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Summery

YeAbat knitting plc is the seventh mens, womens and childrens sock manufacturing industry next to these
six privately owned manufacturers in the country this newly introduced business plans to come up with
through the production of different sizes sock that are used as a casual and occasional sock products in the
country.

Through generous industries capital investment plan, the business will exceed its customers
expectations. These targeted customers will be willing to pay for the product because our product-customer
relations is done according to the need that come from the market not for the product to the market for that
reason if the product is delivered based on the need from customer since the product is acquired by the
customers in their day to day life.

The companys projected growth rate is very high each year with respectable profit margins as a percentage of

sales. YeAbat Knitting plc will be a home based business with four individual as partnership. At start up

the business need ETB 6,584,774.40 from this amount the cost of machinery covers 5,487,312.00 and

20% of from the lease amount working capital covers 1,097,462.40 both in the form of lease financing

and owners contribution. The business will have 30 permanent and temporary employees.

This profile envisages the establishment of a plant for the production of socks and stockings with a capacity of

1,200 This profile envisages the establishment of a plant for the production of socks and stockings with a

capacity of 1,200 tones (1.2 million pairs) per annum. The demand is expected to reach at _______ tones by
the year 2020. The plant will create employment opportunities for 20 persons. The total investment

requirement is estimated at about Birr _____ million, out of which Birr _________ million is required for plant

and machinery.

Some of the management positions in the PLC. will be full filled by the owners themselves, and the rest will

be employed from the market. The general manager of the business partners association will be Mr. Nurelegn

Zelalem, who has a BA degree in Accounting and MBA student having more than eight years experience in

different governmental and privet institutions. He will be responsible for all managerial and leadership

activities that the company acquire to grow such as financial risks and benefits, scheduling, training, and

customer care management. The Association will also have one finance manager, who is a graduate in

accounting with over 4 years experience in the field and will be responsible for performing financial reports,

prepare financial analysis, control insurance payables, control loan payables and short term loan needs etc.

There will also be an accountant who will be responsible for the inventory, cash collection, and preparation of

financial reports and documentation of financial documents. An office manager, who has a diploma in

secretarial science, will be assigned. She/he will be responsible for supervising the overall administrative

activities of the office and subordinate staff.


1.1 Company location and facilities
The company is located in B.D/A.A town, The location is selected mainly because of the high potential and

availability of the main raw material sellers and finished good buyers, The potential of the raw material

here is estimated to have a supply by the time of shortage, and can continue the same way in the second

rotation. Transportation of the raw material from supply site to the factory and finished products to the

market is very easy in that. About 200 KW is an estimated power requirement for the plan, and this is

easily available here as the electric power line from to the capital city Addis Ababa station crosses the area

with substation at 5 km from the factory and the factory will start the business through rental which full

filled the requirement os the electric power. Land for the mill and dumping of raw material and finished

products is already acquired on rent at the location.

1.1 Vision of the Company

YeAbat Kniting plc. vision in the sector is to see minimized currency spending and import
substituted by local manufacturing with maximized product quality and satisfied local market. In
addition, in addition to this generating foreign currency to the country and maximizing companys
profit through exported product market.
1.2 Mission of the company

YeAbat Kniting plc. mission is four-fold, with each being as integral to our success, as the next level:-

Product Mission - Provide customers the finest quality product and delivery products in the most efficient
time.
Environmental Mission It is known that waste is ecpected as long as though the production excist for that
reason our waste products will be process further for house hold products such as askopa
Community Mission - Provide community support through learning process and creat jop opportunity for
the community.
Economic Mission - Operate and grow at a profitable rate through sound economic decisions.

YEABAT KNITING PLC. mission is to provide the customers with reliable product and delivery service
in an efficient, completely trustworthy, and professional manner. It exists to attract and maintain
customers. When it adheres to this maxim, everything else will fall in place. The product will exceed
the expectations of its customers.
PART Two

2 SWOT Analysis

2.1 Strength and Weakness


The new business entrant is not intended to provide a product without any base. As manufacturer, design is still

pretty much of an art, understanding of marketing, human relations and technology as well as operation needs

skill and techniques. The requirement can be fulfilled by the experience of the new business manager. In

addition to experienced manpower, the other strength of the business is the advantage of getting opportunity to

use rental sheds for production and the use of lease financing which is designed by the bank helps the new

business to start in easy way which minimize the cost of equity contribution. Serving the customers on credit

base, can motivate those who have temporary cash shortages in their day to day business activity to order at

any time of the month can be seen as strength of the new business. Moreover, providing the quality and standard

of the products are also an indicator of the strength of the new venture.

The main weakness of the business would be the possibility of not fulfilling the expected market

demand in the early phases of the factory production. This may particularly apply to customers residing

at remote distances from the production site. This may result in the emergence of new competitors for

the same product. In addition to that some production process such as dying for small quantity will not

be available in the country that may affect adversely for some customized product order that need this

process.
2.2 Opportunity and Threat

There are far more opportunities now for running a business than before fifteen or twenties years ago. Among

this, the increasing in modern citizens and the expansion of cities helps for the growth of demand for shoes and

the sock bear in mind the change with in citizen is due to the change attributed to good economic

developments with in the community and other factors are among the opportunities that can be stated. Hence

these opportunity helps the new business to transact with different micro and medium level retailers by

delivering sufficient product for their demand in producing finished products, and with the growing construction

companies in satisfying the need for different size, color and design.

However, these and other opportunities in implementing of the proposed business are not free from

threats. The possible entrance of new competitors and the increasing local and export prices of raw

materials would be some of the threats that the new PLC may face in the future in addition to this

employee constancy in staying for long in the company will affect in loosing of trained man power from

the experience of other related industries further more in finding trained man power in the area is

difficult.
2.3 Micro and Macro Environment of the Business

2.3.1 Micro Environment

A wide variety of individuals and organizations as well as the whole society may be affected by the
business. Each of these groups has its own desires and expectations. Among those who have a high
personal stake in the new business decisions that the micro environment includes are retailers,
employees and customers.

Employees: The business provides its employees not only with good pay and good working condition,
but also with the opportunity to grow and to achieve their full potential as per the growth of the
business. In addition, their rights and privileges will be advanced and they can take parts in decision
making process of the business.

Customers: The business is conscious of the importance of fair price, good quality products, and
honest in its products. Thus the customers can be free from harmful and deceptive product such as
selling law quality product for socks as a great quality, manipulating of price and measurement
device. On the other hand, purchasers may be affected by some unfavorable purchasing decisions,
opportunities for fraud and illegal payment by different retailers. However, they can be protected by
contacting the company.

2.3.2 Macro Environment

To examine the impact of macro factors which act on a business, demographic, economic, technological,
political and social/cultural factors should be considered. The company considers these points in the
following manner :-
Demographic environment: Socio-economic variable, such as socks manufacturers age level, the
industries size, industries profitability and occupation are type of demographic data often used to
classify market. However, the new business will meet the demand of all groups because it mainly
focuses on those largest consumers, medium and micro retailers.

Economic environment: Since the business depend on the purchasing power of its customers; which
is the function of current income and prices, availability; it has to recognize major trends in the
economic environment. The countrys general economic growth and stagnation has an important
influence on the business. Even hundreds of factors can affect the economic condition of the
country. Our business may not be as such affected in the short run.

Technological environment: It embraces all the specific ways customers obtain the product based on
their and other services as their desire. The technology of sharing information through telephone and
web sites helps the new business as well as the customers to exchange orders and other vital
information that can simplify the complexity of rendering the intended product on time. Supplementary
to this we use technology which is produces by the state of the arts specially technology produced in
Turk that can stay for long that enables us to minimize the cost of spare parts and to save the countrys
extra cost of foreign currency.

The legal-political environment: The government in regulating business activities requires the
business to be registered. Accordingly, the new PLC is ready to register and pay taxes based on the
government taxation policy. The new business service, channel of distribution, price and promotion
strategy does not affect and be affected by the current rule and regulation of the country.
The Socio-cultural environment: The beliefs and way of living of the society is an important part of
environment that surrounds the business. The social value and beliefs of the society has no
contradiction with the new idea of the business because most of the customers have the idea of socks
product. Recently there are six companies that are engaged in producing socks. The new business has
a capability of producing the amount what the two existing companies can produce per annum. In
addition, the promotion that the business is going to do is also expected to stimulate the customers
demand of the service. For that matter the new business doesnt faced any socio-cultural environment
problem.

2.4 The Strength and Weakness of Competitors

The existing socks manufacturers and importers are the competitors and are well experienced, strong
enough to extend their market share as long as they are well informed about the market and have
advantage of keeping their customers for a long time.

Their weakness would be lack of expanding their industry and achieving the need of the market of this
product. This shows the new business that they are not strong enough in producing their products
based on customer needs rather they just produce and sell which means lack of providing all type of
different size of plywood to the market.

Thus, the new business is advantageous over the expected competitors on providing good products
according to the customers preference. Since this new PLC has the power of capturing the feeling of
customers and stimulate/encourage them to purchase, it will be easy for the customers to shift to the
new way of getting product and service. So the new business can be built on hard work, creativity, and
genuine customer satisfaction.
PART - THREE

3 Product description

The main product of YEABAT BUSINESS PLC is socks. Socks is serving as a main input for the safety of our

foot that we can use as a fashion when we use shoes or to protect our foots/legs from cold environment.

The following table explains the type of the product and its use:

Table 1: Types of Product

No. Type of product Product users

3.2 Sales strategy

The sales strategy of the industry is as per the customers need. The company uses different sales strategy but to

reach to the customers geographical area the company would use wholesalers and retailers in addition to the
companys own retailing shops in different geography position. During the commencement of product marketing

the company shall use intensive promotion to attract expected customers.

3.3 Technology

The technology that the company will use is the current state of the art technology which is now underutilization

at different international companies with the latest production standards.

3.4 Production Capacity

The production capacity of the socks machine which is proposed to be from 8/12 pairs per hour using 40 socks

machine with all supportive machineries on the first phase we planed to produce 1.2 million pairs per year with

10 hours working time per day for 300 working days per year , This paper is discussing production of phase one

only. The amount of production is to be increased in due course from 1,200,000.00 pairs to 2,880,000.00 of socks

per annum.
PART FOUR

4 Marketing Plan

4.1 Target Market Segment Strategy and customer Identification


As mentioned above, YEABAT knitting PLC. Will be focusing on two target groups. The
first its micro customers.

The second segment of the market that is targeted medium level retailers that sell the
product as a major input during their daily base business activities.

The main market targets of direct consumers for the products are institutions such as

different regional police officers (Reginal police office) and Federal police mass

purchase that are located in different regions.

4.1 Market Opportunity


As mentioned earlier, a socks product is currently used for different purposes, such as

shoes comforts, protecting coldness, for sport, fashion and much more. The need for this

product is growing rapidly in the in Ethiopia. The Demand for this product seems to be

expanding through different part of the country because of the easy to use and its

affordable price.
This product is under a serious shortage in different locations of the country because of

the diversified use of the product and the shortage of manufacturing industries of the

product. This leads to the conclusion, that the existence of the market opportunity is

high.

PART FIVE

5.1 Organizational chart

YEABAT Business PLC. Organizational chart

General Manager /GM/


Legal
Internal
Office
Audit Office manager

Operations Sales and Marketing Administration and


manager manager Finance Manager

Accountant Accounts
supervisor
Chief
Technician
officer Clerk
Disbursement Warehouse
Officer manager
Production International
supervisor sales and Factory General
5.2 Man power requirements
No. Position Job Qualification No.

Overall responsibility for the BA in Business Administration or related 1

1 General Manager management, leadership and fields 6 years relevant experience in the field.
administration of the factory

Secretary Service Diploma in secretarial science and office 1


2 Office Manager Supervise subordinate management and 3 years experience in the
staffs field.

Order receiving

3 Operations manager Manage and control the Degree in industrial management with 5 yr 1
production activity related experience

Administration and Administer the staff, the Degree or above in Management, or 1


4 Finance manager property, and control the Accounting and 5 years experience in the
overall financial positions field.
Accounting Service
Cash collection etc.

5 Marketing and Sales Controlling the market Degree holder in marketing or procurement 1
Manager and sales environment and sales with 5 year experience

Accounts supervisor Control the overall Degree in accounting and 5 year experience 1
6 accounting records
Opperators Daily work TVET graduate
8 20

Total 26

LIST OF PLANT MACHINERY AND EQUIPMENT

Price List
Sr. No. Description Qty
USD/unit Total USD USD/ETB TC
Single cylinder double welt
1 socks knitting machine 4-14 4 4,500.00 18,000.00 24.00 432,000.00
pairs/hr each
Double cylinder sock knitting
2 36 4,500.00 162,000.00 24.00 3,888,000.00
machine, 4-8 pairs/hr each

Linking machine, 2-20


4 5 3,400.00 17,000.00 24.00 408,000.00
pairs/hr each

5 Setting machine, 240 pairs/hr 5,000.00 - 24.00 -

Dyeing machine, 50
6 1 24.00 -
kg/operation
Sock molding Machin steam 1 5,000.00 5,000.00 24.00 120,000.00

7 Steam Iron 2,600.00 2,600.00 24.00 62,400.00

8 Boiler for steam generation 1 10,000.00 10,000.00 24.00 240,000.00


sock packing and labling
1 7,000.00 24.00 168,000.00
machine
Workshop machinery for
24.00
maintenance
9 Spare parts (7.50%) 10,730.00 24.00 257,520.00

Total Fob Price 225,330.00 24.00 5,575,920.00


Freight, port handling, inland
3,308.00 24.00 79,392.00
transport etc
Grand Total 42,000.00 228,638.00 24.00 5,487,312.00
Workshop Machinery for
machine maintenance 24.00
PART SIX

FORCASETED FINANCIAL PLAN

YEABAT BUSINESS PLC

Table 2: FORECASTED INCOME STATEMENT FOR THE NEXT FIVE YEARS (000 birr)

2014-2018

Year 1 Year 2 Year 3 Year 4 Year 5


Efficiency
41% 55.75% 70.50% 85.25% 100%

Volume
of
product 1,920,000 2,160,000 2,400,000 2,640,000 2,880,000
for Sale
(m3)
Sales per
1m3 10.00 10.50 11.00 11.50 12.00

Total sales 19,200,000 22,680,000 26,400,000 30,360,000 34,560,000


.00 .00 .00 .00 .00
Production
10,875,600 12,479,751 14,320,514 14,321,989 14,323,464
cost
.00 .00 .27 .27 .27

Gross Profit 8,324,400. 10,200,249 12,079,485 16,038,010 20,236,535


00 .00 .73 .73 .73
Distribution
cost 240,000.00 245,000.00 320,000.00 380,000.00 480,000.00
Administrat
ive Expense 1,440,000. 1,480,000. 1,580,000. 2,000,000. 2,500,000.
00 00 00 00 00
Annual
Loan 1,097,462. 1,097,462. 1,097,462. 1,097,462. 1,097,462.
Repayment 40 40 40 40 40
Other
450,000.00 500,000.00
Expenses 275,000.00 350,000.00 400,000.00
Finance
Costs / for
long term
and short 120,720.00 120,720.00 120,720.00 120,720.00 120,720.00
term loans
/
Profit
5,151,217. 6,907,066. 8,561,303. 11,989,828 15,538,353
before tax
60 60 33 .33 .33
Profit tax
expense 1,545,365. 2,072,119. 2,568,391. 3,596,948. 4,661,506.
30% 28 98 00 50 00
Profit for
3,605,852. 4,834,946. 5,992,912. 8,392,879. 10,876,847
the year
32 62 33 83 .33

BUSINESS PLC

Table 3: FIVE YEAR FORCASTED FINANCIAL POSITION REPORTS (000)

2014-2018

Year 1 Year 2 Year 3 Year 4 Year 5

Asset
Non-Current Assets
Plant and property 6,840.00 8345.08 9346.50 9798.78 13110.55
Motor Vehicles 900.00 - - 1200.00 -
Furniture and Fixture 45.00 116.00 116.00 119.48 124.30
Office Equip. 40.80 82.00 82.00 82.00 85.28
Deprecation (1,368.00) (1735.02) (1935.3) (2266.76) (2691.97)
Total non - current Asset 6457.80 6808.06 7609.20 8933.50 10,628.16
Current assets
Inventories 771.00 1,301.64 2,195.02 2748.67 3748.67
Trade receivables 900.00 928.30 1230.85 1,250.00 1394.00
Other current Assets 400.20 560.00 672.00 1,000.00 1446.01
Cash and Cash equivalents 1936.20 2,300.00 3164.93 3916.15 5091.00
Total current Asset 3,542.20 5089.94 7262.80 8913.86 11,679.68
Total Asset 10,465.00 11,898.00 14,872.00 17,846.40 22,307.84
Equity and Liabilities
Equity attributable to owners 3.000.00 4,050.00 8923.20 10,707.84 16,584.644
Total Equity 3.000.00 4,050.00 8923.20 10,707.84 16,584.644
Non- Current Liabilities
Long Term borrowings 5,600 4,200.00 2800.00 1400.00 -
5,600 4,200.00 2800.00 1400.00 -
Total non-current liabilities
Current Liabilities
Trade and other payables 265.00 1,460.00 1108.80 1658.56 2173.20
Short term borrowing 200.00 788.00 640.00 1,280.00 2,150.00
Current portion of Long term 1,400.00 1,400.00 1,400.00 1,400.00 1,400.00
borrowings
Total current Liabilities
1,865.00 3,648.00 3148.80 4338.56 5723.20
Total Liabilities 7,465.00 7,848 5948.80 5738.56 5723.20
Total equity and Liabilities
10,465.00 11,898.00 14,872.00 17,846.4 22,307.84
Results and Discussion on the Economic sensitivity analysis

It is a good opportunity having a lease finance here in our country to work


with bank and to motivate new beginners in the business industry especially
the hardest portion of the business is found through leasing.

As described on the above forecasted financial statement and other tables


this new business would create job opportunities for thirty personnels with
the possibility of increment during the increment of machine working hour
efficiency. In addition to this it creates motivations on the community on
working in manufacturing industry.

Furthermore the new company also pays a total of 14,444330.75 for


governmental profit tax within five years of production time. In relation with
this the company can also avoid 12,000,000.00 pairs of imported socks
which can save up to 24,000,000 USD through the process of five year time
with a possibility of expansion.

What makes hard for this new business is most of the raw matrials are not
found in a home base made rather it is through importation this process may
generate some tackle in the production process unless and atherwise from
the forcasted financial statements we understand that the business can run
smoothly.