START-UP FEASIBILITY STUDY 2022

FEASIBILITY STUDY REPORT

ON
PAPER CONVERTING AND PAPER-BASED PRODUCTS MANUFACTURING

PROMOTER: ………ADDIS ABABA CITY ADMINISTRATION,

KIRKOS SUB-CITY, WOREDA-01,

PROJECT OWNER: ……….

DECEMBER, 2022

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ADDIS ABABA, ETHIOPIA

TABLE OF CONTENTS
PAGES

1. EXCUTIVE SUMMARY…………………………………………………..…………3

2 GENERAL INFORMATION………………………….…………………………....5

3. MARKET STUDY……………………………………………………………...…....9

4. SERVICES CAPACITY TECHNICAL STUDY…………….…………………..19

5. ORGANIZATIONAL STRUCTURE & MANAGEMENT…………….………..24

6. FINANCIAL PROJECTION………………………….…………………..……….26

7. ANNEXES…………………………….………..………………………….29

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I. EXCUTIVE SUMMARY
The underlying Paper Products Manufacturing Project is a newly established manufacturing business
founded by Ethiopian citizen Mr. ABC PLC and envisaged on working to partake in paper based
products manufacturing sector which accompanied with conversion of waste to resource. Hence, this
study report is prepared for the establishment of intended plant initially planned to produce three-in-one
paper based products in Ethiopia. The project encompasses converting rolled paper to usable forms and
production of paper based items from natural pulp and recycled waste papers. The basic technical and
financial parameters of the project on the above mentioned products are described in multiple sections
of this document.

In recent days, Sustainable Solid Waste Management is a critical problem not only for developing countries
but for the developed countries as well. Considerable amount of waste is generated in the municipality of
Addis Ababa- Ethiopia, due to urbanization. The study deals with the sustainable ways that the envisaged
project make of recycling waste paper and original pulp as in put for manufacturing of Paper based
products, which in turn to minimize their adverse environmental impacts and diverting from waste to
resource. In a process it is a converting of waste paper to reuse along with natural pulp as input and
fabrication of several Paper based products. Besides, the company intended to secure external financing to
fulfill investment capital requirement related to the above mentioned manufacturing of different Paper based
products, which in turn helps the business to properly deliver as per the national demand.

Regarding the Paper based fabricated product market every line of company’s product can enjoy both
central and regional markets in Ethiopia. In fact, it is one of the highest demand driven products in the
country, and especially as an input for shopping of grocery items, bakery and food packaging as well as for
use of beverage packaging sector development of today. This is because its demand has a relationship with
the level of demand for other goods in various developments of all sector infrastructures. The product is
demanded all year round and not affected by season.

The financial plan is based on previous trends, future estimates and assumptions. The company’s total
financial costs on fixed investment and working capital needed for the activities of running business
operations in smoothest way is about ETB 25,134,125. This initial investment cost is to be spent for full
project financial coverage (i.e. Building Remodeling Works, machineries, equipment and working capital,
like, salaries, operating costs, Raw material purchase and others). Out of the total investment cost in
connection with the establishment of paper products manufacturing plan, the total equity contribution is

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expected to ETB 13,984,125; Whereas, the remaining investment cost on new project activity for about ETB
11,150,000 is sought to be found from external source as bank term loan (i.e. Lease Financing Facility) for
purchase of production machinery.

On the other hand, considering the return after implementing the newly planned operation, the financial
projection indicates that the business will generate net profit of ETB 8,840,310; ETB 12,080,619; ETB
15,295,628; ETB 17,309,551; and ETB 19,228,395; During 1st, 2nd, 3rd, 4th, and 5th years respectively.
Furthermore, the cash flow of the business shows that the project would generate positive net cash flows
throughout the operation years with the Cumulative cash in-flow for considered life span is indicated as
ETB 2,725,014; ETB 11,890,423; ETB 23,874,766; ETB 38,602,154; ETB 54,814,840; and ETB
75,116,232; During Year-0; 1st, 2nd, 3rd, 4th; and 5th; years respectively.

While projecting the financial viability of planned operations, the underlying business will have an internal
rate of return (IRR) =58% before tax and (IRR) = 26 % after tax that indicating the viability of the outlined
investment is very attractive. Whereas, the net present value (NPV) of the project over total investment cost
at 11.5% discount rate is found to be ETB 9,076,042, which is acceptable and attractive. Therefore, the
overall significant increase in profitability and net-cash inflow strongly justifies growth performance and it
reveals that the business is liquid and will be capable of discharging its financial liabilities with no difficulty
and implies the pay-back period of newly planned operations will be during the 2nd year.

Finally, during conducting this feasibility study, the rationale behind implementation of the underlying
project has been proposed based on previous trends, future estimates and current scenarios including policy
frameworks. In conclusion, the implementation activities of intended project with new production technology
for quality product have reliable positive impacts on the overall development of the country in many aspects.
Besides, all assumptions and forecast reveals that the business operation is liquid and will be capable of
discharging its financial liabilities with no difficulty. Thus, it is highly recommended and worth to finance
and work with such profitable investment activities.

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II. BACKGROUND INFORMATION

2.1 ESTABLISHMENT DATA
 Registered Name: …………ABC PLC Business Company
 Company Address: ………..Addis Ababa, Kirkos S/City, Wereda- 01
 Existing Business Type: …..Import and Distribution Services of the following Goods
 Wholesale & Retail of household items, Office furniture and Equipment
 Retail trade of stationery and related products
 Retail trade of Electrical Equipment and related appliances
 Legal Formation: ….……Sole-proprietorship Business

2.2 PROJECT BERIEF AND OWNERSHIP

The envisaged Paper Converting and Paper Products Manufacturing project is a newly established Ethiopian
owned business founded by Mr. ABC PLC under existing service businesses that he has been running during
previous years and having the main focuses on paper products manufacturing in modern technique and by
using advanced technology. Hence, the Paper Converting and Paper Products Manufacturing project is
inspired to engage in fabrication of several types’ of paper based packaging materials from natural pulp along
with partial use of locally sourced raw materials. The business promoter is at the middle age of life, with
having a good character and well appreciated personality among the society. He is educated and has acquired
pertinent working experiences of undertaking quality services and capable to implement proper business
management.

Furthermore, the main focuses and current intentions is producing high quality Paper based packaging
Products by using natural pulp and recycled waste paper as basic raw material. Basically the project
initiation and concept development was raised from the general environmental protection issue which is
highly earned global concern not only of Ethiopia. In recent days, Sustainable Solid Waste Management
is a critical problem for both developing and developed countries in the world. Accordingly, there are
undeniable facts addressing of considerable amount of waste is generated in the municipality of Addis Ababa
and surrounding, due to urbanization, which is mainly sourced from waste plastic packaging materials.

2.3 COMPANY VISION AND MISSION

2.3.1 Vision Statement

Our vision is to become the leading brand in the packaging and paper product manufacturing
industry in Ethiopia and to establish a one stop paper packaging manufacturing company.

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2.3.2 Mission Statement

Our mission is to establish a world – class paper based products manufacturing company whose products
will not only be used in Ethiopia, rather be exported to other countries of the world. With this Mission
the company is to ensure the delivery of clients’ need centric focused products fabrication that enhances
the development of quality life of the society by applying:
 Strategic Business Plan
 Attracting and retaining skilled employees
 Creating and maintaining partnership on the basis of mutual benefits.
 Taking care of natural environment

2.4 PROJECT OBJECTIVES

The general objective is to establish a local paper based products manufacturing plant, to be one of the
best national manufacturers. Moreover, to maintain continuous development in the factory, while
maintaining high quality of products and services in environmentally responsible practices. Besides, the
company intended to secure external financing to fulfill investment capital requirement related to the
above mentioned manufacturing of different Paper based products, which in turn helps the business to
properly deliver as per the national demand. In addition, the business specific objectives are:

 To fully engage in the Conversion of imported and/or supplied rolled paper to different
consumable items,
 To play a role on manufacturing of different type Paper products for commercial purposes
with new artistic manner.
 Producing quality Paper products using modern production techniques and technology
through creation of employment.
 To generate sustainable income for the company in order to expand the operation and other
development activities in the country.
 To provide top quality of paper products that enables to achieve customer satisfaction levels.
 To diminish the use of all type of plastic bags used by the public.

2.5 KEY SUCESSESS INDICATORS

2.5.1 Macro Level Successes

 Access to credit provision at lower interest rate as compared to the business’s return and
convenient terms and conditions of the loan;
 Attractive investment policy and other packages;
 Continuous increment in household and associated increase in their expenditure patterns;

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 Availability of the required professional man power with capacity to run every business.

2.5.2 Sector Level Key Successes

 Availability of the required infrastructure;
 Availability of market for the intended business lines;
 Government incentive and encouragement for the underlying manufacturing sector development.

2.5.3 Firm Level Successes Factors

 Strategic business areas of special focuses for industry line of businesses where others
are relatively lesser available;
 Well trained and motivated personnel;
 Pertinent work experience of the owners/promoters;
 Well established business with plenty of good-will as well as social acceptances that
the promoters earned so far.

2.6 PRODUCTS DESCRIPTION AND APPLICATION

The Company has a plan to consider support of modern production technology of all features and quality
which encompasses two processing phases.
2.6.1 The Paper Conversion Line
The company’s product type includes Paper is an essential commodity of everyday use. The application of
paper and paper products whether it is handmade or other types is very wide in households, education,
business and industrial sector. The product types range from highly priced special papers to cheaper low-
grade varieties. Typical examples are duplicating papers, filing paper and different types of paper boards.
Handmade paper is used for office stationary, writing pads, conference folders, computer printouts, drawing
and documentation sheets, certificate and degree awards are products under conversion line as listed below.;
 A5 Copy Papers  A4 Copy Papers

 A3 Copy Papers  News Print Paper

 Color Printing Paper  Duplex Boards Paper

 Various Art Papers  Thermal Paper, etc.

2.6.2 Paper Based Products Manufacturing Line

Paper based products have become more and more popular in urban and even in rural areas of the
country. They are increasingly replacing plastic and rubber products because they are relatively less

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expensive and easily accessible since they can be fabricated even in small urban centers. In
industrialized countries, Paper products are everywhere to be found, though few people recognize Paper
in all of its applications. Paper is used in almost every industry and household consumption. In this
regard, ABC PLC Paper Products Manufacturing is a company engaged in the paper based products
manufacturing with a wide range of Paper Bags, Cups and cardboard casing for both corporate and
individual clients. We are set to service a wide range of clientele not just in the Ethiopia, but also all parts of
the African Continent and of course to make profits, which is why the company will ensure to go all the way to
give its clients options. Hence, list of product offerings and their applications are discussed below;

 Non-corrugated cardboard boxes, cartons and cases for Pastry and Bakery uses
 Customized paper bags for Events, Gift Packaging, etc
 Paper bags for food and food item storage
 Square Bottom Paper bags for grocery
 Paper bags (Punched) for packaging of processed coffee
 Paper Cup for Events service and Liquid Packaging

2.7 FUNDING REQUIREMENT

The envisaged Paper Based products manufacturing business under consideration requires total
investment of ETB 25,134,125. Out of this, the total equity contribution is expected to ETB 13,984,125
including the initial paid-up capital. The remaining business investment cost about ETB 11,150,000 is
sought to be found from external source as bank capital lease financing for purchase of machineries to be
used in paper conversion and machineries to be installed for products manufacturing line.

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