Project Proposal FOR Textile and Garment Factory: (Different Wearing Apparel and Others Related Product)

PROJECT PROPOSAL
FOR
TEXTILE AND GARMENT FACTORY
(Different Wearing Apparel and others related product)
PROJECT TO BE IMPLEMENTED IN
DUKAMTOWN,O/S/Z/S/FINFINE, OROMIA REGION STATE
PROMOTER: - DEGEMU BEKLE KERGA
NOV,2022
FINFINE, ETHIOPI
Project proposal for Textile and Garment Factory
Table of contents
I. EXECUTIVE SUMMARY
1. INTRODUCTION………...................................................................................................…..5
I.1. Rational Behind and project………………………………………………………………6
I.2. Objective and Justification of the Project………………………………………………...7
I.3. The Socio-Economic Significance of the project...............................................................7
I.4. Location and Premises required……………………………………………………….….8
I.5. Location Map of the Area………………………………………………………………...8
2. MARKET STUDY AND PLANT CAPACITY

2.1. Market Study…………………………………………………………………………….10
2.2. Demand Analysis………………………………………………………………………..11
2.3. Supply Analysis………………………………………………………………………....11
2.4. Market Prospects…………………………………………………………………….….12
2.5. Competition……………………………………………………………………………...12
2.6. Marketing Strategy and Promotion………………………………………………….…..12
2.7. Target Customer and market Share……………………………………………………...12
2.8. Plant Capacity…………………………………………………………………………...13
2.9. Production Program and Prices………………………………………………………….13
3. TECHNICAL STUDY
3.1. Production nature and Description………………………………………………………14
3.2. Raw material and input……………………………………………………………….…14
3.3. Production Process………………………………………………………………………14
4. MANPOWER AND ORGANIZATIONAL MANAGEMENT

4.1. Manpower…………………………………………………………………………….…18
4.2. Organization Structure and Management…………………………………………….…20
4.3. Flow of job process of the departments…………………………………………………21
5. FINANCIAL REQUIREMENT AND ANALYSIS
5.1. Total Initial Investment Cost..................................................................................……..24

5.1.1. Fixed Investment......................................................................................................…..24
5.3. Financial Analysis and Statements...............................................................................…28
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5.3.1. Underlying Assumption....................................................................................……….28

5.3.2. Source of Fund.................................................................................................………..28
5.3.3. Loan Repayment Schedule.........................................................................................…
29
5.3.4. Annual depreciation schedule..................................................................................…29
5.3.5. Revenue Projection..............................................................................................……..30
5.3.6. Balance Sheet (Beginning).................................................................................……..30
5.3.7. Income Loss Statement..............................................................................................…31
5.3.8. Cash Flow Analysis.............................................................................................
……...31
5.3.9. Profitability.........................................................................................................……...32
5.3.10. Break-EvenAnalysis..........................................................................................……..32
5.3.11. Pay-Back Period................................................................................................……..32
6. FUTURE DEVELOPMENT ................................................................................................

……..33
7. ENVIROMENTAL IMPACT OF THE PROJECT

7.1. Socio Economics Environments.......................................................................…….33
7.2 Environmental Impact Assessment of the Project...................................................…33
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1. EXECUTIVE SUMMARY
1. Project Name:-Textile and Garment Factory (Wearing Apparel)
2. Project Owners:- Degemu Bekle Kerga
2.1 Nationality:- Ethiopian
3. Project Location:- Oromia Regional State
Special Zone Surrounding Finfine
Dukam Town
4. Land Area and Capital
4.1 Premises Requirement :- 15,000 M2
4.2 Total Capital :-120 Million (30% owner Equity and 70% Bank Loan)
5. Project Composition
5.1 Garment factory specialized in the production of quality and affordable T-shirt,
jackets, Dresses, Sport wears (Uniform) and etc
6. Planned Employment of the creation of the project
 The total manpower required for the plant will be 600 employees
6.1 Permanent Worker :- 410
 Skilled 280
 Unskilled 130
6.2 On Temporary Basic :- 190
 Skilled 90
 Unskilled 100
7. Market Share
 50% for Domestic Market
 50% for Export Market
8. Economic of the factory for the region/country
 Produce and supply of quality garment production,source of revenue, employment
opportunity, save foreign currency, benefit for the local community and stimulate the
local economy
9. Technology :- Modern Garment Technology
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1. INTRODUCTION
In dynamic economic environment like Ethiopia, industrialization has an immense force to
sustain the development particularly heavy and big industry like textile and garment has a
paramount and multi benefits on the overall development of the nation the Ethiopian economy
had remained for a long time a back ward agrarian economy. Industry was limited to traditional
handcrafts and cottage industries like weaving, blacksmith, pottery, carpentry and wood works.
Modern manufacturing industry started in the late 1950s. The government followed liberal
economic policies and a free market system, and thus created enabling environment to promote
and encourage the initiatives of the private sector. Both nationals and foreigners were allowed to
freely participate in the national development efforts. The institutional frame work of political
economy was defined as capitalism.
With such enabling environment, some foreigners who had technical, managerial and financial
capacities, skills and interest started to establish modern manufacturing enterprises such as oil
and grain mails, beverage factories and food complex industries, manufacture of cement blocks,
leather and shoe factories, textile, construction materials & metal products.
The modest industrialisation that was to take place subsequently was characterized by import
substitution and heavy reliance on foreign investment based on liberal investment policies.The
Dreg regime which came to power in 1974 introduced scientific socialism and carried out
sweeping nationalization of medium and large-scale industries, rural and urban lands, extra
houses in urban areas, private banks and insurances, major Hotels, trading houses &super
markets. Most of the domestic and foreign trade and transport organs came under monopolistic/
semi- monopolistic state companies. Private initiatives in production, distribution & marketing of
goods & services were discouraged.
Private sector investment in manufacturing was restricted to small scale industries and handcraft
and cottage industries with a maximum ceiling of birr 500,000.00 in investment.Handcraft and
cottage industries were organized into producers co-operatives based on socialistic system with
heavy subsides. Thus development objectives
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Were to satisfy the basic material needs of the mass and profit motivation ceased to be major
criteria in decision making.
Like the rest of other economic sectors, Industries, experienced great difficulties during the dreg
regime. These included shortage of foreign exchange to import raw materials, intermediate
inputs, spare parts and capital goods for replacement and modernization, lack of managerial and
technological capabilities, financial constraints absence of incentives to workers under wage and
salary controls and lack of appropriate economic and financial evaluation in investment. All
these led to inefficiency and under capacity utilization in the industrial sector. This had resulted
in failure to satisfy the growing demand of the population for industrial out puts from domestic
production, compelling the country to rely on aid and imports.
Recently the negative impact of the economic policy adopted by the last system has been well
acknowledged and therefore the economic policy that stimulated the role of private sector has
been advocated repeatedly at different level. A favourable investment climate has been created
for private investors as a result of the issuance of the new investment code of the country. Now a
day’s Ethiopia’s investment climate is among the most in the continent.
In the national development plan, industry has been recognized as a driving force to achieve
rapid economic development. The government involvement took the form of actual investment
in industry, financing of industrial under takings through financial institutions and the
formulation of policies intended to promote industrial development.
It is with this back ground that, the promoter came up with this project study that aims to
establish garment factory in Dukam town on 15,000 M2 of land to be provided by the
government.
1.1. Rational Behind of the project
Textile and garment industry has enormous potential and opportunities for progress, however
although there is a high potential for the production of raw materials, such as textile and leather
the garment industry has not yet developed in the country. The demand for garment products in
various parts of the world is steadily growing. The basic garment factory process includes the
spinning of fiber into yarn which is then processed into fabric in a weaving or knitting mill. After
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the finishing process which includes dyeing/printing, the woven or knitted fabric is delivered to a
distributor – whole saler-retailer, who wills sale it to individuals in the making of clothes or
house hold articles.
The garment sector has the potential of employment generation and export earnings. For a
populous country like Ethiopia the contribution of a textile sector is indispensable particularly
judged from the current low level of development of the country.
There is an opportunity to get skilled manpower for making the product as there is a textile and
garment industry support institute at technical and vocational schools and Bahir Dar University
in advanced training professional skilled manpower. Given the potential of the raw material and
priority of the government for the textile and garment sub sector, the garment industry has a
major role to play in the region’s economy in general and export trade in particular.
1.2. Objective and Justification of the Project

1.2.1. Objective of the Project
The main objective of the factory is to produce quality and affordable garment productions
mainly T-shirt, men shirt sport and school wears (uniform) for domestic and foreign market.
1.3. The Socio-Economic Significance of the Project

The envisaged project deemed to contribute to the economic development of the region in
the following ways:
A. Source of Employment
One of the problems that our country is faced is unemployment. Therefore, the current
objective of our government is working on tackling the problem of unemployment either
through creating self employment or employment in other organization.
Hence, the envisaged deemed to contribute somewhat to solve the problem of

unemployment. Upon completion, the Garment assumed to generate employment
Opportunities for about 100 persons during its construction period and more than 473
persons in its functional life time.
B. Source of Government Revenue
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To redistribute income, the government collects different forms of taxes from different
business undertakings and individuals as income tax. Among the different forms of taxes,
business income taxes are collected from undertaking business activities. Therefore, the
factory will serve as sources of revenue for the region.
C. Sources of Social Service
In addition to serving as a source of employment and income for the region, the factory
renders social services for different group of people. Hence, the Garment Factory deemed
to provide the following services:
 Regular subscriptions with local and foreign textile trade and fashion magazines.
 Supply new style, fashionable, and locally made textile to the households, retailers
and wholesalers.
 Makes to flow of latest marketing and trade information to the exporter.
D. Benefit for the Local community

As a corporate responsibility the company will engage in different development activities on the
surrounding areas (Dukam town). This will better worse the community and contrite for the
development of the region.
1.4. Location and Premises required

A. Location
The envisioned project is planned to be located in Dukam town which is 38kms far from capital
city to the way to adama. Oromia special zone surrounding finfine, oromia regional state.
Generally, the rental value period of rural land are determined and fixed by land use regulations
of the regional governmental of oromia. The area of land needed for development activities are
based on the types of projects. The maximum period of land allotted for investment purposed is
not greater than forty five (45) years. Rental prices in rural are determined on the types,
magnitude and location of the project areas.
An Investor has the right to hold land either on lease or rental basis in Oromia. The investment
Board of the region with priority given to approve investments delivers land to an investor within
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a short period of time through its channels. Urban land in these cities and towns can also be
given with the maximum price within a short period based on the interest and capacity of the
investor. The maximum and minimum annual lease charge ranges will largely depends on the
type of project location of the land and the size of land requested. Urban Land in the remaining
small towns of Oromia is administered on rental basis and the annual rental charge ranges per
square meter is depending on the location, the type of project and size of the land According to
the 1994 national census, the town had a population
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B. Premises required
The total land holding of the project one hectare, which is equivalent to 15,000 M2, the premises
required planned as follows in the table below.
Table premises required and land use plan.

SN Description Land requirements(M2)
1 Production Hall
1.1 Cutting Section 3,250
1.2 Sewing Section 2,500
1.3 Finishing Section (Including Inspection and Packing) 500
Total 9,250
2 Warehouse
2.1 Raw material (Fabrics) and Input 2,500
2.2 Finished Production(Garment) 2,750
Total 5,250
3 Office Building 400
4 Shop and showroom 300
5 Waste Accumulation area 200
6 Green area, buffer zone and parking 2,600
Total 14000
Grand Total 15,000
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C. Floor Lay Out
The ring was a descendant of the Arkwright water Frame 1769. It was a continuous
process; the yard was coarser, had a greater twist and was stronger so was suited to be
warp. Ring spinning is slow due to the distance the thread must pass around the ring, other
methods have been introduced. These are collectively known as Break or Open-end
spinning.
Sewing thread was made of several threads twisted together, or doubled.
 Checking
This is the process where each of the bobbins is rewound to give a tighter bobbin.
 Folding and twisting
Plying is done by pulling yarn from two or more bobbins and twisting it together, in the
opposite direction that in which it was spun. Depending on the weight desired, the cotton
may or may not be plied, and the number of strands twisted together varies.
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 Gassing
Gassing is the process of passing yarn, as distinct from fabric very rapidly through a
series of Bunsen gas flames in a gassing frame, in order to burn off the projecting fibers
and make the thread round and smooth and also brighter. Only the better qualities of
yarn are gassed, such as that used for voiles, poplins, venetians, gabardines, many
Egyptian qualities, etc. There is a loss of weight in gassing, which varies' about 5 to 8
per cent., so that if a 2/60's yarn is required 2/56's would be used. The gassed yarn is
darker in shade afterwards, but should not be scorched
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2. MARKET STUDY AND PLANT CAPACITY

2.1 Market Study
In view of the fact that the textile and garment industry are related on the some value chain
they have similar demand (positive relationship), therefore this study tried to study the
market from broad view of textile and garment industry.
The textile industry is the largest manufacturing industry in Ethiopia. The sector comprises
a large number of state owned enterprises’ and a growth number of private sector
participants at all levels.
2.2. Demand Analysis
There exist many factories that boost the demand for garment and textile industry in
Ethiopia a part from its basic need like huge population, increase in income. As the time
series data there exist paramount demand for these productions.
Table 2: Ethiopian Import and Export of textile
Years CIF Value in US$ (Million) Import CIF Value in US$ (Million) Export
2003 141.3 10.1
2004 142.6 12.1
2005 239.8 13.4
2006 279.2 8.3
2007 291 15
2.3. Supply Analysis
The most recent statistical abstract indicates that there were 23 factories producing garment
of which 6 were public. In addition, there are large numbers of artesian enterprises
producing traditional Ethiopian style clothes. The state owned garment enterprises are
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inextricably linked with the nine state owned enterprises, six of which producing textile,
two yarns and sewing thread, and one blanket. As clearly indicated in the introductory part
of this proposal, Dukam town is the growing town of Oromia special zone. Above all it
found on the road to Addis – Adama where moderate traffic flow is recorded due to
different commodities flow to capital cities.
Thus, it has a big market opportunity for the Garment project. Moreover, since this project
encompasses different supplementary and complementary projects, it deemed to help the
customers have a stop services. Therefore, the target customers of this envisaged project
include:
 The residents of the city of dukam town and the surroundings

 Individuals all over the country and
 For export trade.
Hence to reach customers different marketing vehicles will be used. Among the
different marketing strategies and tools for promoting and controlling the market the
factory will use:
 Sponsorship of key government activities and public support mechanism.

 Using different marketing segmentation strategies and tactics.
 Utilizing effective and customer centric marketing strategies, that is the marketing
strategies that focuses on different groups of customers based on different
segmentation tools; for example, Age , Sex, income level, and the like.
2.4. Market Prospects
From the above marketing demand and supply analysis for the garment production there
exist huge market gab in Ethiopian market. Hence, the envisioned factory will be
successful y entering in to this market.
Besides, the demand for garment in the world marketing is increasing. Garment
productions of Ethiopia have high market demand in many parts of the world, particularly
in the united state of American, Western Europe and Japan. Therefore, there will be
sufficient demand for the production in the international markets.
2.5. Competition
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There are different forms of competition that may face the factory. These are price and non
price based competition. Moreover, there are different competitors that will compete with
the project either directly or indirectly. But the factory under discussion has diversified
marketing strategies that could enable it cope-up with the different competitors in the
market. Moreover it will frequently conduct competitors research which focuses on, the
strength and the weaknesses, the different competitor’s strategies, the techniques they use
in rendering the product, their customer handling methods, and others.
2.6. Marketing Strategy and Promotion
The company will follow promotional methods:
 Electronic Medias
 Advertising (Media, Flayer and news paper)
 Public relations
 Branding,
The marketing strategy mainly focus on the satisfying the needs and the requirement of
the customers.
2.7. Target Customer and Market Share
The project target is upper and lower level of the people because our strategy is the provide
standard quality of the product at cheaper prices and to capture the market.
The project will distribute 50% of its product for domestic market and 50%for Export
2.8. Plant Capacity and Production Progress
2.8.1. Plant Capacity
Based on plant capacity and progress this plant assumed to produce 2,500,000 T-shirt
1,600,000 Jacket, Dresses and 750,000 school wears(uniform) at full capacity utilization
operating 310 days per year and 8 hours per day.
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2.2.2. Production Program and Prices
Considering the gradual growth of demand and the time required to develop the required
skill the rate of capacity utilization during the 1st, 2nd and 3rd year of production will be
70%, 90% and 100% respectively. Full capacity utilization will be reach during the third
year of operation.
Description Years 1 Years 2 Years 3-10

Capacity Utilization (%) 70 90 100
T-Shirt in pcs 1,750,000 2,250,000 2,500,000
Jacket and Dresses in pcs 1,120,000 1,440,000 1,600,000
School wear(Uniform) in Unit 525,000 675,000 750,000
2.3Production Pricing
It would be important to examine the possible level of pricing based on the competitor
action. In this regard the existing average pricing of similar company were assessed for the
benefit of comparison. Based on the existing retail price in the market the firm stetted the
price as follows.
Product Price of company

T-Shirt in pcs 38
Men Shirt in pcs 105
School wear in Unit 170
Total 313
2.3.1 Total Price and Sales projects
Description Years 1 Years 2 Years 3-10

66,500,00 85,500,00
T-Shirt in pcs
0 0 95,000,000
1112,000,00
Jacket and Dresses in pcs
0 151,200,000 168,000,000
School wear(Uniform) in Unit 89,250,00 114,750,000 127,500,000
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0
Total 273,350,000 351,450,000 390,500,000
Increase by 5 % per annum after 2 year
nd
19,525,000
Grand Total 410,025,000
3. TECHNICAL STUDY
3.1. Product Process and Technology
The production process includes designing, measuring and cutting of the fabric. Then
sewing machine, machine designed to join pieces of fabric or leather by means of either a
lockstitch or a chain stitch is used for the process (tailoring). The lockstitch which is used in
modern sewing is formed form two threads and the chain stitch from a single thread. Other
machines, such as shuttle, loop and needle are used in the process.
3.2. Raw Materials and Input
The main raw materials for the plant will be the textiles factories such as Akaki Textile
Factory, Bahir Dar Textile Factory, Kombolcha Textile Factory and Awassa Textile
Factory; and sometimes raw materials are imported from countries such Italy ,Turkish, India.
3.3. Production Process
 Ginning
The seed cotton goes in to a Cotton gin. The cotton gin separates seeds and removes the "trash"
(dirt, stems and leaves) from the fiber. In a saw gin, circular saws grab the fiber and pull it
through a grating that is too narrow for the seeds to pass. A roller gin is used with longer staple
cotton. Here a leather roller captures the cotton. A knife blade, set close to the roller, detaches
the seeds by drawing them through teeth in circular saws and revolving brushes which clean
them away.
The ginned cotton fiber, known as lint, is then compressed into bales which are about 1.5m tall
and weigh almost 220 kg. Only 33% of the crop is usable lint. Commercial cotton is priced by
quality, and that broadly relates to the average length of the staple, and the variety of the plant.
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Longer staple cotton (2½ in to 1¼ in) is called Egyptian, medium staple (1¼ in to ¾ in) is called
American upland and short staple (less than ¾ in) is called Indian.
The cotton seed is pressed into cooking oil. The husks and meal are processed into animal feed,
and the stems into paper.
Issues
Cotton is farmed intensively and uses large amounts of fertilizer and 25% of the world’s
insecticide. Native Indian variety was rainwater fed, but modern hybrids used for the mills
need irrigation, which spreads pests. The 5% of cotton-bearing land in India uses 55% of
all pesticides used in India. Before mechanization, cotton was harvested manually and this
unpleasant task was done by the lower castes and in the United States by slaves of African
origin.
Preparatory processes- preparation of yarn
 Ginning, bale-making and transportation is done in the country of origin.

 Opening and cleaning
Platt Bros. Picker
Cotton mills get the cotton shipped to them in large, 500 pound bales. When the cotton
comes out of a bale, it is all packed together and still contains vegetable matter. The bale is
broken open using a machine with large spikes. It is called an Opener. In order to fluff up
the cotton and remove the vegetable matter, the cotton is sent through a picker, or similar
machines. A picker looks similar to the carding machine and the cotton gin, but is slightly
different.
The cotton is fed into the machine and gets beaten with a beater bar, to loosen it up. It is
fed through various rollers, which serve to remove the vegetable matter. The cotton, aided
by fans, then collects on a screen and gets fed through more rollers till it emerges as a
continuous soft fleecy sheet, known as a lap.
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 Blending,
Mixing &Scotching
Scotching refers to the process of cleaning cotton of its seeds and other impurities. A scotching
machine for cotton was first invented in 1797, but didn't get much attention until it was
introduced in Manchester in 1808 or 1809. By 1816 it had been generally adopted.
The scotching machine worked by passing the cotton through a pair of rollers, and then
striking it with iron or steel bars called beaters. The beaters, which turn very quickly, strike
the cotton hard and knock the seeds out. This process is done over a series of parallel bars
so as to allow the seeds to fall through. At the same time a breeze is blown across the bars,
which carries the cotton into a cotton chamber
 Carding
Carding: the fibers are separated and then assembled into a loose strand (sliver or tow) at
the conclusion of this stage.
The cotton comes off of the picking machine in laps, and is then taken to carding
machines. The carders line up the fibers nicely to make them easier to spin. The carding
machine consists mainly of one big roller with smaller ones surrounding it.
All of the rollers are covered in small teeth, and as the cotton progresses further on the
teeth get finer (i.e. closer together). The cotton leaves the carding machine in the form of a
sliver; a large rope of fibers.
Note: In a wider sense Carding can refer to these four processes: Willowing- loosening the
fibers; Lapping- removing the dust to create a flat sheet or lap of cotton; Carding- combing
the tangled lap into a thick rope of 1/2 in diameter, a sliver; and Drawing- where a
drawing frame combines 4 slivers into one- repeated for increased quality.
 Combing is optional, but is used to remove the shorter fibers, creating a stronger
yarn and Drawing the fibers are straightened
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Several slivers are combined. Each sliver will have thin and thick spots, and by
combining several slivers together a more consistent size can be reached. Since
combining several slivers produces a very thick rope of cotton fibers, directly after being
combined the slivers are separated into roving. These roving’s (or subbing) are then
what are used in the spinning process. Generally speaking, for machine processing, a
roving is about the width of a pencil.
 Drawing frame: Draws the strand out

 Subbing Frame: adds twist, and winds on to bobbins
 Intermediate Frames: are used to repeat the subbing process to produce a finer yarn.
 Roving frames: reduces to a finer thread, gives more twist, makes more regular and
even in thickness, and winds on to a smaller tube.
Spinning- yarn manufacture
 Spinning
The spinning machines take the roving thins it and twists it, creating yarn which it winds
onto a bobbin. In mule spinning the roving is pulled off a bobbin and fed through some
rollers, which are feeding at several different speeds.
This thins the roving at a consistent rate. If the roving was not a consistent size, then this
step could cause a break in the yarn, or could jam the machine. The yarn is twisted through
the spinning of the bobbin as the carriage moves out, and is rolled onto a cop as the
carriage returns. Mule spinning produces a finer thread than the less skilled ring spinning.
The mule was an intermittent process, as the frame advanced and returned a distance of
5ft.It was the descendant of 1779 Crompton device. It produces a softer less twisted thread
that was favored for fines and for weft.
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4. MANPOWER AND ORGANIZATIONAL MANAGEMENT

4.1. Manpower
At the top of the organization structure, there will be a general manager with the responsibility of
supervising the overall activity of the plant. It is always true that Organization and Management
of the project plays a key role and bear direct impact on the success and profitability of the
project. The opportunities of being serviced by well skilled professionals well enable the
company to evaluate the internal weakness and strength of the company as well as to assess the
global opportunity and risks in the world market so that the company can cope up with the
dynamics of the market situation.
The company will use efficient trained staffs in the area of marketing to be competitive supplier
o finished clothes in the market .Therefore, it must particularly to the project under
consideration, to give especial affection to select and recruit the appropriate total manpower
requirement for the plant will be employees at full capacity.
The total manpower required for the plant will be 600 employees
1. Permanent Workers :- 410

 Skilled :-280
 Unskilled:-130
2. Temporary Workers:-190
 Skilled :-90
 Unskilled:-100
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The total number of manpower, manpower list, qualification, and salary and sex composition
are listed in the table below.
No Position No. Qualification Monthly Total annual
require salary pay roll
I Permanents Worker
1 General manager 1 MSc in Garment and Textile Eng.
11,400 136,800
2 Production Head 1 MSc in Garment and Textile
7,600 91,200
3 Production Supervisor 5 Diploma Textile Technology
5,320 319,200
4 Designer 5 Garment and Finishing Design
3,800 228,000
5 Pressing Man 6 Diploma general Mechanics
2,280 164,160
6 Cutter Master 2 Tailor and Garment Technology
2,432 58,368
7 Sales 8 Dip. salesman and marketing
2,660 255,360
8 Personnel 1 BA in HRM
5,320 63,840
9 Tailor 180 Dip. Tailor and Garment Techn.
1,520 3,283,200
10 Assistant Tailor 130 Level Tailor and Garment Techn.
1,368 2,134,080
11 Marketing Head 1 BA in Accounting
5,367 64,405
12 Mechanic 2 10+2 in general mechanics
3,800 91,200
13 Administrator & 1 BA in management/Accounting
Finance manager 5,320 63,840
14 Accountant 3 BA in Accounting
3,800 136,800
15 Electrician 2 10+2 in general Electrics
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3,800 91,200
16 Secretary 3 Dip. In secretariat science
1,368 49,248
17 Clerk 2 10 completed
1,520 36,480
18 Store Keeper 4 10+2 in store and logistic mngt.
1,368 65,664
19 Drivers 4 10 completed
1,140 54,720
20 Assistant Drivers 3 Basic
988 35,568
21 Cashier 4 10+3 in accounting
1,140 54,720
22 General Service 1 10 completed
3,040 36,480
23 Purchaser 3 BA in Purchaser
2,280 82,080
24 Guards 3 Unskilled
1,140 41,040
25 Cleaner and Laundry 35 Unskilled
1,140 478,800
Total 410
8,116,453
II Temporary Worker
1 Daily Laborer 190 Unskilled
1,026 2,339,280
Total
600 10,455,733
Benefit (10%)
1,045,573
Grand Total
11,501,306
4.2. Organization Structure and Management

The organization structure of the project is designed by including all the necessary personnel
under the right division. At the top of the organizational structure, there will be a general
manager with the responsibility of supervising the overall activities of the plant. Employees
under each unit will be supervised by the department head that is accountable for the general
manager. General Manager is accountable to the owner to the factory as indicated in figure
below.
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OrganizationalStructure
General Manager
Production Dept. Administration and

Marketing Department
Finance
Administration and
Purchase Finance
Secretary General service
Waiter Department
department
Cutting Sewing Finishing Driver Clerk

Section Section Section Customer
Fig: Organizational Structure
Hence the following section deals with the duties and responsibilities of some departments.
Page 24
4.3. Flow of job process of the departments
Page 25
1. General Manager
Duties and responsibilities
 She/he will plan, organize, direct and control the overall activities of the factory
 She/he will devise policies and strategies that will enable the factory to be profitable.
 She/he will incorporate modern technological innovation that will facilitate the service
delivery of the project center and increase customer’s satisfaction.
 He/he will plan, organize, direct and control the human and non-human resources of the
plant so as to achieve the short and long run objectives of the organization.
2. The Manufacturing Department

Duties and responsibilities:-
It is the core department of the project center and has the following responsibilities.
 Use modern manufacture, processing and technologies that will enhance the quality of
those products.
 Produce quality product that will enable the center competent both in the domestic and
international market.
 Use appropriate technology to manage its products.
 Control on the quality of raw materials, inputs, quality of the product and also the
overall production process.
 Produce products in least cost so that the profitability of the center is guaranteed.
 Moreover control over the quality of the final products
Page 26
3. Administration and Finance Department

 Will plan, organize direct and control the financial transaction of the plant by using the
entire necessary document.
 Will develop sound financial control system by developing modern financial control
systems.
 Will prepare the annual financial statements and prepare condensed reports for the
general manager, owner and other concerned government body.
 Will control the human and non human resources of the plant, which include: effective
handling of the different inventories of the machineries, equipments, raw materials,
finished products, and devise strategies of controlling against fraud and damage.
 Manage and execute The promoter national and international procurement procedure
 Administer and control The promoter logistic resource
 Effectively administer the promoter Procurement process domestically as well as
internationally.
 Manage the public relation of The promoter/factory with external parties/stakeholders
 Provide and manage general supportive service to the plant.
4. Commercial Department
 Will handle the overall marketing activities of the organization which include planning,
organizing, directing, and controlling.
 Provide cost estimates in preparation for securing
 Gather information on new product design, profile
 Approval of new products profile & brand plan analyzes market research.
 Plan and execute sales.
 Will develop effective customer handling strategies
 Will design and implement effective advertisement and promotion schemes
 Will develop the marketing strategies for future project center’s development.
Page 27
 Conduct both foreign and domestic market research for expanding the sales of The
promoter
5. FINANCIAL REQUIREMENT AND ANALYSIS

5.1 Total Initial Investment Cost
Cost estimates of the envisaged project consist of capital investment cost and working capital
requirement. Total investment capital required to establish and run the envisaged project is
estimated at birr 120,000,000Million, the project will be financed Owner equity contribution
30% that means 36,000,000and Bank loan 70% (84,000,000)Detail financial analysis of the
project is depicted in the table blow.
SUMMARY OF FINANCIAL REQUIREMENT
No Description Cost
1 Fixed Investment
1.1 Land, Building and Construction 16,435,528 00
1.2 Machines and Equipments 19,220,953 00
1.3 Office Equipment 988,000 00
1.4 Other equipment 777,178 00
1.5 Vehicles and Motors 4,256,575 00
Total Fixed Investment Cost 41,678,234.00
2 Operating Expense
2.1 Raw Materials Purchase and Input 11,400,000 00
2.2 Salary Expense 11,501,306 00
Page 28
2.3 Other Operating Expense 2,945,701 00
2.4 Pre-operating Expense 874,760 00
Total Operating Expense 26,721,767 00
Total Cost 68,400,000 00
Contingency (10%) 12,000,000 00
Total Investment Cost 120,000,000 00
5.1.1. FIXED INVESTMENT COST ESTIMATION OF THE PROJECT
A) LAND, BUILDING CONSTRUCTION & CIVIL WORK
No Description Unit Build area Unit cost Total cost

in Birr in Birr
1 Production Hall (from weaving 4250 2,300
to finishing process) M2 7,429,000
2 Warehouse M2 3,250 2,250
5,557,500
3 Office Building, Shops & show M2 700 2,000
rooms 1,064,000
4 Waste Accumulation area M2 200 1,700
258,400
5 Green area & parking M2 1,600 500
608,000
6 Fences
380,000
7 Site Development
225,108
8 Design and Supervision
380,000
9 Land Lease initial
533,520
Total Estimated cost 16,435,528
B) MACHINERY AND EQUIPMENTS
No. Description Unit Quantity Unit cost Total cost in

(Birr)
1 Weaving machine with No. 4 2,375,000 7,220,000
accessories
Page 29
2 Single needle stitching No. 2 1,620,000 2,462,400

machine
3 Double needle stitching No. 2 4,652,692 7,072,092
machine
4 Sewing machinery No 15 5,000 57,000
5 Lay Cutting Machines No 10 2,000 15,200
6 Needle Detectors No 2 1,000 1,520
7 Glass Cutter No 6 2,000 9,120
8 Steam Iron Boxes, No 6 35,000 159,600
9 Oil Stain Removers, No 5 50,000 190,000
10 Fabric Cutting Tables No 5 3,000 11,400
11 Vacuum Press Tables No 5 15,000 57,000
12 Line Product Tables No 10 30,000 228,000
13 Wooden Platforms No 15 1,800 20,520
14 Stitching Machine No 4 150,000 456,000
15 Garment washing machine No 2 829,671 1,261,100

25Kg Capacity
Total Estimated Cost 19,220,952
C) OFFICE FURNITURE & EQUIPMENT
No Description Unit Qty Unit cost, in (Birr) Total cost, in (Birr)

.
1 Managerial Tables No. 6 20,000
with Chair 91,200
2 Secretarial Chairs No. 5 10,000 38,000
3 Computer with printer No. 20 15,000 228,000
4 Office Chairs with No 50 5,000
tables 190,000
5 Shelf No. 50 5,000 190,000
6 Telephone and Fax No. 5 10,000
machine 38,000
7 Filing Cabinets No. 5 10,000 38,000
Page 30
8 Decoration and Other No. 76,000

9 Other Miscellaneous No.
Off. Equ 98,800
Total Estimated Cost 988,000
D) OTHER EQUIPMENT
No Description Measure Qty Total Price
1 Factory fixture (wooden tables, stools, “ 1

boxes etc) 380,000
2 Machine Installation & Electric wiring “ 1

cost 397,178
Total 777,178
E) VEHICLES AND MOTORS
No. Description Unit Amount required Unit cost, in Total cost, in Eth
(Birr) (Birr)
1 Pick up No. 2 1,200,000

1,824,000
2 Service bus No. 1 600,756
456,575
3 FSR Isuzu truck No. 2 1,300,000
1,976,000
Total estimated cost 4,256,575
Page 31
5.1.2. INITIAL WORKING CAPITAL ESTIMATION OF THE PROJECT
The initial working capital is estimated to be birr 35,160,220.00
A. RAW MATERIAL PURCHASE AND INPUT
No Description Measure Qty Per/ Qty Per Unit Total price

ment price
month Year
1 Colored Cotton poplin M2 6,757 81,084 93
/Polyester Fabrics/Other 5,731,008
2 Buttons ,Hooks Kg 2,000 24,000 60 1,094,400
3 Sewing Threads “ 2,400 28,800 45 984,960
4 Labels Kg 4,800 57,600 55 2,407,680
5 Zippers Kg 1,280 15,360 70 817,152
6 Packing material No 1,000 12,000 40 364,800
Total 18237
B. SALARY EXPENSE
As indicated in part 4.1 (manpower) of this study, the total cost of salary and wages is estimated
to be Br.11, 501,306.00
Page 32
C. OTHER OPERATING EXPENSES
SN Description Annual Cost in Br. Assumption Used
1 Property Insurance 304,069 10% of Fixed investment cost
2 Audit and Legal Fee 91,200 10% of Salary
3 Uniforms 126,493 1% of FC
4 Telephone, Fax and Postal 65,360 3000per month
5 Cleaning Gods Supplies 74,480 80*60br
6 Repair and Maintenance 1,026,000 83333 per month
7 Advertisement 585,200 64167 per month
9 Stationery and other office 3500 per month

supplies 69,920
10 Electricity 190,000 0.45*150,000W per year
11 Water 22,800 2*1000 m3 per year
12 Fuel 288,800 1900 lit*20 per year
13 Oil and lubricant 26,139 10% of fuel cost
14 Miscellaneous Expense 75,240 8,250 per month
Total 2,945,701
D. PRE -SERVICE EXPENSE
No Description Cost
Page 33
1 Project proposal and EIA 38,000
2 Licensing fee and others 38,000
3 Promotion and Advertisement 760,000
4 Staff Capacity Building/Trainers/ 38,760
Total 874,760
5.3. FINANCIAL ANALYSIS AND STATEMENTS
5.3.1. Underlying Assumption

The financial analysis of the envisioned Garment Factory is based on the data provided in the
preceding sections and the following assumptions.
A. Construction and Finance
 Construction Period ……………………………………………………….…24 Months

 Source of finance………………………………………………30% equity and 70% loan
 Bank interest rate ……………………………………………………………………10 %
 Tax holidays ……………………………………………………………………2 years
 Operating costs increase by…………………………………………………………2%
 Operating costs and raw material increased by……………………………………5%
 Utilities and operation expense …………………increase 3% per annum after 2ndyear
 Wages and Salary increase……………………Increase 3% Per annum after 2 nd year
 Sales …………………………………………..increase by 5 % per annum after 2nd year
B. Depreciation
 Building…………………………………………………………………………….5%
 Machinery and Equipment ………………………………………………………..10%
Page 34
 Office Furniture……………………………………………………………………10%
 Vehicles ………………………………………………………………………..…..20%
C. Working Capital
 Accounts Receivable…………………………………………………………….30 days
 Raw material Local …………………………………………………………..…..30 days
 Work in progress…………………………………………………………………5 days
 Finished Production ……………………………………………………………..30 days

 Cash in hand ……………………………………………………………………...5 days
 Accounts payable …………………………………………………………….…..30 days
5.3.2. Source of Fund

SN Description % share Amount(in birr)
1 Owners Share 30 36,000,000
2 Bank Loan 70 84,000,000
Total 100 120,000,000
5.3.3. Loan Repayment Schedule

Year Principal Payment Interest (10%) Total Annual Payment Remaining Balance
0 0 0 0 84,000,000
1 5,320,000 5,320,000 10,640,000 47,880,000
2 5,320,000 4,788,000 10,108,000 42,560,000
3 5,320,000 4,256,000 9,576,000 37,240,000
4 5,320,000 3,724,000 9,044,000 31,920,000
5 5,320,000 3,192,000 8,512,000 26,600,000
6 5,320,000 2,660,000 7,980,000 21,280,000
7 5,320,000 2,128,000 7,448,000 15,960,000
8 5,320,000 1,596,000 6,916,000 10,640,000
Page 35
9 5,320,000 1,064,000 6,384,000 5,320,000

10 5,320,000 532,000 5,852,000 0
5.3.4. Annual depreciation schedule of the fixed Asset ( birr)
SN Description Initial value Annual depreciation

Rate Value
1 Building & construction 21,625,695 5% 1,081,285
2 Machinery& Equipment 25,290,727 10% 2,529,073
3 Office furniture & equipment 1,300,000 10% 130,000
4 Vehicles 5,600,756 20% 1,120,151
Total 53817178 - 1250151
5.3.5. Revenue Projection

Based on the production capacity and program of the envisioned garment factory indicated in
previous (chapter 2), the revenue of the factory at full capacity projected as indicated in the table
below.
SN Description Year 1 Year2 Year 3
1 T-Shirt 66,500,000 85,500,000 95,000,000
2 Men Shirt 1112,000,000 151,200,000 168,000,000
3 School Wears 89,250,000 114,750,000 127,500,000
Total 273,350,000 351,450,000 390,500,000
4.2.1. Balance Sheet (Beginning)
Asset
Current Asset Value in Br
Cash
35,200,000
Inventory of raw material and input
21,400,000
Total Current Asset 56,600,000
Fixed Asset
Land, Building and Construction 26,435,528
Page 36
Machineries and Equipment

30,942,719
Office Equipment
988,000
Other equipment 777,178
Vehicles
4,256,575
Total Fixed Asset 63,400,000
Total Asset 120,000,000
Liability
Account Payable 84,000,000
Owner Equity
Capital 36,000,000
Total Liability and Owners Equity 120,000,000
5.3.6. INCOME LOSS STATEMENT
Revenue Year 1 Year 2 Year 3-10

Sales 273,350,000 351,450,000 390,500,000
Sales expenses (5%)* 410,025,000
Purchase of Raw Material 15,000,000 15,000,000 15,000,000
Gross profit 258,350,000 336,450,000 375,500,000
Expenses
Salary Expense 15,133,298 15,133,298 15,133,298
Operating Expenses 3,875,922 3,875,922 3,875,922
Pre-operating Expense 1,151,000 1,151,000 1,151,000
Total Deprecation 4,860,509 4,860,509 4,860,509
Interest Expense 7,000,000 6,300,000 5,600,000
Total Expense 32,020,729 31,320,729 30,620,729
Profit Before Tax 226,329,271 305,129,271 344,879,271
Tax(30% ) 67,898,781 91,538,781 103,463,781
Net Profit 158,430,489.70 213,590,489.70 241,415,489.70
Page 37
*sales expenses not include all costs pertinent to sales that include: promotional costs,
transportation of products, commissions and other sales discounts.
5.3.7 CASH FLOW STATEMENT
Year Year 0 Year 1 Year 2 Year 3-10

Equity Capital 30,000,000
Loan principal 70,000,000
Net sale 273,350,000 351,450,000 390,500,000 410,025,000

Total cash in flow 273,350,000 351,450,000 390,500,000 410,025,000
cash payment
Purchase of raw materials 0 15,000,000 15,000,000 15,000,000
Salary expense 0 15,133,298 15,133,298 15,133,298
Investment 41,000,000 0 0 0
Operating cost 0 3,875,922 3,875,922 3,875,922
loan repayment 0 7,000,000 7,000,000 7,000,000
Lease payment 0 702,000 702,000 702,000

Tax payment 0 210,600 210,600 210,600
Total payment 41,000,000 11,788,522 11,788,522 11,788,522
5,793,323.3
Cash surplus / Deficit 0 7,990,254.63 13,952,278
3
5,793,323.3
Cumulative Balance 0 13,783,577.96 27,735,855.96
3
5,793,323.3
Return to equity 0 7,990,254.63 13,952,278
3
Page 38
5.3.9. Profitability
According to the projected income statement, the project will start generating profit in the 1st
year of operation. 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 lifetime of the project.
The income statement and the other indicators of profitability show that the project is viable.
5.3.10. Break-Even Analysis
The break-even point of the project including cost of financial when it starts to operates a t full
capacity (year 3) is estimated by using income statement projection.
5.3.11. Pay-Back 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 at the 3 years of operation.
6. FUTURE DEVELOPMENT
Every business undertaking be it large or small should have future development plan. It is a plan
fact that business activities are undertook in a dynamic business nature and different
environment. Therefore, the factory will have an expansion phase depending on the condition of
the industry character particularly in producing the profile itself by installing the plant. Inthis
regard, envisioned garment factory will expand its capacity as well as the product mix a part
from T-shirt, Men shirt and Uniforms
7. ENVIRONMENTAL IMPACT ASSESSMENT OF THE PROJECT

7.1. Socio Economics Environments
Page 39
The owner will provide the land on bases and all required compensation will be paid for the
project. The livelihood of the local people around the project area is rural dweller of various
occupation and economic background.
7.2. Environmental Impact Assessment of the Project

Environmental aspects are fundamental for the sustainability assessment of the current and novel
designs of this project garment Industry. In this regard the factory will undertake a separated and
detailed Environmental impact assessment.
To assess the impacts and design mitigation measure if any adverse impacts are there so as to
make the project benefited more society and nation.
Page 40

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PROJECT PROPOSAL

TEXTILE AND GARMENT FACTORY

(Different Wearing Apparel and others related product)

PROMOTER: - DEGEMU BEKLE KERGA

2. MARKET STUDY AND PLANT CAPACITY

4. MANPOWER AND ORGANIZATIONAL MANAGEMENT

5. FINANCIAL REQUIREMENT AND ANALYSIS

5.1. Total Initial Investment Cost..................................................................................……..24

5.3.1. Underlying Assumption....................................................................................……….28

6. FUTURE DEVELOPMENT ................................................................................................

7. ENVIROMENTAL IMPACT OF THE PROJECT

1.1. Rational Behind of the project

1.2. Objective and Justification of the Project

1.3. The Socio-Economic Significance of the Project

Hence, the envisaged deemed to contribute somewhat to solve the problem of

B. Source of Government Revenue

C. Sources of Social Service

D. Benefit for the Local community

1.4. Location and Premises required

Table premises required and land use plan.

C. Floor Lay Out

Sewing thread was made of several threads twisted together, or doubled.

 Folding and twisting

2. MARKET STUDY AND PLANT CAPACITY

2.2. Demand Analysis

Table 2: Ethiopian Import and Export of textile

 The residents of the city of dukam town and the surroundings

 Sponsorship of key government activities and public support mechanism.

2.6. Marketing Strategy and Promotion

The company will follow promotional methods:

2.7. Target Customer and Market Share

2.8. Plant Capacity and Production Progress

2.8.1. Plant Capacity

2.2.2. Production Program and Prices

Description Years 1 Years 2 Years 3-10

Product Price of company

Description Years 1 Years 2 Years 3-10

3.2. Raw Materials and Input

3.3. Production Process

Preparatory processes- preparation of yarn

 Ginning, bale-making and transportation is done in the country of origin.

Platt Bros. Picker

 Drawing frame: Draws the strand out

Spinning- yarn manufacture

4. MANPOWER AND ORGANIZATIONAL MANAGEMENT

1. Permanent Workers :- 410

4.2. Organization Structure and Management

Production Dept. Administration and

Cutting Sewing Finishing Driver Clerk

Fig: Organizational Structure

4.3. Flow of job process of the departments

2. The Manufacturing Department

3. Administration and Finance Department

5. FINANCIAL REQUIREMENT AND ANALYSIS

SUMMARY OF FINANCIAL REQUIREMENT

1.1 Land, Building and Construction 16,435,528 00

1.2 Machines and Equipments 19,220,953 00

1.3 Office Equipment 988,000 00

1.4 Other equipment 777,178 00