FOUR Y Trading PLC

Business Plan for Debt

transfer/Purchase of
Collateral building

April 2023

Executive summery
This business plan was prepared with the intention of transferring the
outstanding debt of Birr 20 Million from third party. The proposed loan
transfer is come to being since the company FOUR Y Trading PLC is
expecting to purchase the underlying Collateral. The company has
concluded a Sales contract to purchase the building/G+4/ at a price of
29 Million. While 9 Million Birr has been effected on cash, the rest of
the amount is a debt which shall be transferred to the company and
shall be repaid on a regular installment basis for a period of five
years.

The existing import/export business of the company as well as the

business of sister companies sufficient enough to service the entire
Debt with the scheduled time. The Manager of the company, W/ro
Seble Habtamu is engaged in import and export business thus has
ample experience in import of various types of items such as Baby
milk powder, Diaper etc…and export of cattle, camel, sheep etc…

The company has the intention to participate in the property market

to a wider scale by purchasing the above mentioned building
collateral through the finance support expected to be arranged from
Abyssinia bank together with his own capital. For this she has finalize
all the necessary preparation such as signing sales contract, paying
advance payment, communicating the Bank officials etc… The loan to
be transferred shall be extended in such a way that an additional two
year extension on the expiry date of the existing outstanding Debt
expected to be offered from the Bank. Equally we are willing to offer
additional collateral, as it may deem necessary or as it may dictated
by your internal credit processing procedure.

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The manager of the company is dead sure that the cash flow
generated from the business is capable to service the captioned debts
regularly. During the process of creating such Banking connection,
she will strive to establish genuine financial relationship thereafter
maintain this exemplary relationship to an iconic standard with Bank
in question in terms of both as prominent depositor and credit
customer of the Bank. We may the option to conduct the export
transaction through the above mentioned Bank as we have already
carrying through Awash Bank.

The building to be purchase earns gross rental income of 40,000 Birr

per month. Since the building is going to be purchased in the name of
the company, the existing merchandise sales business of the
company will be considered as a source of repayment incase the
repayment from rental is not sufficient to cover the periodic payment.
Thus case flow analysis is carried on holistic basis

The company business expected to generate sales revenue of 106.5

Million Birr. This sale in local currency expected to boost the
resources mobilization effort of the financing Bank and the company,
with utmost faith, assures that all the sales proceeds shall be
channeled to the Bank.

In the process of operating the regular business, the company

expected to generate Birr 13.9 Million as net profit in the first year of
the business period and this profit shall reach up to Birr 18.8 million
at the end of business period (5 th year). In Addition to this, the project
shows a positive cumulative net cash flow of Birr 63.58 Billion at the
end of 5th year.

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Mission, Vision and Values

Vision: -

 The Company aspires to be a competent firm with robust financial

status which carried the following major activities
o Envisioned to be the most preferred importer of various merchandise
items nationwide in all Aspects and thus it intended to be one of the
top 10 mega business entity in import and export sector in the
country by 2035 G.C.

Mission:-

 Internally the company intends to create and nurture a healthy,

exuberant, respectful, and enjoyable environment, in which our
employees are fairly compensated and encouraged to respect the
customer and the quality of the product the company intend to
provide. In addition to this follow-up will be mandatory so as ensure
customer satisfaction and make any improvements as recommended
by the customers in future. The company seeks fair and responsible
profit, enough to keep the company financially healthy for the short
and long term, and to fairly remunerate employees for their work and
effort.

Values:-

Reasonability

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 o Offering Quality products at reasonable prices and maintaining
professional standards

Reliability

o Conduct every prospect of business with transparency

Excellence

o Make Every Effort to achieve the maximum possible product

standards to deliver what the Company promises to customers

Commitment

o Commitment not only goes to customers but it reaches further

to societies communities and countries in which the Company
work

Quality

o Key Goal is to provide the best products possible to our

customers

Business Objectives

The company business will revolve around the need to provide quality
products to our various target customers, in the process fully satisfying
their needs. This shall be undertaken through recruitment of a professional
team and the provision of good quality items to the client's particular
needs.

With time our marketing campaign will increase the awareness of our
products in the various market segments. This is particularly so, with the
organization looking at establishing a clear advantage in an increasingly
competitive market. The company will provide customers with the
opportunity to focus on their core activities whilst their needs for
FOUR Y Trading PLC Page 5
merchandise items are fully satisfied through our channels. Marketing
material shall be professionally done so as to be reflective of our intended
image and reputation. The company shall position itself as a quality product
supplier that provides customer-need fulfillment, enjoyment, reliability and
a good image.

The company also have well-designed brochures and other promotional

material that will enable clients to have an understanding of the types of
products it offer. In addition to well-done, informative brochures, fact sheets
and business cards often have a triggering effect on clients contemplating
utilizing our products. Hence this will undoubtedly generate increased sales
of our product.

In summary we intend to attain the following objectives:

 Continuously provide enjoyable products on time and on budget.

 Develop enthusiastically satisfied customers all of the time.
 Establish a market presence that assures short-term and long-
term profitability, growth and success.
 The company fully committed to supporting growth and
development in the sector where it involved and overall economy
of Ethiopia.
 Contribute positively to our communities and our environment.

KEY SUCCESS AND RISK FACTORS

3.1 Key success Factors

3.1.1 Macro Success factors-

Rise of Global Disposable Income: - As income rises, (due to the fast

growing economies witnessed worldwide on developing countries) a greater
share of income would be allocated for purchase of consumable item that
modernize their lifestyle and keep their household/family safe in terms of
nutrition and other securities.
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Government support: - in pursuit of enhancing the wellbeing of citizen
the government is rapidly changing the regulation regarding import of
pharmaceutical items, baby nutritional and hygienic materials etc…

Infrastructure and Urbanization

Improvement in infrastructure and Urbanization has also grown together

with investment and infrastructure. This indirectly has created an impact on
the demand for imported products all over major town and cities of the
Country.

Sector Success Factors

 The import sector where the company involved is currently favored

since it can support the nutritional and hygienic issues of the citizen.
 There are Customers with sufficient disposable income to create and
drive the market for the products in the industry
 Government support through its regulation and incentive schemes to
the sector help to enjoy the pie
 The government is investing on Roads, Telephone and the energy
sector which indirectly help to facilitate the development of the
business under caption

Company Level Success Factors

The key to the business success is undoubtedly effective market

segmentation through identification of several niche markets and
implementation strategies. Along these lines the company intends to
implement advertising, personal selling and direct marketing strategies to
the target markets. The company‘s personal selling marketing strategies
will rotate around keeping in touch with local purchasers, and advertising

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for more individual customers. Hence, the company key success factors will
include the following:

1. Excellence in fulfilling the promise: the company intends to offer

completely enjoyable products that will ensure that the customers are
thoroughly satisfied and appreciative while consuming the products.
2. Timely response to customers' requests: the company cannot
afford to delay its clients for whatever reason, as this will have a
negative bearing on its image and reputation. Hence the company
need to be continually communicating with the customers so as to
ensure that the company constantly available to the client meeting
their expectations.
3. Solid and fruitful strategic alliances: Considering the nature of
the company products and the extent of competition in the industry,
the company realize the importance of establishing and maintaining
fruitful strategic alliances with various stakeholders, such as Financial
institutions, Foreign embassies, big brand supplier of Global wide
etc…, so as be assured of a constant flow of customers, fulfilling their
needs at every opportunity.
4. Marketing know-how: As a relatively new company on the market
there will be a need to aggressively market the business and the
products the company provide so as to be continuously at the top of
our prospective customers minds. This will also act as a temporary
deterrent for companies contemplating entering into market.
Advertising shall be undertaken on a regular basis.

Risk Mitigating Measures

To minimize the impact of the risk factors, the company may take actions
on the following mitigating mechani[Link]

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  Enhancing the product excellence while selling the products in a
manner that exceed the expectation of the purchasers and hence
intensive training shall be provided to sales officers on the manner of
handing customers
 The company needs to build referrals and a long-term reputation as a
trustworthy product supplier to the local community. The company
will continue to reach out to past clients in future years to answer
questions and to continue to develop a relationship with customers.
 The promoter can make organized arrangement & promotional work
through print and air media. The business will begin with a general
corporate brochure establishing its position on the market. This
brochure will be developed as part of the start-up expenses including
the business cards and Company Profile, mainly for the large media
outlets that often recommend products to potential customers.
Compliment slips are also intended so as to raise awareness of the
company and its products. We also intend to have information
pamphlets that will provide information on the company various
products.

About the company: - FOUR Y trading PLC

Four Y Trading PLC with over sixteen years of global experience, four
Y Trading formerly known as ‘’Seble Habtamu Import & Export’’ is one
of the leading Welo Opal suppliers directly from the mines, in beads,
polished, & rough

Four Y Trading is a PLC. Which operates through SEBLE HABTAMU

IMPORT & EXPORT as well as VOLCANO (“Four Y Trading”) and its
sister companies (collectively as “Four Y Trading PLC”).

Four Y Trading and its other subsidiaries engage in product design,

manufacturing, and retailing activities. VOLCANO offerings include an
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extensive selection of jewelry (92% of worldwide net sales in fiscal
2019), as well as timepieces, and accessories.

Four Y Trading PLC was founded in 2007 when Seble Habamu opened
in downtown Addis Ababa.

Establishment

The company is established in 2013 with initial paid-up capital of Birr

6,302,000.00 to engage in import of vehicle spare parts, regular
equipment and décor supplies. Based on the trade licenses renewed
for 2015 under business license number BL/AA/14/673/6018639/2013,
The Company is being managed by Ato Ermiyas Desalegn

The PLC was initially established with initial paid up capital of Birr 1.2
Million. Based on the given article of associations the company
incorporated by six shareholders. Based on the minute of
shareholders meeting the new capital structure among the
shareholders of the company is as depicted here under

Name of shareholders Number of Par Value Total share

shares value
1 Ato Ermiyas Legesse 4311 1000 4,311,000.00
2 W/ro Seble Habtamu 4311 1000 4,311,000.00
3 Yafet Ermiyas Desalegn 170 1000 170,000.00
4 Yuliya Ermiyas Desalegn 170 1000 170,000.00
5 Yabeth Ermiyas Desalegn 170 1000 170,000.00
6 Yekabed Ermiyas Desalegn 170 1000 170,000.00
Total 9302 9,302,000.00

The main objective of establishment of the business is

 Establishment of factories
 General construction works, including manufacturing/import of
construction material
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  Import of vehicle spare parts and regulatory equipment etc…
 Export of coffee and tea,
 Import of Vehicles,
 Export of beverage plants (except coffee and tea)
 Export of cereals, oilseeds, pulses.
 Export trade in minerals and mineral products.
 Import trade in chemicals for industrial input, rubber, plastics
products, and batteries.
 Import trade in material metal and non-metal scraps, logs,
timber.
 Live animals and their products.

When we observe the actual business activities, the company

 is primarily engaged in import and sales of Baby milk powder,

Diaper etc…
 has concluded a contract agreement with BGI Ethiopia to import
various items as well as to supply various raw materials.
 The previous year sales is near to 70 Million Birr
 Is well recognized and awarded with silver prize for its
outstanding performance in paying tax from Inland Revenue.

Based on the given article of association the business is primarily run

by W/ro Seble Habtamu as Manager and Ato Ermiyas Desalgen as
Deputy Manager. The company

About the request

The company has concluded a sales contract agreement to purchase

a G+4 building with a sales price of price of 20 Million Birr. The Seller
has an outstanding loan of near to 20 Million Birr secured against this

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building thus the company is requesting the transfer of the loan found
in the name of the seller. The payment need to be extended for an
additional two years from the existing expiry date. The sources of
repayment, as we will show you latter in detail, expected to come
from the merchandise business activity of the company as well as
from rental income of the building to be purchased (The building is
expected to be rented at least 40,000 Birr per month.). For this the
company is willing to offer additional collateral.

FINANCIAL Analysis-FOUR Y trading PLC

BALANCE SHEET
PERIOD ENDED 7/7/2021 7/7/2022 Average
8,141,55 6,784,82 7,463,19
FIXED ASSETS 7 7 2
CURRENT ASSETS
1,084,47 5,108,76 3,096,62
Cash, Bank Accounts & Investment 8 6 2
25,999,9 9,285,61 17,642,7
Stock & Work in Progress 32 4 73
1,248,81 11,212,6 6,230,72
Trade Debtors/Receivables 2 41 7
28,333,2 25,607,0 26,970,1
TOTAL-CURRENT ASSETS 22 20 21
CURRENT LIABILITIES
28,428,2 1,249,72 14,838,9
Trade Creditors 27 8 78
3,842,98 3,842,98
Current Taxes 1 1

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 28,428,2 5,092,70 18,681,9
TOTAL CURRENT LIABILITIES 27 9 58
20,514,3 8,288,16
NET CURRENT ASSETS/(LIABS) (95,006) 12 3
9,302,00 9,302,00 9,302,00
Share Capital/Premium 0 0 0
2,338,04 2,338,04
Capital & Other Reserves 5 5
(1,255,4 15,659,0 7,201,82
Retained Earnings 48) 94 3
8,046,55 27,299,1 18,841,8
TANGIBLE NET WORTH 2 39 68
8,046,55 27,299,1 18,841,8
CAPITAL EMPLOYED 2 39 68

 An impressive Sales growth is registered in the Last from

nothing to something huge

PROFIT & LOSS

ACCOUNT
PERIOD ENDED 7/7/2021 7/7/2022 1/0/1900
PERIOD LENGTH (DAYS) 365 365 Average
101,442, 101,442,
Net Sales 434 434
72,700,5 72,700,5
Cost Of Goods Sold 60 60
Other Direct Costs 0
Gross Profit 0 28,741,8 28,741,8

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 74 74
1,139,29 5,066,51 3,102,90
General Expenses 1 0 0
(1,139,2 23,675,3 11,268,0
OPERATING PROFIT 91) 65 37
(1,139,2 23,675,3 11,268,0
PROFIT/(LOSS) BEFORE TAX 91) 65 37
6,760,82 6,760,82
Tax Charge/(Credit) 2 2
6,760,82 6,760,82
SUB TOTAL 0 2 2
(1,139,2 16,914,5 7,887,62
NET PROFIT/(LOSS) AFTER TAX 91) 42 6
 A sizable profit also been registered in the period ended July 7,
2022

7/7/202
PERIOD ENDED 1 7/7/2022
PERIOD LENGTH (DAYS) 365 365 Average
Profitability
Gross Profit Margin (%): 0.00% 28.33% 14.17%
Op. Profit Margin (%): 0.00% 23.34% 11.67%
Net Profit Margin (%): 0.00% 16.67% 8.34%
Liquidity
Current Ratio: 1.00 5.03 1.44
Quick Asset Ratio: 0.08 3.20 0.50
Working Capital Management 0 81 40.34
Stock Turnover (Days): 0 47 23.31

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 Debtors T/O (Days): 0 40 20.17
Creditors T/O (Days): 0 6 3.14
Working Capital Cycle (Days) 0 81 40.34
per 1Birr Sales (Measure Birr) 0.00 0.19 0.09
Leverage
8,046,5 27,299,1 18,841,8
Tangible Net Worth 52 39 68
Total Liabilities/TNW 3.53 0.2 1.86

JALO Hotel PLC

JALO Hotel PLC is a private limited company incorporated in 2015 by

two shareholders namely Ato Ermiyas Desalegn and W/ro Seble
habtamu with initial paid-up capital of Birr 361,930,000.00. The initial
capital structure between the shareholders is as depicted here under

Name of shareholders Number of Par Value Total share

shares value
Ato Ermiyas Legesse 180,965 1000 180,965,000.0
0
W/ro Seble Habtamu 180,965 1000 180,965,000.0
0
Total 361,930 361,930,000.0
0

The main objective of establishment of the business is to render hotel

and catering service. The company also has the intention to
participate in rendering restaurant and lounge service, tour and travel
services, lodges and Gust house business, establishment and
operation of recreation centers etc… Based on the given article of
association the business is primarily run by W/ro Seble Habtamu as
Manager and Ato Ermiyas Desalegn as Deputy Manager.

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About the Hotel

JALO HOTEL offer Hotel Service for those who want to rest and relax
with all rooms feature free Wi-Fi. Each room is individually decorated
and has a private bathroom. With access to public transportation, the
hotel offers a hot breakfast buffet.

The Hotel offers

 24 Hour Guest Reception

 Breakfast
 Complimentary Electronics Chargers
 Clothing Iron
 Meeting mall
 Business Facilities
 Transportation Services and Information
 Laundry Services
 Daily Newspaper
 Bakery shop
 Gym Services
 Free Wi-Fi

Financial Performance-JALO Hotel

Based on the audited financial statement of the Company for the

period ended July 7, 2022. The following major financial performance
indicators has been observed

BALANCE SHEET
FIXED ASSETS Amount
Land and Buildings 3,741,856
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 CURRENT ASSETS
Cash, Bank Accounts & Investment 1,080,324
Stock & Work in Progress 1,474,618
Trade Debtors/Receivables 2,142,037
Total 4,696,980
CURRENT LIABILITIES
Trade Creditors 3,450,326
Other Creditors & Accruals 3,812,225
Current Taxes 247,951
Total 7,510,502
NET CURRENT ASSETS/(LIABS) (2,813,523)
Capital
Share Capital/Premium 50,000
Retained Earnings 878,334
TANGIBLE NET WORTH 928,334
CAPITAL EMPLOYED 928,334
Financial observation

 In fact there is shortage of working capital/since net current

asset is negative/ observed

Profit and Loss statement

17,750,0
Net Sales 70
6,134,75
Cost Of Goods Sold 1
11,615,3
Gross Profit 19
General Expenses 10,199,7

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 12
1,415,60
OPERATING PROFIT 7
Tax Charge/(Credit) 537,274
NET PROFIT/(LOSS) AFTER TAX 878,334
 There is good sales turnover as compared to the capital
employed
 Huge gross profit margin is observed

Analytical Ratio
Gross Profit Margin (%): 65.44%
Op. Profit Margin (%): 7.98%
Net Profit Margin (%): 4.95%
Current Ratio: 0.63
Quick Asset Ratio: 0.43
Stock Turnover (Days): 88
Debtors T/O (Days): 44
Creditors T/O (Days): 205
Working Capital Cycle (Days) -74
per 1Birr Sales (Measure Birr) 0.01
Tangible Net Worth 928,334
Total Liabilities/TNW 8.1

All indicators shows the healthiness of the business except Total

Liability to tangible net worth ratio

SEBLE HABTAMU

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W/ro Seble habtamu who is the shareholders of FOUR Y trading PLC as
well as JALO Hotel Trading PLC, also engaged in the business of export
of coffee and tea as well sales of merchandise items.. The business is
established in 2002 with initial paid-up capital of Birr 20,000,000.00.
Her trade licenses renewed for 2015 under business license number
BL/AA/14/673/2881919/2012, currently she is operating Sun City
supper market

Financial performance-Seble Habtamu

BALANCE SHEET
PERIOD ENDED 7/7/2020 7/7/2021 7/7/2022 Average
Land and Buildings 1,382,113 1,304,731 3,577,064 2,087,969
Other Fixed Assets 1,800,000 1,800,000 1,800,000
FIXED ASSETS 3,182,113 3,104,731 3,577,064 3,287,969
Cash, Bank Accounts &
Investment 799,753 24,726,887 951,453 8,826,031
59,768,47
Stock & Work in Progress 1 81,968,828 1,749,928 47,829,076
21,613,20
Trade Debtors/Receivables 7 63,887,787 81,360,387 55,620,460
217,765,00 217,765,00
Investment 0 0
82,181,43 301,826,76 330,040,56
CURRENT ASSETS 1 170,583,502 8 7
Bank Short Term Debt 64,666,692 80,972,160 72,819,426
Trade Creditors 128,680 111,130,154 134,541 37,131,125
Current Taxes 243,227 243,227
110,193,77
CURRENT LIABILITIES 128,680 175,796,846 81,349,929 8
NET CURRENT 82,052,75 220,476,84 219,846,78
ASSETS/(LIABS) 1 (5,213,344) 0 9
85,234,86 224,053,90 102,393,38
EMPLOYMENT OF CAPITAL 4 (2,108,613) 4 5
83,802,69 171,278,54 127,976,83
Term Debt - Banks 3 128,849,279 3 8
83,802,69 171,278,54 127,976,83
TERM LIABILITIES 3 128,849,279 3 8
Share Capital/Premium 2,096,708 2,096,708 20,000,000 8,064,472
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Custom Value Difference 25,449,932 35,876,081 30,663,007
(158,504,533 (54,089,929
Retained Earnings (664,535) ) (3,100,720) )
(130,957,893 (15,362,451
TANGIBLE NET WORTH 1,432,173 ) 52,775,361 )
85,234,86 224,053,90 112,614,38
CAPITAL EMPLOYED 6 (2,108,614) 4 8
 Notes on the balance sheet
o Though has registered significant sales volume across the
period, it has been en=incurring loss for some periods. In
contrast however, a significant capital growth is registered
across the period
o The owner/Seble Habtamu/ is a source of finance for the
growth of other sister companies

Profit and Loss Statement

PERIOD ENDED 7/7/2020 7/7/2021 7/7/2022 Average
162,112,2 175,669,99 265,159,86 200,980,70
Net Sales 48 7 0 2
143,974,4 148,034,37 228,003,77 173,337,55
Cost Of Goods Sold 99 6 9 1
18,137,74
Gross Profit 9 27,635,621 37,156,081 27,643,150
General Expenses 2,650,860 4,787,927 5,878,870 4,439,219
15,486,88
OPERATING PROFIT 9 22,847,694 31,277,211 23,203,931
Financial Expenses 7,757,378 9,334,169 23,347,676 13,479,741
PROFIT/(LOSS) BEFORE TAX 7,729,511 13,513,525 7,929,535 9,724,190
Tax Charge/(Credit) 2,687,329 4,711,734 3,054,397 3,484,487
NET PROFIT/(LOSS) AFTER
TAX 5,042,182 8,801,791 4,875,138 6,239,704
 Though gross profit is growing consistently across the period,
the net profit shows a significant variation across the period due

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 to a huge financial expenses/interest expense/ observed in the
period ended July 2022

Analytical Ratio

PERIOD ENDED 7/7/2020 7/7/2021 7/7/2022 Average

Sales Growth
Net Sales Gr. Rate (%) 8.36% 63.57% 35.96%
Profitability
Gross Profit Margin (%): 11.19% 15.73% 14.01% 13.75%
Op. Profit Margin (%): 9.55% 13.01% 11.80% 11.45%
Net Profit Margin (%): 3.11% 5.01% 1.84% 3.32%
Liquidity
Current Ratio: 638.65 0.97 3.71 3.00
Quick Asset Ratio: 174.18 0.50 3.69 2.56
Working Capital
Management
Stock Turnover (Days): 152 202 3 118.81
Debtors T/O (Days): 49 133 112 97.80
Creditors T/O (Days): 0 274 0 91.52
Leverage
(130,957,8 (15,362,4
Tangible Net Worth 1,432,173 93) 52,775,361 51)
Total Liabilities/TNW 58.60 0.00 4.8 21.13
Bank Debt/TNW 58.51 0.00 4.8 21.10
Profit Cover For Interest 2.00 2.45 1.3 1.93

Explanation on the financial position of [Link] Seble Habtamu

 Her business is much diversified. She is currently engaged in the

business of renting Sino trucks, Milk powder import and sales,

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 export of cattle, camel and sheep etc…. with the details as
described here under
o Income from vehicles 73.35 Million
Birr
o Milk powder 93.98 Million
Birr
o Export of Cattle 40.68 Million
Birr
o Export of camel 25.33 Million
Birr
o Export of sheep 32.47 Million
Birr
o Sales of SH oil 0.32 Million
Birr
 Here fixed asset basis largely laid on office furniture, motor
vehicles & machinery, computer & accessories etc… that worth
a net book value of Birr 3.57 Million as of July 2022. Thus she
doesn’t require intensive fixed asset base to operate the
business
 She has carried a huge investment on Jalo Hotel (Birr 35 Million)
as well as on real estate (Birr 180.96 Million) and investment on
Debrebirhan site (Birr 1.8). Most of this investment is brought
from long term debt obtained from Awash Bank
 The financial statement also indicates that she still running the
business of mining and selling of gemstone such as opal. For the
financial period ended July 2022 she claimed that inventory of
Birr 1.54 worth of Opal is report in the period.

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  Out of the total receivable nearly 71% is trade receivables while
the rest is other receivables such as exchange rate loss
 There is an insignificant trade payable. However, she has been
enjoying OD facility with the aggregate amount of Birr 80.
Million from Awash Bank and Oromia Bank.
 She has managed to be interest on short as well as long term
loan with aggregate outstanding balance of nearly 250 Million
Birr. Thus Birr 23.34 Million has been reported as repayment of
interest indicating that she has a huge financial capacity to
withstand repayment burdens.

Marketing of the Company’s import products

There is a huge demand for various import items such as Diaper,

baby Milk/anchor/, and other consumable products in domestic
markets. The supply of the items largely brought by firms engaged in
import of the items with various scale and capital strength. The
Manager, has acquired ample experience in the business under
caption since she has the opportunity to scrutinize and control the
market as she has better knowledge about suppliers, market
competitors, government regulations, Global business activities, price
information etc……She has enormous accumulated and practical
experience that help her to have the ability to predict the movement
of the business precisely, hence the decision to hold stock or expedite
sale shall accordingly headed based on the information she get from
their surroundings. This informal market spying helped her to averse
the risk embedded in the import business.

The surge in demand for import items such as baby milk powder,
baby diaper etc… was brought mainly as a result of an increase of the
FOUR Y Trading PLC Page 23
country’s economic capacity coupled increase in population growth,
increase in awareness and uses of modern canned food, increasing
preference to material that ease life styles, prevalence of few
substitute products for the items etc…

Marketing strategy

The company is currently concluded a huge contractual agreement

with BGI Ethiopia to supply various imported items. In addition to this
the company also supplies its import products to other companies
without signing a contractual agreement.

Since the Manager of the company W/ro Seble Habtamu is engaged in

Export of cattle’s, camels etc… the foreign currency derived from this
source greatly helps to finance the import business which require he
foreign currency.

The marketing approaches also encompass various methods among

which the sale of the items on wholesale or retail basis is another
way. In line with this, the sales of the imported products to
individuals, companies are arranged either in retail or in wholesale
basis.

SWOT Analysis

Strength

 Owner’s/promoter long time experience in the business line

 Commitment , strong initiative and aspiration for long term
growth

FOUR Y Trading PLC Page 24

  Knowing the international marketing trend for the imported
items
 Good business conducted/Disciplined in terms of respecting
rules of law/.The company has been awarded silver level prize
for its outstanding performance in terms of paying tax
obligation/

Weakness

 Financial constraints to settle the Debt where the building to be

purchased is held for

Threats

 Foreign currency shortage

 Ever increasing inflation making the import of items more
expensive in terms of local currency
 Rapid changes in government regulation regarding import of
items
 Increasing involvement of competitors
 Increase in the production of items from the local industry (a
rare threat)

Opportunity

 Decrease in the purchasing cost as a result of technological

advancement in foreign country
 Untapped demand for various import items despite several
challenges
 Vast opportunity for growth as a result of increasing network of
foreign supplier

FOUR Y Trading PLC Page 25

 MANAGEMENT
As it was stated earlier, the company is managed by the Manager, W/ro
Seble Habtamu, who has been engaged in the business of import and
export business for several years, she has been also in the business of sales
of gemstone. As a Manager of the company, she is responsible for strategic
issues and the overall affaires of the business. She is entrusted to deal with

FOUR Y Trading PLC Page 26

 the company's overall performance, operation as well as major financial
decisions.

As a Manager and owner, she is directly in-charge for its operations,

expansion and related matters of the company as well for the building to be
acquired hereafter. Her exposure and experience in the import and export
business as well as in real-estate business has given teething edge in
operating the business.

V. HUMAN RESOURCE

The company business requires knowledge on the surrounding

circumstance on the business which the company manager is well
acquainted with. It’s well organized in holding dedicated profession and
nonprofessional (support staff). The exhaustive list of the manpower to be
hired to manage the building to be acquired is as described in the table
hereunder.

Variou Annual
Number Transport Total Monthly
Basic s Salary
Job title of Allowanc Payment Salary and
Salary Benefit and
Employee e per person Benefit
s Benefit
Building
1 25,000 4,000 2,000 31,000 31,000 372,000
Administrator
Accountant 1 15,000 1,500 1,000 17,500 17,500 210,000
Guard 2 5,500 5,500 11,000 132,000
Cleaners 5 4,500 4,500 22,500 270,000

Total 9
50,000 5,500 3,000 58,500 82,000 984,000

VI. ORGANIZATIONAL STRUCTURE

The success of an organization depends mainly on the quality of its staff

and an effective organization structure that can respond to customer's
demands efficiently. Quality performance is attained through a lean and
mean organizational structure and management style. The owner strongly

FOUR Y Trading PLC Page 27

believes in lean management policy whereby concerned building
administrator are appointed and given authorities to implement
management plan for growth in tandem with policy and procedures. The
following Organizational structure advocates and explains all:

FOUR Y Trading PLC Page 28

 ORGANIZATIONAL STRUCTURE TO MANAGE THE BUILDING

Manager/W/ro Seble Habtamu

Building
Administrator

Accountants Lobby Attendant Head, Cleaners

Guards Cleaners

FOUR Y Trading PLC

 Financial Analysis
The financial Plan

The financial plan is prepared taking into account the company’s

internal capacity and the current market opportunities and threats. The
plan includes the sales forecast, projected cash flow, projected income
loss statement etc...For the next five years.

The promoter has already participated in business to get pie from the
lucrative import and export business. FOUR Y Trading PLC’s revenues
will come primarily from the sales of various types of merchandise
items.
The purpose of financial analysis to assess whether the company is
able to service the Debt which is going to transferred from third person
there by the underlying building collateral accordingly transferred to
the Company FOUR Y trading PLC. In this assumption, we incorporated
the aggregate income of the existing business of the company
together with the rental income of the building to be purchased

The financial analysis of the business is based on the data presented in

the previous chapters and with some assumptions.

FOUR Y Trading PLC

ASSUMPTION

 The company has registered sales volume of Birr 101,442,434.02.00 in

the business period ended July 2022
 But this volume of sales may not be maintained within the ongoing
period. Thus a slight growth of 5% of sales as compared to last year
sales figure is expected to be maintained within the current year.
 Based on the given financial statement the CGS as percentage of sales
is 72%. In addition this, administrative expenses as percentage of CGS
is 7%
 Though there is higher working capital cycle (9.3), we choose 6
working capital cycle since the number of cycle in this year may not be
as similar as that of last year or slightly diminishes as a result of
decline in sales due to perhaps working capital shortage.
 The actual sales growth rate of the company is much impressive. i.e. it
exhibited from nothing in 2013 E.c to 101 Million Birr in 2014 E.c. This
was largely brought as a result of huge contractual agreement signed
with BGI to supply various imported items. However, for the sake of
this business plan sales growth rate has been conservatively set to be
much lower than the actual sales growth figures. Thus Sales, CGS and
Administrative expenses assumed to increase at a rate of 5% over the
coming five consecutive years.
 Depreciation for the fiscal year ended July 7, 2022 is Birr 226,607. A
5% of this figure was taken as a projected Depreciation rate on the
years to come.
 The company contributed Birr 9 Million for the purchase of the building
 The loan to be transferred (20 Million Birr) has been considered cash
inflow in cash flow analysis since the company didn’t settled the entire
debt from its own sources, it has helped to maintain the liquidity
position of the company.

FOUR Y Trading PLC

  Rental income of the building to be purchase considered as part of
cash inflow and 60% of rental income has been considered as an
expense to operate the business of renting the building to be
purchased. The building is assumed to be rented Birr 40,000 per month
 20 Million Loan to be transferred is amortized for a period of five year
on Quarterly mode of repayment at 15% interest rate. The repayment
schedule is presented in the annexure part this business plan.

FINANCIAL EVALUATION

Based on the above mentioned assumption, the company future financial

prediction and its capacity to address all possible financial issues has been
depicted as indicated hereunder.

1. Profitability

Based on the projected profit and loss statement, the business will generate
a profit throughout its operation life. Annual net profit after tax is 13.99
million Birr in the first year and expected to grow gradually over the next five
years. The detail of the projected profit and loss statement is as shown in the
annexure part of this business plan

2. Cash flow

Based on the projected cash flow statement, the business will generate net
cash inflow of Birr 11.39 Million after cover all the debts of the company.
Furthermore, at the end of 5 th year the accumulated net cash flow of the
business expected to reach 63.58 Million Birr. The detail of the projected
cash flow is as shown in the annexure part of this business plan.

Economic and Social Benefit and Justification

Based on the foregoing presentation and analysis, we can learn that the
transfer of the debt to the company possesses wide range of benefits that
FOUR Y Trading PLC
complement the financial feasibility obtained earlier. In general the proposal
to transfer the collateral along with the underlying debt will have socio-
economic benefits. These benefits are listed as follows.

1. Tax Revenue

In the coming five years, the federal government will collect about Birr 43.83
million from corporate tax payment alone (i.e. excluding labor income tax,
and VAT). Such result create additional fund for the government that will be
used in expanding social and other basic services in the country.

2. Employment and Income Generation

The proposed project is expected to create employment opportunity to

9 professionals as well as support staffs. Consequently the project
creates income of Birr 0.98 million per year to the staffs to be hired for
the building to acquired hereafter.

3. Pro-Environment Project

The business by its own nature doesn’t harm the environment, hence
no risk can be brought as a result of the captioned business, if exists,
however, it should be carried out carefully to protect the environment
from various unrecognized hazards.

FOUR Y Trading PLC

.Annexure 1

FOUR Y trading PLC

Projected Profit Loss statement Figure in '000

Year 1 Year 2 Year 3 Year 4 Year 5

Sales 106,515 111,840 117,432 123,304 129,469
CGS 76,690 80,525 84,551 88,779 93,218
Gross Profit 29,824 31,315 32,881 34,525 36,251
Administrative Exp. 5,368 5,637 5,919 6,215 6,525
Operating Exp. 24,456 25,679 26,962 28,311 29,726
Depreciation 238 250 262 275 289
Profit before int. Exp. And
Tax 24,218 25,429 26,700 28,035 29,437
interest Expense 2,800 2,337 1,803 1,184 470
Profit before tax 21,418 23,091 24,897 26,851 28,967
Profit Tax 7,496 8,082 8,714 9,398 10,139
Net Profit after Tax 13,922 15,009 16,183 17,453 18,829

FOUR Y Trading PLC

FOUR Y Trading PLC
.Annexure 2

FOUR Y trading PLC

Projected Cash flow

in 000
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Cash inflow
Owner's Equity to purchase building 9,000
Loan to be transferred 20,000
Rental income from the new building 480 504 529 556 583
Depreciation 227 238 250 262 275 289
Net Profit 13,922 15,009 16,183 17,453 18,829
Pre-Operating Cost
Total cash inflow 29,227 14,640 15,763 16,975 18,284 19,701
Cash out flow
Total Purchasing Cost 29,000
Operating cost of the new BLD 288 302 318 333 350
Repayment of Loan-principal 2,957 3,420 3,954 4,572 5,287
Total cash outflow 29,000 3,245 3,722 4,272 4,906 5,637

Net Cash flow 227 11,394 12,041 12,703 13,378 14,064

Cumulative Net Cash flow 227 11,394 23,436 36,139 49,517 63,581

FOUR Y Trading PLC

.Annexure 3

Loan Amortization Table

Proposed amount of
loan 20,000 Million
interest
rate 15%
to be repaid within 5 years
Quarterly installment Figure in
repayment 1,439 Million ‘000
Remainin Repayment Repayment per annum
Interes
Repayme Outstandin Principa g
t
nt Repaymen g balance- l outstandi Princip Outstanding
amoun Interest Principal interest Total
period t mode beginning amount ng al balance
t
/Year/ balance
Year 1 Quarter 1 20,000 700 740 19,300 700 740
Year 1 Quarter 2 19,300 725 714 18,575 725 1,454
Year 1 Quarter 3 18,575 752 687 17,823 752 2,141
Year 1 Quarter 4 17,823 780 659 17,043 780 2,800 2,957 2,800 5,757 17,043
Year 2 Quarter 1 17,043 809 630 16,234 809 3,430
Year 2 Quarter 2 16,234 839 600 15,395 839 600
Year 2 Quarter 3 15,395 870 569 14,525 870 569
Year 2 Quarter 4 14,525 902 537 13,623 902 537 3,420 2,337 5,757 13,623
Year 3 Quarter 1 13,623 935 504 12,688 935 504
Year 3 Quarter 2 12,688 970 469 11,718 970 469
Year 3 Quarter 3 11,718 1,006 433 10,712 1,006 433
Year 3 Quarter 4 10,712 1,043 396 9,669 1,043 396 3,954 1,803 5,757 9,669
Year 4 Quarter 1 9,669 1,082 358 8,587 1,082 358
Year 4 Quarter 2 8,587 1,122 318 7,466 1,122 318
Year 4 Quarter 3 7,466 1,163 276 6,303 1,163 276
Year 4 Quarter 4 6,303 1,206 233 5,097 1,206 233 4,572 1,184 5,757 5,097
Year 5 Quarter 1 5,097 1,251 189 3,846 1,251 189
Year 5 Quarter 2 3,846 1,297 142 2,549 1,297 142
Year 5 Quarter 3 2,549 1,345 94 1,204 1,345 94
Year 5 Quarter 4 1,204 1,395 45 1,395 45 5,287 470 5,757

FOUR Y Trading PLC

FOUR Y Trading PLC