 .42 1.60 11 49 1.61 34
3,897,72 8,411,40 11,570,3 13,923,90 15,785,588 17,723,14 14,704,816. 16,345,021. 18,149,24 20,133,895.
Profit after tax 2.96 3.00 18.52 5.18 .77 4.40 49 63 7.28 50
46
9.2 Forecasted Cash flow statement

Description Year 0 Year 1 year 2 year 3 year 4 year 5 year 6 year 7 year 8 year 9 year 10
Profit before tax 3,897,722.96 12,940,620.00 17,800,490.02 21,421,392.58 24,285,521.19 27,266,376.01 22,622,794.60 25,146,187.12 27,921,918.89 30,975,223.84
Depreciation 2,611,130.58 2,611,130.58 2,611,130.58 2,611,130.58 2,611,130.58 2,611,130.58 2,611,130.58 2,611,130.58 2,611,130.58 2,611,130.58
Interest expense 1,462,591.78 1,346,456.70 1,019,153.45 659,631.04 264,717.86 0.00 0.00 0.00 0.00 0.00
Cash flow after
adjustment 7,971,445.31 16,898,207.28 21,430,774.06 24,692,154.20 27,161,369.62 29,877,506.59 25,233,925.18 27,757,317.70 30,533,049.47 33,586,354.42
Change in working
capital 3,761,915.91 752,383.18 752,383.18 752,383.18 752,383.18 752,383.18 752,383.18 752,383.18 752,383.18 752,383.18
Add: Bank loan 15,395,702.92
Owners contribution 6,923,867.34 0
Less: Loan repayment 1,462,591.78 4,671,415.74 4,671,415.74 4,671,415.74 4,671,414.74 0.00 0.00 0.00 0.00 0.00
Investment cost 22,319,570.25
Tax payment 0.00 4,529,217.00 6,230,171.51 7,497,487.40 8,499,932.42 9,543,231.60 7,917,978.11 8,801,165.49 9,772,671.61
Net Cash flow 22,319,570.25 2,746,937.63 12,979,174.72 12,982,524.50 14,542,950.14 15,744,850.66 22,129,957.35 16,443,076.76 20,591,722.77 22,484,267.16 24,566,065.99
Cumulative cash flow 2,746,937.63 15,726,112.35 28,708,636.85 43,251,586.98 58,996,437.64 81,126,395.00 97,569,471.76 118,161,194.53 140,645,461.69 165,211,527.68
12% cost of capital 0.913 0.834 0.762 0.696 0.635 0.018 0.530 0.484 0.442 0.404
Pv of cash flow 59,144,901.57 2,508,618.84 10,824,774.06 9,888,189.79 10,115,702.27 10,001,564.72 402,506.51 8,711,325.67 9,962,761.40 9,934,629.25 9,912,756.14
Sum of Pv of cash flow 82,262,828.65
NPV 59,943,258.39
IRR 32%
47
48
9.3 Loan Repayment Schedule

Yea Principal Outstanding Yearly Yearly
r Months amount Interest Repayment balance repayment interest
1 15,395,702.92 365,647.94 365,647.94 15,395,702.92
2 15,395,702.92 365,647.94 365,647.94 15,395,702.92
3 15,395,702.92 365,647.94 365,647.94 15,395,702.92
1 4 15,395,702.92 365,647.94 365,647.94 15,395,702.92 1,462,591.78 1,462,591.78
5 15,395,702.92 365,647.94 1,167,853.94 14,593,496.93
6 14,593,496.93 346,595.55 1,167,853.94 13,772,238.54
7 13,772,238.54 327,090.67 1,167,853.94 12,931,475.27
2 8 12,931,475.27 307,122.54 1,167,853.94 12,070,743.88 4,671,415.74 1,346,456.70
9 12,070,743.88 286,680.17 1,167,853.94 11,189,570.11
10 11,189,570.11 265,752.29 1,167,853.94 10,287,468.46
11 10,287,468.46 244,327.38 1,167,853.94 9,363,941.90
3 12 9,363,941.90 222,393.62 1,167,853.94 8,418,481.59 4,671,415.74 1,019,153.45
13 8,418,481.59 199,938.94 1,167,853.94 7,450,566.59
14 7,450,566.59 176,950.96 1,167,853.94 6,459,663.61
15 6,459,663.61 153,417.01 1,167,853.94 5,445,226.69
4 16 5,445,226.69 129,324.13 1,167,853.94 4,406,696.88 4,671,415.74 659,631.04

17 4,406,696.88 104,659.05 1,167,853.94 3,343,502.00
18 3,343,502.00 79,408.17 1,167,853.94 2,255,056.24
19 2,255,056.24 53,557.59 1,167,853.94 1,140,759.89
5 20 1,140,759.89 27,093.05 1,167,852.94 0.00 4,671,414.74 264,717.86
49
10. CONCLUSION AND RECOMMENDATION

10.1 Profitability
As shown on the profit and loss statement under the above assumptions, the proposed
business will be profitable throughout the project life. It starts with Birr 3,897,722 net profit
in the first year and will reach its maximum profit of Birr 20,133,895 at end of year ten.
Important ratios such as profit to total sales, net profit to equity (Return on equity) and net
profit plus interest on total investment (return on total investment) show an increasing trend
during the life-time of the project. The income statement and the other indicators of
profitability show that the project is viable.
10.2 Viability
The project is profitable and worthwhile. The NPV is positive, 59,943,258.43 within ten
years and The IRR is 32%. Furthermore it has positive cash flow throughout the project life
as shown on the forecasted cash flow statement of the project.
10.3 Payback Period

The investment cost and income statement projection are used to project the pay-back
period. The project’s initial investment will be fully recovered within 3 years.
10.4 Sensitivity Analysis

The sensitivity analysis indicates that the projects profitability is sensitive to changes in
assumed direct raw material costs mainly soya bean above 10% and decrease in selling
prices above 10%.
10.5 Conclusion
The market assessment carried out shows that there is a promising market opportunity for
the project output owing to the rapid growth of demand for Soy edible oil products. Also
the project will generate Birr 73.6 million in terms of tax revenue over the assumed project
life of 10 years.
The planned manpower of the project is 49; In addition casual labor will be required.
These will create job opportunities for citizens that will contribute to reducing
unemployment in the country and the project employees will acquire experience in the
production and processing which contributes to the development of skills in the country.
50
The loan is assumed to be paid quarterly in 5 years at 9.5% of interest rate. A cash flow
projection shows the project earns positive cash inflow throughout its operational life, it
will have a net cash inflow of Birr 2,746,937 and 24,556,065 at the end of year one and
year ten respectively.
In general the analysis reported in this document shows that the project under consideration
is financially feasible, economically beneficial and socially desirable.
51

KUNAP'S Final Feasibility Study

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KUNIFIRA AGRO-PROCESSING PLC (KUNAP) – FEASIBILITY STUDY

KUNIFIRA AGRO-PROCESSING PLC

ESTABLISHMENT OF EDIBLE SOYABEAN OIL

1.2 Importance of soybean and soy oil production in Ethiopia.................................................................8

2.1 Location and Address.......................................................................................................................11

2.2 Project objective...............................................................................................................................11

2.3 Product Description and Application................................................................................................12

2.4 Opportunity Rationale......................................................................................................................12

2.5 Project activities...............................................................................................................................12

2.6 Plant Capacity..................................................................................................................................13

2.7 Project Cost Summary......................................................................................................................13

2.8 Implementation Time Schedule........................................................................................................14

3.1 Past Supply and Present demand of Edible Oil................................................................................15

3.2 Consumer Attitudes – Acceptance of Soybean oil and Nutritious food............................................18

3.3 Projected Demand............................................................................................................................18

3.4 Market Segmentation.......................................................................................................................19

3.5 Target Marketing Strategy................................................................................................................19

3.6 Pricing Strategy................................................................................................................................20

4.1 Plant Capacity and Capacity Utilization...........................................................................................21

4.2 Production Process...........................................................................................................................21

4.3 Raw Materials and Inputs.................................................................................................................24

5. ORGANIZATION AND MANAMENT...............................................................................................27

5.1 Establishment and Objectives...........................................................................................................27

5.2 Vision of the Company....................................................................................................................27

5.3 Mission Statement............................................................................................................................27

5.4 The Management..............................................................................................................................27

5.5 Organizational Structure...................................................................................................................31

5.6 Human Resource Requirement.........................................................................................................33

7.1 Pre Operating Costs..........................................................................................................................36

7.2 Building & civil works.....................................................................................................................36

7.3 Plant, Equipment and Machinery.....................................................................................................38

7.5 Office Furniture and Other Equipment.............................................................................................40

7.6 Working Capital Requirement..........................................................................................................41

7.7 Source of Fund.................................................................................................................................41

8.1 Financial Projections and Assumptions............................................................................................42

8.2 Sales revenue....................................................................................................................................42

8.3 Costs & Expenses.............................................................................................................................44

9. PROJECTED FINANCIAL STATEMENTS......................................................................................45

9.1 Projected Profit & Loss Statement...................................................................................................45

9.2 Forecasted Cash flow statement.......................................................................................................47

9.3 Loan Repayment Schedule...............................................................................................................48

10. CONCLUSION AND RECOMMENDATION................................................................................49

10.3 Payback Period.................................................................................................................................49

10.4 Sensitivity Analysis..........................................................................................................................49

Our Keys to Success are:

 Existence of Conducive investment policy in the country towards manufacturing and

 Effectively communicating, to potential customers, the position of the company as a

 Controlled overhead and operational costs

 Regular monitoring on the quality and safety aspect of the products

1.2 Nutritionally Balanced

1.4 Rich Source of Vitamin E

1.2 Importance of soybean and soy oil production in Ethiopia

According to a study on oilseeds business opportunities in Ethiopia by Royal Netherlands

2- Satisfy growing domestic demand

3- Contribute to food security and commercialization of small holders

Town Gelan Town

Telephone No. 0911-207912

2.2 Project objective