«confirmation» “ ”

12.3. Revenues

The total revenues from the sale of manufactured building materials of LLC «___________________________» LLC are represented in the following table:

Production of emulsion paints	1 year	2years	3 years	4 years	5 years	6-10 years
	thousand (USD)	thousand (USD)	thousand (USD)	thousand (USD)	thousand (USD)	thousand (USD)
Emulsion paints	1 108	1 310	1 512	1 714	1 916	2 016
TOTAL INCOME	1 108	1 310	1 512	1 714	1 916	2 016

12.4. Expenses

The costs incurred for the production of Emulsion paintsin the above-mentioned plant, which is planned to be built, are presented in the following tables.
Table of pre-project costs (costs related to construction and purchase of fixed assets):

No.	EXPENSE NAME	USD	Thousand (USD)
1	Building, structure, construction	32 000	32,00
2	Furniture and auxiliary equipment	3 100	3,10
3	Paint production line	347 800	347,80
AMOUNT		382 900	382,90

The total expenses made in the production process are given in the following table:

EXPENSE NAME	1 year	2years	3 years	4 years	5 years	6-10 years
Organization of production of building materials (varnish).	thousand (USD)	thousand (USD)	thousand (USD)	thousand (USD)	thousand (USD)	thousand (USD)
Raw material	675,88	799,10	922,32	1 045,54	1 168,76	1 229,76
Utility costs	11,08	13,10	15,12	17,14	19,16	20,16
Depreciation	73,38	73,38	73,38	73,38	73,38	73,38
Wages of employees in production	18,48	21,84	25,20	28,56	31,92	33,60
Deductions for social insurance	2,22	2,62	3,02	3,43	3,83	4,03
Other production expenses	33,79	39,96	46,12	52,28	58,44	61,49
EXPENSES INCLUDED IN THE PRICE	814,83	950,00	1 085,16	1 220,32	1 355,49	1 422,42
Salaries of administrative staff	17,40	17,40	17,40	17,40	17,40	17,40
Deductions for social insurance	2,09	2,09	2,09	2,09	2,09	2,09
Other expenses
PRODUCTION EXPENSES	834,32	969,48	1 104,65	1 239,81	1 374,98	1 441,91
Marketing expenses	55,40	65,50	75,60	85,70	95,80	100,80
Other financial expenses	49,78	44,07	31,63	19,18	6,74	0,00
TOTAL PRODUCCTIONEXPENSES	939,50	1 079,06	1 211,88	1 344,70	1 477,52	1 542,71

12.5. Financial result

It is known from experience that it is very difficult for an entrepreneur to make a profit in the first year of activity. But starting from next year, due to a sharp decrease in expenses and an increase in sales volume, the entrepreneur will have the opportunity to make more net profit. And this indicator will bring significant income in the following year.
The following table shows the company's financial results:

Production of emulsion paints	1 year	2years	3 years	4 years	5 years	6-10 years
	thousand (USD)	thousand (USD)	thousand (USD)	thousand (USD)	thousand (USD)	thousand (USD)
Gross income	1 108	1 310	1 512	1 714	1 916	2 016
VAT	119	140	162	184	205	216
Net income	989	1 170	1 350	1 530	1 711	1 800
Total expenses	939	1 079	1 212	1 345	1 478	1 543
Profit before paying profit tax	50	91	138	186	233	257
Profit tax	7	14	21	28	35	39
Net profit	42	77	117	158	198	219

Thus, the initiator will make a net profit of 1.7 million US dollars in 10 years through the project.

13. Economic efficiency of the project

13.1. NPV and IRR indicators

The sum of the net discounted cash inflows from operations during the project is 290,814 US dollars, and the sum of the net discounted cash inflows during the project is zero at a discount rate of 24.71 percent. Considering the discount rate of 14 percent, the project is economically efficient.
The table below shows the NPV and IRR indicators:

Period	Cash flow	Refinancing rate	NPV	IRR
0	-471,13	14%
1	42,32	14%	-434,01	-91,02%
2	77,00	14%	-374,76	-54,83%
3	117,40	14%	-295,52	-24,97%
4	157,81	14%	-202,08	-5,71%
5	198,22	14%	-99,13	6,57%
6	218,70	14%	0,50	14,03%
7	218,70	14%	87,90	18,53%
8	218,70	14%	164,57	21,42%
9	218,70	14%	231,82	23,36%
10	218,70	14%	290,81	24,71%

13.2. The breakeven point

When the project works at 41 percent capacity, i.e., when 410.63 tons of emulsion paints are produced per year, the gross income of the enterprise without VAT will be equal to the total costs:

Parameter	Amount at full capacity, thousand US dollars
Total income	1 800
Changeable expenses	1 449,84
Permanent expenses	142,65
General expanses	1 592,49
Breakeven point (production capacity)	41%

The following graph shows gross income and total expenses:
The breakeven point; Total income; General expanses.

14. Contribution of the project to the country's economy

In recent years, many new enterprises have been established in our Republic at the expense of foreign investments. These enterprises produce various products: household goods, clothes, chemicals and other types of products for sale in the domestic market. The main reason for the establishment of many joint ventures is to fill the domestic market with import-substituting products using foreign experience. Especially the development of food production, using the available opportunities, will serve to increase the well-being of our population. The share of small business in the gross domestic product of the country will also increase. It will be possible to develop the activity of a modern, all-round convenient production factory in the village.
Based on the above, if the enterprise implements this project in Nishan district, the following opportunities will be created:

• 
  availability and cheapness of raw materials, lowering of product prices.
  
• 
  8 new jobs will be created to prevent high unemployment in the district.
  
• 
  It will be possible to provide consumers with cheap and high-quality emulsion paints products at the regional and national level.
  
• 
  Local residents are also provided with high quality emulsion paints products.