199.

PROFILE ON VETERINARY CLINIC

199-2

TABLE OF CONTENTS
PAGE
I.

SUMMARY

199-3

II.

SERVICE DESCRIPTION & APPLICATION

199-3

III.

MARKET STUDY AND SERVICE CAPACITY

A. MARKET STUDY
B. SERVICE CAPACITY

199-4
199-4
199-6

IV.

MEDICAL SUPPLIES AND UTILITIES

A. MEDICAL SUPPLIES
B. UTILITIES

199-6
199-6
199-10

V.

MEDICAL EQUIPMENT AND BUILDING

199-11

A. MEDICAL EQUIPMENT
B. LAND, BUILDING & CIVIL WORKS

199-11
199-12

MANPOWER & TRAINING REQUIREMENT

A. MANPOWER REQUIREMENT
B. TRAINING REQUIREMENT

199-12
199-12
199-12

VI.

VII.

I.

FINANCIAL ANLYSIS
A. TOTAL INITIAL INVESTMENT COST
B. OPERATION COST
C. FINANCIAL EVALUATION
D. ECONOMIC BENEFITS
SUMMARY

199-14
199-14
199-15
199-16
199-17

This profile envisages the establishment of a veterinary clinic with a capacity of

treating 20 25 livestock and pet animals per day.
The market study shows that in Addis Ababa currently 5 veterinary clinics are required.
If additional veterinary clinics are not established the requirement will increase to 14 by
the year 2020.

199-3
The total investment requirement is estimated at about Birr 7.44 million, out of which
Birr 2.74 million is required for equipment. The center will create employment
opportunities for 25 persons.
The project is financially viable with an internal rate of return (IRR) of 21.80% and a
net present value (NPV) of Birr 511.24 thousand discounted at 8.5%.
II.

SERVICE DESCRIPTION AND APPLICATION

A veterinary clinic is an institution that provides preventive and curative medical services
to livestock and pet animals. Most people only take their pet to a veterinarian when a
health problem already exists or for routine vaccinations. Preventive vaccinations and
early detection of diseases are the keys to successfully treating the pet. Because of the
shorter life span of livestock and pet animals, it shall stress the importance of veterinary
clinic and the clinics will make through check-up and preventive care can help alleviate
serious heath problems.

199-4
III.

MARKET STUDY AND SERVICE CAPACITY

A.

MARKET STUDY

1.

Past Supply and Present Demand

Veterinary medicine, branch of medical science that deals with the health and welfare of
animals. Doctors of veterinary medicine diagnose and treat the diseases and injuries of
household pets and livestock.
According to the data obtained from the Urban Agricultural Department of Addis Ababa,
veterinary service is on the part of Urban Agriculture Development and is given through
the Agricultural Development Team in Trade and Industry Offices in seven sub-cities.
Moreover, currently they are ten veterinary clinics operating in the city which means
there are a total of 17 veterinary service providers in Addis Ababa.
In Addis Ababa, in the intra urban areas it is estimated that about 31,000 cross bred cattle
are found while in peri-urban areas about 35, 700 heads of local cattle are found which
means there are a total of 66,700 cattle in and around Addis Ababa.
On the other hand the poultry population in the Addis Ababa is estimated at about
350,000 while the number of sheep and goats (shoats) is estimated to be about 28,000.
Regarding pet animals ( cats and doges) there is no official data available. However, it
can be conservatively assumed that in Addis Ababa 50% of the households own a cat or
dog. Therefore , considering the current (2008) number of house holds in Addis Ababa
which is 659,434 it can be assumed that there are 329,717 cats and doges in the city.
Therefore, the total number of animals that require veterinary service are estimated at
1,104,134. Assuming that one veterinary clinic is required for 50,000 animals the total

199-5
veterinary clinic requirement of the city is estimated to be 22. The existing number of
veterinary clinics in the city is 17 which mean demand exceeds supply by 5 clinics.
2.

Projected Demand

In projecting the demand for veterinary clinics it is assumed that number of animals
increases at annual average growth rate 2.9% which is equivalent to the growth rate of
households. Accordingly, the projected demand and supply gap is shown in Table 3.2.
Table 3.2
DEMAND PROJECTION FOR VETERINARY CLINICS

Year
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020

Projected

Number of

Existing

Number of

Veterinary

Number

Demand

Animals
1,136,154
1,169,102
1,203,006
1,237,893
1,273,792
1,310,732
1,348,744
1,387,857
1,428,105
1,469,520
1,512,136
1,555,988

Clinics Required
23
23
24
25
25
26
27
28
29
29
30
31

of Clinics
17
17
17
17
17
17
17
17
17
17
17
17

Supply Gap
6
6
7
8
8
9
10
11
12
12
13
14

199-6
3.

Service Fee

Based on current fee charged by existing veterinary service providers Birr 30 per check
up is recommended for the envisaged clinic.
B.

SERVICE CAPACITY

The envisaged veterinary clinic will have a capacity of treating 20-25 livestock and pet
animals per day.
IV.

MEDICAL SUPPLIES AND UTILITIES

A.

MEDICAL SUPPLIES

The medical supplies required by the clinic and corresponding costs are indicated in
Table 4.1.
Table 4.1
MEDICAL SUPPLIES REQUIREMENT AND ESTIMATED COST
Sr.

Description

No.
1
2
3
4
5
6
7
8

Adrenomone
Terramycin Ophthalimic
Ointment with Polymyxin
Liquamycin Injectable,
Teramycin Injectable
Sulmet Solution Injectable
Kemithal L.A
Ophthaine Solution
P.L.H. Injectable
Synovex C, Synovex S

Unit of
Measure
Pack

Qty.

COST(Birr)
FC

10
15

875

LC
2625

787.5

2362.5

1200
3375
1500
3750
3000
3375

3600
10125
4500
11250
9000
10125

20
25
5
35
20
10

TC
3,500
3150
4,800
13,500
6,000
15,000
12,000
13,500

199-7
Contd Table 4.1

Sr.

Description

Unit of

No.
9
10
11
12

Qty.
FC

Measure
Nicarbazin
Primidone
Fumidil B
Terramycin 10 Type A

COST(Birr)
LC

TC

5
5
10

1375
1875
625

4125
5625
1875

5,500
7,500
2,500

2500

7500

10,000
3,000

750

2250

Medicated Articles,
Terramycin 100 SS Type A
Medicated
Article,Terramycin 100D
Type A Medicated Article,
Terramycin 100SS Type A
Medicated Article,
Terramycine 20 Type A
Medicated Articles,
Terramycin 200 Type A
Medicate Article,
Terramycin 50 Type A
Medicated Article,
13

Terramycin
Carafen Cough Syrup,

pack

25
20

14

Carafen Cough Tablets

Nolvasan Antiseptic

15

15
16
17

Ointment
Nolvasan Cap-Tabs
Meticorten
Darbazine Spansule No.1,

25
15
10

18

Darbazine Spansule No.3

Jenomycin Tablets

20

4720
1180
2187.5
1625

3540
6562.5
4875

2375
1500

7125
4500

8750
6,500
9,500
6,000

199-8
Contd Table 4.1

Sr.

Description

Unit of

Qty.
FC

No.
19
20
21
22
23

Measure
Tylan Premix No. 10
Amprovine 9.6% Solution
Liquamycin Intramuscular
Tylan Soluble
Thibenzole Sheep & Goat

24
25

Wormer
Kopertox
Tylan Injection 200mg.

10
30

26

Tylan Injection 50 Mg
Dyrex Bolus, Dyrex

25

Pack

5
20
10
15
5
10

5
10
5
5
15

COST(Birr)
LC

750
1,875
1,000
1125

2,250
5,625
30,00
3375

625
787.5

1875
2362.5

3000

9000

TC
3,000
7,500
4,000
4,500
2,500
3,150
12,000
5750

Capsules, Dyrex Granules,

27
28
29
30
31
32

Dyrex Tablets
Pharmastatine -20
Promazine Granules
Bo-Se,L-Se
Azium Solution
Tylosin/Hygromix
Tylan 100 CAL Type A

33

Medicated Article, Tylan

Dizan Suspension With

34
35
36

Piperazine
Temaril-P Tablets
Albamix Feed Medication
Amprovine 25%, CORID

37

25%
Pig Wormer, Wazine,
Wazine-34

1437.5
875
945
1000
1125
625

4312.5
2625
2835
3000
3375
1875

745

2235

15
10
5
3

3,500
3,780
4,000
4,500
2,500
2,980
6,500

1625
1075
1150

4875
3225
3450

850

2550

675

2025

4,300
4,600
3,400

3
2,700

199-9
Contd Table 4.1

Sr.

Description

Unit of

Qty.
LC

No.
38
39
40

Measure
Mylepsine Tablets
Gallimycin -100P
Carb-O-Sep Type A

41
42
43
44
45
46

Medicated Article
Meticortelone Acetate
Combuthal Powder
Nalline Hydrochloride
Nolvasan Suspension
Shurjets
Newo-Cortef

5
10
15
15
3
5

47
48
49
50
51
52

Withtetracaine
Sparine Injection
Nonemic
Surital
Ferrextran 100
Hygromix 2.4
Butazolidin Bolus,

Pack

10
3
5
5
5
10

53
54
55

Butazolidin Tablets
Terramycin Scour Tablets
Hydeltrone-TBA Suspension
Zoamix Type A Medicated

5
10
5

56

Article
Unistat-2 Type A Mediated

57
58
59

Premix
NFZ Puffer
Diquel Tablet
Promazine HCL Injectable

2
5
5

Cost(Birr)
FC

250
375

750
1125

1,000
1,500

437.5
337.5
625
562.5
750
150

1312.5
1012.5
1875
1687.5
2250
450

1,750
1,350
2,500
2,250
3,000
600
2,500

625
750
375
187.5
750
700

1875
2250
1125
562.5
2250
2100

1250
875
375

3750
2625
1125

750

2250

3
5
5
15

TC

3,000
1,500
750
3,000
2,800
5,000
3,500
1,500
3,000
450

112.5
625
187.5
3000

337.5
1875
562.5
9000

2,500
750
12,000

199-10
Contd Table 4.1

Sr.
No.
60
61
62

Description

Unit of

Qty.
FC

Measure
Parvex Suspension
Medro Tablets
Neomix 325 Soluble

10
5
10

COST(Birr)
LC

1250
1653.75

3750
4961.25

6250
77,598.75

18750
232,796.3

TC
5,000
6,615
25,000

Powder, Neomix AG 325

Soluble Powder, Neomycin
325 Soluble Powder
Total
B.

UTILITIES

The major utilities required by the veterinary clinic are electricity and water. The
required quantity of these utilities and corresponding cost are indicated in Table 4.2.
Table 4.2
ANNUAL UTILITIES REQUIREMENT AND COST
Sr.

Description

Qty.

Cost Birr

No.
1
2

Electricity, kWh
Water, m3
Total

75,000
5,000

35,520
16,250
51,770

310,395

199-11
V.

MEDICAL EQUIPMENT, BUILDING AND CIVIL WORKS

A.

MEDICAL EQUIPMENT

The list of medical equipment required by the envisaged veterinary clinic is shown in
Table 5.1.
Table 5.1
LIST OF REQUIRED MEDICAL EQUIPMENT & COST
Sr.
No.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24

Description
Anesthesia equipment
Surgical lights
Treatment table
Grooming & tubs
Stainless steel cages
Centrifuges
Dental equipment
Electro surgery
Faucets
IV Fluids administration
Laboratory
Light-surgical
/treatment/
dental
Microscopes
Otoscopes /ophthal mas
copes
Refracto meter
Scales
Sterilization
Surgery tables/scrubs
Tables & cabinets
Tables with adjustable height
Thermometers
Warming systems
Wet tables & drop-Ins
X-ray
Total

Qty
1 set
4
1
1
4
2
1
1
2
1
1
1
2
1
1
2
2
1
1
1
20
2
1
1

FC
80,750
76,500
2,550
4,250
51,000
127,500
1,275,000
12,750
12,750
21,250
255,000

Cost Birr
LC
14,250
13,500
450
750
9,000
22,500
225,000
2,250
2,250
3,750
45,000

38,250
51,000

6,750
9,000

8,500
2,550
10,200
80,750
4,250
21,250
2,550
15,300
42,500
29,750
102,000

1,500
450
1,800
14,250
750
3,750
450
2,700
7,500
5,250
18,000

2,328,150

410,850

TC
95,000
90,000
3,000
5,000
60,000
150,000
1,500,000
15,000
15,000
25,000
300,000
45,000
60,000
10,000
3,000
12,000
95,000
5,000
25,000
3,000
18,000
50,000
35,000
120,000
2,739,000

199-12
1.

Source of Medical Equipment

The medical equipment required by the envisaged veterinary clinic can be obtained from
the following supplier.
THE VET STORE
Phone: 450-670-0880
Fax: 450-670-7915
E-mail: info@thevestore.com
B.

LAND, BUILDING AND CIVIL WORKS

The total area requirement of the project is estimated at 1,000m 2, out of which the builtup area is estimated to be 500 m2. Out of the total 500m2 built up area, 150m2 will be
used for laboratory, 200m2 for examination rooms, 100m2 for office purpose, and 30m2
for guard house. The total cost of building and civil works, at a rate of 2,300 Birr per m 2,
is estimated to be Birr 1.15 million.
According to the Federal Legislation on the Lease Holding of Urban Land (Proclamation
No 272/2002) in principle, urban land permit by lease is on auction or negotiation basis,
however, the time and condition of applying the proclamation shall be determined by the
concerned regional or city governments depending on the level of development.
In Addis Ababa the citys Land Administration And Development Authority is directly
responsible in dealing with matters concerning land. Accordingly, the initial land lease
rate in Addis Ababa set by the Authority based on the location of land is as shown in
Table 5.2.

199-13
Table 5.2
INITIAL LAND LEASE RATE IN ADDIS ABABA
Sr.
No
1

Location of the land

Central Business zones

Places That
Transit

Expansion Zones

are

Land
Grade
1
2
3
4
5

Initial Price in
m2
1167.3
1062.9
916.2
751.5
619.2

1
2
3
4
5
1
2
3
4

716.4
647.1
559.8
472.5
384.3
245.7
207
150.3
132.3

Under

Source; Addis Ababa City Land Administration Authority

As can be seen from Table 5.3, the initial land lease rate ranges from Birr 1,167.3 to
132.3 per m2 .
Currently, most of the health facilities in Addis Ababa are located on the central business
zones of the city. Therefore, places under transit and expansion zones are recommended
as the best locations for the project. Accordingly, the average of the highest land lease
rates in places under transit and expansion zones, which is Birr 481.05 m2 is adopted.
The Federal Legislation on the Lease Holding of Urban Land legislation has also set the
maximum on lease period and the payment of lease prices ( see Table 5.3 and Table 5.4).

199-14
Table 5.3
LEASE PERIOD
Lease Period
( Years)
99
80

Type of Service
Residential area
Industry
Education, cultural research
NGO and religious
Trade
Urban Agriculture
Other service

health, sport,
99
70
15
70
Table 5.4

LEASE PAYMENT PERIOD

Sr.
No.
1
2
3
4
5
6
7

Service Type
Private residential are obtained
through tender or negotiation
Trade
Industry
Real estate
Urban Agriculture
Trade and social service
Others

Period of Payment
According to the Grade of
Towns
50 - 60 years
40 - 50 years
40 - 50 years
40 years
8 - 10 years
40 - 50 years
40 years

Moreover, advance payment of lease based on the type of investment ranges from 5% to
10%. For those that pay the entire amount of the lease will receive 0.5% discount from
the total lease value and those that pay in installments will be charged interest based on
the prevailing interest rate of banks. Moreover, based on the type of investment, two to
seven years grace period shall also be provided. The lease price is payable after the grace
period annually.

199-15
Regarding, the terms and conditions of land lease the Addis Ababa City Government have
adopted Article 6 of the Federal Legislation with very minimal changes. Therefore, for
the purpose of this project profile since the project is engaged in social service , 99 years
lease period, 50 years lease payment completion period, 5% down payment and seven
years grace period is used.
Accordingly, the land lease cost of the project, at rate of Birr 481.05 per m 2 for 99 years
of holding is estimated at Birr 47.62 million. Assuming 5% of the total cost ( Birr 2.38 )
will be paid in advance as down payment and the remaining Birr 45.24 million will be
paid in equal installments with in 50 years, the annual lease payment is estimated at Birr
904,855.

VI.

MANPOWER AND TRAINING REQUIREMENT

A.

MANPOWER REQUIREMENT

The envisaged veterinary clinic requires 25 work forces.

The proposed manpower

requirement for the envisaged clinic and the estimated annual labour cost including fringe
benefits are given in Table 6.1.

199-16
Table 6.1
MANPOWER REQUIREMENT AND ANNUAL LABOUR COST
Sr.
No.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

B.

Description
Medical director
Administrator
Doctor (Medical)
Doctor (Surgical)
Matron (Head nurse)
Nurse
Health Assistant
Health officer
Dermatology
Cardiology
Ophthalmology
Neurology
Radiology
Anesthesiology
Lab technician
Secretary (receptionist)
Cleaner
Driver
X-ray technician
Sub Total
Employees benefit 25% of basic salary
Total

Req.

Monthly

No.
1
1
1
1
1
3
2
1
1
1
1
1
1
1
2
1
3
1
1
25

Salary (Birr)
5,000
2,000
4,000
4,500
1,600
1,200
850
1,500
3,000
3,500
3,000
2,500
1,500
1,200
1000x2
650
400x3
500
1,000

Annual Salary
(Birr)
60,000
24,000
48,000
54,000
19,200
43,200
20,400
18,000
36,000
42,000
36,000
30,000
18,000
14,400
24,000
7,800
43,200
6,000
2,000
546,200
136,550
682,750

TRAINING REQUIREMENT

There is no any training requirement for the envisaged plant.

VII.

FINANCIAL ANALYSIS

The financial analysis of the veterinary service project is based on the data presented in
the previous chapters and the following assumptions:Construction period

1 year

199-17
Source of finance

30 % equity
70 % loan

Bank interest

8%

Discount cash flow

8.5%

Accounts receivable

30 days

Medical supplies

30 days

Finished products

30 days

Cash in hand

5 days

Accounts payable

30 days

A.

TOTAL INITIAL INVESTMENT COST

The total investment cost of the project including working capital is estimated at Birr
7.44 million, of which 31 per cent will be required in foreign currency.
The major breakdown of the total initial investment cost is shown in Table 7.1.

199-18

Table 7.1
INITIAL INVESTMENT COST
Sr.
Cost Items
No.
1 Land lease value

Local
Cost
2,381.19

Foreign
Cost
-

Total
Cost
2,381.19

1,150.00

1,150.00
2,739.00

Building and Civil Work

Plant Machinery and Equipment

410.85

Office Furniture and Equipment

100.00

2,328
-

Vehicle

450.00

450.00

Pre-production Expenditure*

523.21

523.21

Working Capital

96.23

96.23

5,111.48

2,328.2

7,439.63

Total Investment cost

410.85

* N.B Pre-production expenditure includes interest during construction ( Birr 423.21

thousand ) and Birr 100 thousand costs of registration, licensing and formation of the
company including legal fees, commissioning expenses, etc.

B.

OPERATING COST

The annual operating cost at full capacity operation is estimated at Birr 4.60 million
(see Table 7.2).

The major components of the operation cost are depreciation, direct

labour and medical supplies accounting for 19.37%, 17.82% and 16.88% of the total
operation cost respectively.

The remaining 45.94% is the share of utility, labour

overhead, depreciation, repair and maintenance, financial cost and administration cost.

199-19
Table 7.2
ANNUAL OPERATING COST AT FULL CAPACITY ('000 BIRR)
Items
Medical supplies
Utilities
Maintenance and repair
Labour direct
Labour overheads
Administration Costs
Land lease cost
Total Operating Costs
Depreciation
Cost of Finance

Cost

310.39
51.77

16.88
2.81

137.0
327.7

7.45
17.82

136.6
218.5

7.42
11.88

1,181.9
356.2

64.26

301.2

16.38

1,839.27

100

19.37

Total Production Cost

C.

FINANCIAL EVALUATION

1.

Profitability

Based on the projected profit and loss statement, the project will generate a profit through
out its operation life. Annual net profit after tax will grow from Birr 29.79 thousand to
Birr 117.30 thousand during the life of the project. Moreover, at the end of the project life
the accumulated cash flow amounts to Birr 2.15 million.
2.

Ratios

In financial analysis financial ratios and efficiency ratios are used as an index or yard
stick for evaluating the financial position of a firm. It is also an indicator for the strength
and weakness of the firm or a project. Using the year-end balance sheet figures and other
relevant data, the most important ratios such as return on sales which is computed by
dividing net income by revenue, return on assets ( operating income divided by assets),

199-20
return on equity ( net profit divided by equity) and return on total investment ( net profit
plus interest divided by total investment) has been carried out over the period of the
project life and all the results are found to be satisfactory.
3.

Break-even Analysis

The break-even analysis establishes a relationship between operation costs and revenues.
It indicates the level at which costs and revenue are in equilibrium. To this end, the
break-even point of the project including cost of finance when it starts to operate at full
capacity ( year 3) is estimated by using income statement projection.
BE =

Fixed Cost

21%

Sales Variable Cost

4.

Payback Period

The pay back period, also called pay off period is defined as the period required to
recover the original investment outlay through the accumulated net cash flows earned by
the project. Accordingly, based on the projected cash flow it is estimated that the
projects initial investment will be fully recovered within 4 years.
5.

Internal Rate of Return

The internal rate of return (IRR) is the annualized effective compounded return rate that
can be earned on the invested capital, i.e., the yield on the investment. Put another way,
the internal rate of return for an investment is the discount rate that makes the net present
value of the investment's income stream total to zero. It is an indicator of the efficiency or
quality of an investment. A project is a good investment proposition if its IRR is greater
than the rate of return that could be earned by alternate investments or putting the money
in a bank account. Accordingly, the IRR of this porject is computed to be 21.80%
indicating the vaiability of the project.

199-21
6.

Net Present Value

Net present value (NPV) is defined as the total present ( discounted) value of a time
series of cash flows. NPV aggregates cash flows that occur during different periods of
time during the life of a project in to a common measuring unit i.e. present value.

It is a

standard method for using the time value of money to appraise long-term projects. NPV
is an indicator of how much value an investment or project adds to the capital invested. In
principal a project is accepted if the NPV is non-negative.
Accordingly, the net present value of the project at 8.5% discount rate is found to be
Birr 511.24 thousand which is acceptable.

D.

ECONOMIC BENEFITS

The project can create employment for 25 persons.

In addition to supply of the

domestic needs, the project will generate Birr 0.458 million in terms of tax revenue.