.

PROJECT PROPOSAL

ON SPONGE FACTORY

LOCATION : OROMIA REGIONAL STATE

,ARSI ZONE ASELA TOWN

PROMOTER :MENGISTU SABSIBE

OCTOBER,2020

ARSI,ETHIOPIA

Table of Content

Executive summary

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1.Introduction------------------------------------------------------------------------------------------------1

1.1.promoter Profile---------------------------------------------------------------------------------------2

1.2.Project Justification-----------------------------------------------------------------------------------2

1.3.Objective--------------------------------------------------------------------------------------------------3

2.Project Description and Application-------------------------------------------------------------3

2.1.The project Finance-----------------------------------------------------------------------------------4

2.2.Mission and Goal---------------------------------------------------------------------------------------4

2.3.Project Location and Infrastructure------------------------------------------------------------5

3.Market study and Plant Capacity------------------------------------------------------------------5

3.1.Market Study--------------------------------------------------------------------------------------------5

3.2.Present Supply in Asela.----------------------------------------------------------------------------6

3.3.Demand for sponge production and processing------------------------------------------6

3.4.Customer--------------------------------------------------------------------------------------------------6

3.5.Capacity and service Programme---------------------------------------------------------------7

3.5.1.Capacity-------------------------------------------------------------------------------------------------7

3.5.2.List of Machine---------------------------------------------------------------------------------------7

3.5.3.List of Equipment-----------------------------------------------------------------------------------7

3.6.Processing Technology------------------------------------------------------------------------------8

4.Technical Study------------------------------------------------------------------------------------------9

4.1.Design and particular--------------------------------------------------------------------------------9

4.2.Physical Appearance ---------------------------------------------------------------------------------9

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4.3.Unit Operation------------------------------------------------------------------------------------------9

4.4.The Raw material for production and processing----------------------------------------9

4.5.Utilities---------------------------------------------------------------------------------------------------10

4.6.Man power Requirement--------------------------------------------------------------------------10

4.7.Description of Land Use plan-------------------------------------------------------------------11

5.Financial Analysis--------------------------------------------------------------------------------------12

5.1.Project Capital and Financing-------------------------------------------------------------------13

5.2.Financial and source of income----------------------------------------------------------------14

6.Implementation Schedule---------------------------------------------------------------------------14

7.Monitoring and Evaluation-------------------------------------------------------------------------15

8.Conclusion and Recommendation---------------------------------------------------------------15

Executive summary

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1.Project Name Sponge manufacturing

2.Nationality Ethiopia

3.Project Owner Mangistu Sabsibe

4.Contact address 0911750722

5.Project Location Asela

6.Project Composition Production and processing of sponge

7.Primeses Required 10,000m2

8.Total Investment Cost total capital of the project estimated at birr-

50,000,000of which Fixed for
investment cost-32500,000
Working capital-17500,000

9.Employment Opportunity total 40 of which permanent jop opportunity

30 Permanent skilled person and unskilled 10

10.Social and Economic Benefit Provide better building service, employment

opportunities, generation of income,
stimulates town economy and benefits for the
local people.

1. INTRODUCTION

The present active socio-economic growth of Ethiopian especially in urban area necessitates

equivalent growth of building and construction sector of manufacturing industry. The sector

should expand rapidly to support the overall economic development of the country.

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In the building sector of the economy, the multipurpose one become common and fastly expands

in urban areas of the nation since dynamic economic development of the urban economy requires

the construction of these building in towns to support the growing of manufacturing and business

service sector used agricultural input at all.

To these effects, the owner of the envisioned production and processing of sponge planned to

invest in Asela town, Arsi zone of oromia regional state and undertake this project study to check

the market, technical and financial feasibility of this project .the result of the study is very sound

and promising for the owner to start the project in this area. The promoter is very ambitious and

committed to realize the project. Hence, he expects to get the necessary support from the

regional and local governments to make project to be operational.

1.1.Promoter Profile

The promoter proposed project, Mangistu Sabsibe has a used experience of end product and
processingof sponge that currently needs to extends his amble manufacturing and business of
furniture making experience in keble 09 asela town of oromia regional state.

1.2. Project Justification

Manufacturing industry is the vast industry in the sector purposely used agricultural input in the
country. The production and processing of sponge is one of the latest technology in the country
of manufacturing item that used raw material around oromia regional state. The production and
processing of sponge machine to be circular foam cutting,vertical foam cutting,oscillating blade
contour cutter and block moulding foam machiniers which Facilities with short period of time by
Development Bank of Ethiopia Asela branch.the technology of production and processing

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sponge new investigated technology in the country so that mostof customer and users need by
balanced price.behind this oromia regional state is one of the raw material potential study for the
production and processing of sponge.
So Asela town is one of the fastest growing town in oromia regional state and it has huge
potential for business and investment .Besides, the area has a very conductive climate condition
for the human settlement and the growth different types of crops. Furthermore, there exist
remarkable economic activities.
Being a capital and strategic town of the zone with dynamic commercial activities, scarcity of
mixed use building in the town, population density and geographical significance in the zone are
the major justifications behind the establishment of this project.

1.3. Objective of the Project

The objective of project :-

 To create job opportunity for unemployment in the town.

 To maximize the return on the invested capital through modern manufacturing

technology service.

 To raise the significance and importance of the sector by raising its contribution
to the economic development for the town.

2.The project Description and application

Sponge factory is one of the huge manufacturing industry in the sector of the country stragretic
and focus area of the government plan which used end product of agricultural input of the
resource as well as create wide unemployment opportunity.since the sponge manufacturing the
nearest technology in the country most of the customer needs satisfy and economic development
of the town to be raise up opportunity.

The project establishment provide padding lodging on short term basis. facility provided may
range from quality mattress in a sites such as installation of the machines, production area, stored
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area, office and facility for transport place to be required for functional service. Among this the
development bank of the town to be rolled to overcome the machine with short period of time.

2.1. The project Finance

The project finance is Loan and equity of the promoter. purpose of loan is to strength the
relationship between the investor and the bank. Furthermore, the investor gets strength to
advance to various variable economy sectors in the industry.

Out of the total investment capital 50,000,000.

30 %/-15,000,000-/ is to be contributed by the promoter.

70 % /-35,000,000 is to be covered by local bank loan

2.2. Mission and Goal

Mission

 To establish the sponge manufacturing technology service for the town

 To give high quality product and processing of sponge.

Goal

 To create job opportunity for unemployment 30 permanent and 10 Temporally for the
town.

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2.3.project location and infrastructure

2.3.1.Location

The proposed project of sponge manufacturing established in area of 10,000m2 located in asela
town.

2.3.2.Infrastructure

The project to be need High power of the electricity, water and Road. Behind this every
concerned government and non-government office to support for the establishment of the project
in town to overcome his mission and goal.

3.MARKET STUDY AND PLANT CAPACITY

3.1.Market study

General overview
Market is the most important for the manufacturing industry.In large manufacturing industry
sector market development play great role in history.in free market mix manufacturing industry
competent in quality standards,waste free, non pollution and the other to be fulfill.since there is
no sponge factory in arsi zone,the project to be answer customer need and profitability.

In free market mix any manufacturing industry to consider customer service or customer
oriented based product.

1.product:-product the main end product of manufacturing industry.ever manufacturing

industry to focused for their product to process/harvest.product to free form any contimant and
quality enough for the service.

2.price:-the second basic necessity in market mix is price. The manufacturer to analysis
customer by assigning the medium way of cost participation for all.

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3.place:-non pollution,contimantion free,nearest to customer and visual for all possible.

4.promotion:in case of new product,non visible area and customer awareness promotion great
role in manufacturing industry.

3.2.Present supply in Asella

According to the current 2017 information asela has no production and processing of sponge
factory .The production and processing of sponge end product to be found around oromia
regional state and the country. So this project may be approve lack of job creation and marketing
segmentation of the town. Based on the market study and other consideration sponge to be
processed by standard quality with standard machine and equipment to be recommended.

3.3. Demand for sponge production and processing

According to the project mission and goal ,the project feasibility study i.e /gathering and
analyszing information / around oromia regional state, Arsi Zone helps the investor to know if
the project is feasible or possible .that feasibility study aim to objective and rationally uncover
the strength and weakness of existing business or proposed venture ,opportunities and threat as
presented by the environment.

The feasibility study is evaluation and analysis of the potential of the proposed project which is
based on extensive investigation and research to give full comfort to decision makers.

Beyond this there is no production and processing of sponge in the town. Most of the customer
use the end product of production and processing sponge around the town.

3.4.Customer:-The sponge production and processing is the new nearest technology in our
country. Most of the furniture making trader, industry and SMES used the end products in the
town.as well as there is no such factory in the town most probable used with the balanced price
and place.

3.5 capacity and service programme

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3.51.Capacity

Based on the market study observed that there is a great demand gap between the demand and
supply of sponge production and processing. The machine has their own capacity of production
and processing.

3.5.2.Machiner and production ,processing design

List of machinier

Quantity
No. Description Total cost

1. Circular foam cutting machine 1 $12000-

$12800

2. Vertical foam cutting machine 1 $4000

3. Oscillating blade contour cutter 1 $20000

4 Block moulding foam machine 1 $26000

List of equipment requirement

No Description of raw material Quantity Unit price Total in birr

1 Foam rebounding 1 $5000-20000

2 Foam panel cutting 1 $8000

3 Foam chemical toluene 1 $1200-5000

disocyanate

3.6. processing Technology

There are many way of sponge processing. Most of production and processing to be different as
used by raw material type. Most Sponge processed based on the type of reductant used. The
common processing are gas and coal based processing. The most common processing type of
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sponge is coal based processing. There are two temperature zone in the kiln of processing caol
based sponge.

The production and processing sponge quality based on the temperature zone of heating at
degree of heating or boiling point. Both temperature heat zone used Iron oxide lump calcium
oxide silicon oxide magnesium oxide as raw material.

The first pre heat zone is the change is heated to 900-1000 c

i.e.Fe2o +CO = 2Feo+CO2

The second metallization zone is held fairly constant at 1000-1050c

i.e. FeO+CO = Fe+CO2

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4.TECHNICAL STUDY

4.1.Design and particular

Design and particular of the project depend on the owner interest.the owner has already decided
to commit himself manufacturing industry service having full knowledge required by the
national and international stardards.so owner fulfill the aim of project in Arsi asela town
administration.

4.2.Physical appearance

The Sponge factory building was placed on any direction of Asela Town administration .the
project has basic nessesity of infrastruicture such as electric power,water and road. The
instalation of the machine to be by technician of the machine operator.the project need the area
of 10000m2 in general.

4.3.unit operation

The sponge factory has many unit operation. In each of unit operation area there is techian
operater and work per/day.the machine has the capacity to produce and processing

4.4.Raw material of sponge production and processing.

The raw material of sponge production and processing are different according to their type.

The most sponge raw material are list as follow

1.Iron oxide lump ore consists of SIO2 ,ALO2O

2.Non coking coal dry basiscontain Ash,Moisture and VM

3.Lime stone SI2O,CaO and MgO in amount

4.Dolomite consistsof SI2O,CaO and MgO in amount

4.5.UTILITIES

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There should be enough electric power and the rest according to the machine capacity of
working. The other most utilities also water.in the sponge processing factory water is the basic
necessity. There for electric power and water is the most utilities in the processing of production
of sponge.

4.6.Manpower requirement

The plant requires 12workers, and their annual expenditure, including fringe benefits, is
estimated at Birr For details table manpower requirement and annual labour cost

Description Req. Salary, Birr

No. No.

Monthly Annual

1. Manager 1 3500 42000

2. Secretary 1 1000 12000

3. Accountant 1 2000 24000

4. Technician Operator 2 2500 60000

5. Assistant operators 1 2400 28800

6. Store keeper 2 800 19200

7. Guard 2 750 18000

8. Sales man 2 1500 36000

Sub-Total 12 14450 240,000

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4.7.Description of land use plan

No Description Quantity Unit cost Total cost

Guard office 50 m2

Office building 200 m2

Parking area 1000 m2

Raw material storage 1000 m2

Production area 1000 m2

End product stored area 1000 m2

Loading and unloading area 2000 m2

Greenery area 2000 m2

Toilet and shower house 200 m2

Future expansion area 1550m2 8,000,000

The description of land use to be based on the design of the actual land on the behave of the
owner.

5.FINANCIAL ANALYSIS

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The financial analysis of the sponge production and processing project balance sheet

Total current asset 5,000,000

Fixed asset

General equipment 1500,000

Building and construction 2,000,000

Total fixed asset 2000,000

Total asset 50,000,000

Liability

Account payable 1000,000

Owner equity

Owner of the capital 15,000,000

Total liability owner equity 50,000,000

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5.1.Project capital and financing.

5.1.1.Project capital

The total investimant capital of the project is estimated at birr 50,000,000 of which birr
3,2500,000 /65%/is for fixed investiment items while the remaining balance of birr 1,7500,000
/35%/ will be intial working capital.

Project capital and source of income

No Description Investiment Source of income Remark

capital birr

1 Land development 250000` Local market Duty free

2 Building and construction 5,000,000 50% foreign Duty free

currency

3 Machinery and equipment 4,000,000 40% foreign Duty free

currency

Total

4 Working capital 5,250,000 Local market Duty free

Total 50,000,000

5.2.Fincial and source of income

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The implementation of project Mangistu Sabsibe sponge manufacturing industry total
investiment capital 50,000,000 birr is needed to be 30%/-15,000,000 / 70%/ -35000,000/will be
covered by financial institution.

No Source of fund Share in % Amount in birr

1 Own capital 30 15,000,000

2 Bank loan 70 35,000,000

Total 100% 50,000,000

6.Implementation schedule

The actual implementation schedule of the project

Activities Time plan

Land requisition October 2020

Land attainment October 2020

Land clearance December 2020

Design and construction permit from the December 2020

authorized body

Building and construction February 2020 –January 2020

Office structuring March 2020

Service delivery April 2020

7.Monitoring and evalution

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Monitoring and evalution of the project to be depend on the mission and goal of the project.to the
aspect of this every concerning office to be evaluating and monitoring that the project stands for
its mission and goal.

8.Conclusion and recommendation

Conclusion the project is found to be operationally profitable and has significance socio
economic benefits. due to customer satistifaction based experience project income statement and
profitability indicator shows to start up is financially return the loan and equity of the owner
according to the project plan schedule.

Recommendation:-the project will be no environmental impact assessment that have no

pollution. The project mission to be job creation for the reduction of unemployment of the living
town. So that every concerning body to be support to facilitate the implementation of this plan.

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