PROJECT PROPOSAL FOR THE ESTABLISHMENT

OF CONSTRUCTION MACHINERY ASSEMBLY

PLANT

PROJECT TO BE IMPLEMENTED IN OROMIA

REGIONAL STATE, GELAN TOWN

PROMOTER; ADISU MOSISA

April; 2021

Finfinne,Ethiopia

1
 Executive summary
Project owner Adisu Mosisa
Project location Gelan town
Land size required 5 hectares
Project type Construction machinery assembly
Project composition Truck mounted mixer, portable concrete mixer, and tipper truck,
Dozer, Grader and Loader.
Total project cost 452,350,000
Production at full 589,000 items of various machineries and equipment
capacity
Target market 70% domestic and 30% export.
Financing Total capital 452,350,000out of 30% ( 135,705,000) owner’s
contribution and 70% (316,645,000) bank loan.
Employment 1. Permanent (skilled and Unskilled) 1385
opportunity 2170 Skilled 1000
Unskilled 385
2. Causal 758
skilled 58
Unskilled 700
Benefit of the It adds values to the economy
project for Source of government revenue
region/country Employment opportunity
Minimizing foreign currency expenditure /import substitution.
Benefit for the local community
Stimulate the local economy and technology transfer
The project employs software designing, automatic cutting and
modern Assembling machine which are labor intensive machineries
Technology and equipments are selected. Machinery spare parts will be
manufactured locally and technology transfer will be conducted.

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1. Introduction
Ethiopian being of the Africa countries required continuous improvement in
Construction Machinery Assembly and manufacturing sector. In accomplish
the development on these sectors, the role of infrastructure is vital. the
development of the infrastructure in turn highly depend on the availability of
various types of construction like rollers, leaders, truck minted mixers,
portable concrete mixers tipper truck etc.

The country has been improving almost all of its industrial machinery and
equipment than aboard. According to the data abstained from Ethiopian
customs authority. The country is importing several types of machinery and
equipment from several countries. Chine, Italy, turkey, and Germany are the
dominant supplies

Looking the need establish construction machinery assembly plant in

Ethiopian and the ample market opportunity, Adisu Mosisa is an Ethiopian
business organization highly engaging in Construction sector, with a primary
objective of proving comprehensive engineering solutions planned to engage in
the sector by providing the spare part and manufacturing some parts of the
machineries in Gelan town.

The investment project requires total capita of birr 452,350,000 million initial
investment to be financed both by equity and bank loan in proportion of 30; to
70, ratio respectively. The financial evaluation shows that the project will be
profitable and liquid for its estimated project life. The project will create
employment opportunity for more than 2170 workers of which 1385 are
permanent and the remain 758 are temporary.

The project uses part and auxiliary items as a major raw material to be
imported, thus the benefit multi – dimensional in foreign currency savings.

Thus, the project is socially desirable, economically feasible and financially

sound.

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1.1. Back ground of the project

The owner of this envisaged project Adisu Mosisa is an Ethiopian business

organization and it has a good business experiences and very ambitious to
establish Construction Machinery Assembly by expecting a good support and
facilitation from the regional government as well the town administration. In
addition the owner hopes this project to be the first of many other
developmental projects to follow as they look forward to share the responsibility
of fighting poverty, reducing unemployment here in Ethiopia. The promoter
accumulated diversified Art skills in the area and also adopted working with
many people. Thus, it is these experiences which primarily motivated this
investor to develop the inception of this project idea.

1.2. Scope and objective of the project

1.2.1. Scope of the project

The project aims at state of the art manufacturing facility and equipment
around the especial zone of oromia surrounding Finfinne–Gelan town to meet
the increasing demand for construction machineries. In Ethiopia, the
construction sector has shown significant progress over the past few years and
the promoter plan to manufacture highly demand truck mounted concert
mixers, portable concerted mixer and tippers, Loader, Dozer and Graderhaving
different sizes to the sector.

Generally, the company as the following objectives

1.3. Objectives
 To engage in the production and assembly construction equipment and
related items
 To contribute for h technologically transfer and capacity development in
the country

4
  To share experience with TVET college student so, apparent ships and
employment opportunity
 To open a market opportunity for small scale industries by out sourcing
non –core activity for the organization.
 To generate income for the company in order to expand the operation and
other development activity
 To contribute to the socio-economic development of the nation at large
and to the construing sector in particular
 To pay its part in import substitution

1.4. Marketing study

Construction machinery is one of the main imputes for construction capacity
to function property. It is unthinkable in 21th century construction without
sufficient equipment and machineries. Due to the need of the advancement
intechnologies, it is not easy to manufacture constructing machineries in the
country. Therefore, the major source of construction machineries demand ids
fulfilled through import. The reconstruction machineries import had been
increasing by 118% due to the construction boom in the country and it is
partly related with the great millennium renaissance dam.

1.4.1. Concert mixers import

Like other type of construction machineries due to unavailability or a
limited number of construction machineries assemblers and manufacture
in most of concert mixers are imported from various Asia and European
countries. The import of concert mixer grew with an average growth rate of
45% per annual similar to the art of construction machineries.

Demand analysis

Demand for the envisaged project product is driven by overall economic

growth, end users consumption trend, private sector development and
mainly by the growth of construction sector.

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 1.1. Ethiopian construction sector

The construction sector is one of the fastest growing activities in the

Ethiopian economy over the past successive years. Thegrowth in this sector
is above that recorded on the country average GDP growth. The sector as a
whole revived and a number of private participants joined the industry

In spite of such improvements like change in the policy framework and

institutional set –up associated with the sector, the capacity of the existing
construction sector is still very limited compared to the nation’s needs. For
example, he majority of the firms are blow or at grade five level. With
respect to the umber, the investment projects registered and licensed in the
sector until now about 795 with 7.9-billion-birr capital. However, out of this
number about 36% were under operation.

In spite of the paramount importance of this sector, its capacity is highly

constrained by shortage of construction material and machineries into eh
right quality and quantity. However, the economy policy of the federal
democratic republic of Ethiopian (FDRE) and the investment law issued to
promote and encourage the participation of private investment law issue to
promote and encourage the participation of private investment in virtually
all sectors of the economy including in real –estate. Furthermore, the
expected like in investment in manufacturing industries, hotels and other
service, living institution is to place a great demand on the construction
sector, thus, the demand ofreconstruction is to place a great demand on the
construction sector. Thus, the demand for construction material is to keep
accelerated pace. However, lack of adequate construction material including
major construction machineries is impeding constructions activities

6
Despite the growth registered over the past years, this sector is still one of
the lowest when we view the country‘sconstructionsrequirement. As all well
know, this country during the previous regime has been under war
situation where almost all the capital budget expenditure had been spend of
repurchase of ammunition, during this time there had been no or limited
effort on the part of the government to construct and reconstruct the
country. During this period the citizen’s per capital income is one of the
lowest bottoms where more than half of the population is living below the
absolute poverty line.

On the other sided, the role played by the private sector in boosting the
country ‘economy was almost legible. This is because the country ‘s
economy policy was command economy where the private sector is not
allowed to participate in any investment activity. Because of all these
factors the country’s economy was in general backwards and the
construction sector one of the poorest. It is because of this ugly situation
before that the present fast growth in the constructions sector couldn’t
attain the country ‘s growth requirement. Besides, the ever-increasing
population of the country, increase in per capital income citizens as well as
the growth in public and private increment associated with the country
attractive investment environment and resource potential eve increases the
construction requirement of the country. This conger is at early stage of
development where the growth trajectories are taking root towards
advancement. They require the realization of various development projects
and betterment of citizen’sincome. The forefront sector that needs to be
proofed during realization of development projects is the construction
industry. It requires the activation of this sector when one think of
constructing roads. Hydroelectric dam, manufacturing industries housing
construction, other building contractions, social service institutions etc.

According to the Ethiopia investment office private investment since the

declaration of the free market policy had improved and this is bound to
7
bring about significant positive impact to the demand of ruling construction
for office, factories and other purposes which in turn will increase the
demand for construction material.

All the description above indicates that the construction sector at present in
Ethiopian is growing at fastest rate but a lot remains to be done when
viewed with the country development equipment and h reconstruction that
needs to take place to achieve this since the country started the
reconstruction from the scratch.

Road sector development

The government of Ethiopian had been engaged in investment of

infrastructure development to sustain economic growth, improving product
competitiveness and encourage private investors. Inparticular, the
government noted that, the development of road transport creates a
network over a wide array of infrastructural facilities so as to improve the
accessibility and mobility of agricultural and industry product. As a result,
the road transport in Ethiopian has been the dominate made of transport
and accounts for 90 to 95 percent of the total motorized inter –urban freight
and passenger transport.

In 2011/12, the total stock of road network reached 63,083 KM of which

24,550 km federal,31,550 km rural road and 6, 983 are woreda road, the
federal road includes 9,875 km in 2011/12 the total road network
expanded by 16.8 percent. Total woreda road network, which was
previously known as community road, also increased significantly to 6,983
km compared to 854km in 2010/11 due to the government ‘s plan to
integrate every kebele to the main roads.

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 Road development data
  Asphalt Gravel Rural Load   Total  
Growt Growt Growt Growt Growt
Lengt h Lengt h Lengt h h Lengt h
  h rate h rate h rate Length rate h rate
200/0 1246 1648 3287
1 3924 7   0   NA   1 0
2001/ 1256 1668 3329
02 4053 3.29 4 0.78 0 1.21 NA   7 1.3
2002/ 1234 1715 3385
03 4362 7.62 0 -1.78 4 2.84 NA   6 1.68
2003/ 1390 1795 3649
04 4635 6.26 5 12.68 6 4.68 NA   6 7.8
2004/ 1364 1840 3701
05 4972 7.27 0 -1.91 6 2.51 NA   8 1.43
2005/ 1431 2016 3947
06 5002 0.6 1 4.92 4 9.55 NA   7 6.64
2006/ 5452 1462 2234 57763 9149
07 0 8.99 8 2.22 9 10.84 .7   7 7.48
2007/ 1436 2393 70038 4435
08 6066 11.26 3 -1.8 0 7.07 .1   9 4.55
2008/ 1423 2564 4681
09 6938 14.38 4 -0.89 0 7.15 85767   2 5.53
2009/ 1437 2694 10038 4879
10 7476 7.75 3 0.98 4 5.09 4   3 4.23
2010/ 1413 3071 5314
11 8295 10.96 6 -1.65 2 13.98   854 3 10.67
2011/ 1467 3155 5610
12 9875 19.05 5 3.81 0 2.73   6.98 0 16.83
Source: Ethiopian road authority

9
Growth rate of community road total length does not include community road
as shown in the table above the construction of roads at national level is
growing by latest 16.83% in the year 2011/12, indirectly indicating the
demand for construction machinery

1.5. Marketing strategy

The market strategy refers to the actions that company plans in response to or
in anticipation o changes in its external environment, its customers, and
competitors

This project will not need aggressive product introduction and popularization
interventions with the aim to reach out the maximum possible buyer

The target market is 70% for domestic –import substitution and the remaining
30% will be export market.

1.6. Generic strategy

The generic comprises of a combination of differentiation and focus

a. Differentiation

Differentiation is a prim marketing object. It involves making the company

service appear different in the mind of the clients

b. Focus

Using a focus strategy, the company concentrates on a market area within

Ethiopian. The strength of a focus strategy is derived from knowing the
customer and the product category very well. Hence, company’s generic
marketing strategy shall rely on focus and differentiation the strategy
concentrates on creating a market segment and within that segment attempt to
achieve differentiation the strategy components are defined in the marketing
mix.

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1.7. The marketing mix
Based on the generic market strangely outlined above, the market analysis and
the competition discussed in the previous section, the marketing mixes of the
company are summarized below.

1.8. Technical study

The most important technical considerations for this project is raw material ,
type and selection, technology and capacity of plant , power source , water
source and production process . each of them is discussed in the subsequent
parts

1.9. Raw material

Part auxiliary and accessories

The major raw material is parts imported from original manufactures aboard.
Auxiliary items and accessories are supplements used to fix, decorate and
polish parts and parts therefore are also imported together with the original
parts.

1. Product / service: the product of the company are truck –mounted mixer
portable concrete mixer and tipper body with various ranges of
engineering products in order to comply with the differentiation strategy
2. The service shall have
Fit service shall be tailored to customer needs
Reliability, the company shall have reliability policy for clients.
these are quality and adequate delivery potential, and long –term
business relationships

II. Place target geographic location is within Ethiopia boundaries

11
III. Promotion: this includes all the advertising and selling efforts of the
marketing plan as with company’s service promotional efforts are guided by a
strategy. Thecompany shall implement pull strategies. Pull strategies are those
efforts that pull clients to the company

IV. Advertising it takes many forms television radio outdoor (billboards), and
magazine and newspaper. The two important to consider are the intended
message and the quantitative measurements of media goals. The company
shall focus to reach clients through TV, newspaper, web page exhibition, etc..

V. pricing he price strategy‘s the proposed project to follow relevant

competitor’s price and industry standard

1.8. Technical study

1.8.1. Location
The plant will be located Gelan town. The promoter will require at least 15
hectares envisaged project site selection is based up on the following criteria.
Proximity to market the project has to be located close to major market center
such as Addis Ababa, proximity to raw material.

The projects major raw material will be imported hence; the project has to be
located in close proximity Addis –Djibouti high way

Availability of infrastructure: the project will required significant amount of

electric power and water hence, the project should be located in a place where
such infrastructure is available.

2. Technology machinery and equipment

2.1. Technology
2.2. Concrete mixers
2.3. Truck mounted concrete mixers

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A truck mountedconcerted mixer or agitator or transient mixer type to mixing
or /and transporting concrete and more particular to an improve mobile mixer
especially arranged to carry the maximum permissible load of concrete on a
moontruck of standard construction.

Concrete on a standard commercialwheel of the truck to the limit permitted of

ruse on the whereby a larger proportion of thewidth of the mixer and its load of
concrete is imposed upon the front wheels of the truck. The arrangement being
such that all of the wheels of the truck are loaded to full capacity, where by the
maximum possible load of concrete may be carried by the truck without
subjecting h high way surface to in furious overloading.

2.3.1.1. Tipper truck

 U – chassis
 5mm thick floor
 4 columns mid 2 column rear
 Tool box
2.2. . Other portable mixers

To perform small size of works there are many types of small portable concrete
mixers .a typical portable concrete mixer uses a small revolving drum to mix
the components .a gasoline engine may power portable concrete mixer,
although it is more common that they are powered by electric motors using
standard mains current

The major components of the mixer and are the following

DRUM

 Head 5mm think

 Shall l5mm thick abrasion –resistant steel
 Shape low profile for fast charging mixing ad discharging
 Lades 4mm thick abrasion –resistant steel
 Lip mixing blades for optimum mixing

13
Drum roller

 Surface hardened 20 cm diameter

 Alloy steel with tapered roller
 Barings with center shaft high – grade lubrication
 Remote central greasing standard

Swing chute /discharge or input

 14cm chute with 8cm fold over and one

 10cm chute side frame mounted
 Liners and additional chute available
 Engine driven curette hoist with
 Control at mixer rear and in cab

Variable chute positioning

 7 position with positive lock. remote central

 Greasing for easy maintenance of dual
 Roller bearings, which can be directly replaced

Gear box

 Two stage drive gearbox with a deep reduction drive

Booster pressurization control

 Adjustable settings to meet both state arid

 Federal highway limits. pressure gauges are
 Located in cab and at valve

Rear ladder

 New ladder design will be done which folds down and angle out for
 Easier ascent by drivers. water plumbed to wash
 Station and at ground level with diversion value

14
Real pendant control

 New ladder design will be done which folds down and angles
out for
 Easier ascent by drivers. water plumbed to wash
 Station and at ground level with diversion value

Rear pendant control

 Real pendant control is optimal equipped with a 25 mobile hard

wire control

Fenders

 Fill width smooth tope steel extra strong fenders with center
bracing extra support
 Each fender ha recessed stop , turn and tail light rear mud
flaps are standard from mud flaps can also fixed

Water tank

 Standard 350 litter side mounted pressurized steel

 Water tank. three position fill hold and release valve for pressurizing
 Water tank. off- set swing away sight gauge with dual shut –off
 Valves wash down hose with pistol grip spray muzzle
 Optional X months

Mixer tank justification and analysis

 Mixer tank blame (m3)-6

 Valid mixing bulimia (m3-10
 Barrel wall thickness -4mm
 Loading speed m3/min )>=3.2
 Discharging speed (m3/min)>=2.2.
 Rest rate (%) -<=1

15
  Mixer speed (rpm)-0.16
 Mixer tank angle : 120
3. Production process

The production process starts with thedesign. Ideas for new model are
developed to respond to unmet public needs and preference. With the help of
computer –aided design equipment, designers develop basic concept drawing
that helps them visualize the proposed vehicle’s appearance

Before proceeding with the manufacturing of a tipper an analysis of the vehicle.

In conjunctionwith therequired payload(size andweight ) should be performed
to establish whether the nominated trailer has the capacity to satisfy
requirements item that must be checked include.

 Axle loads do not exceed the axle capacities

 Distribution of axle loads by the position of the body payload
 Overall dimension of the trailer

The assembly line is designed for a sequential organization of workers tools or

machines and parts. All parts of assemblies are handled either by trolley lifts
with manual trucking to that each worker, typically perform one simple
operation. To faster the production process of the assembly the following issues
need to be considered:

Placing the tools and the men in the sequence of the operation so that
each component part shall travel the least possible distance while in the
process of finishing

Using assembling lines by which the parts to be assemble are delivered at

convenient distance the operation of the factor will be more focused on the
production of mixer and trailers , the assembly procedure will be follows

Step 1; clean the environment and the truck

Step 2: fix the rear and front support for the shell

16
Step 3: out the outer shell as per the drawing, grind and polish

Step 4: roll the cut paces as per the manufacturing know drain

Step 7: weld as per welding direction given

Step 8: fix the round gear and wheel to the shell

Step 9: suspend the shell with crane

Step 10: assemble the shell with front and rear support

Step 11: fix the other remaining parts such as discharge nozzle, elevated
discharge

Step 12: fix the internal spiral bathe and weld as per the drawing

Step 13: mount the engine and calibrate the speed and the load

Step 14: mount the water tanker and fuel tank and make fittings with electrical

Step 15: test the mixer with water. The water will help to estimate feed and
discharge phenomena , capacity of the mixer and load analysis

Step 16: test drive and quality approval as per the design analysis and h
standard given by the nation authorities

Step 17: painting with compressors with 40-60-micron thickness

Step 18: documentation will be made which included manufacturing date ,

purpose for the mixer clients address , serial number , review , validation
and verification

Design

Material pro
linement

Arranging

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 Roll conform dome Truck cut and prepare
frustum and mixing side bar and base
chamber and weld

Drill and punch and fix auxiliary chassis

Fix pipe accessories for
water spray and spiral on the main chassis
mixer with stitch weld

Fix the bolts and tighten, weld if

Paint one coat of anti – required stitch weld
rust and suspend with
overhead crane
Paint red oxide and polish and prepare the
Assemble together place for front and rear support

Fix saddle for the mixers as per the truck

Weld bolt and press it specification and design given (journal / journal
accessories piping and and rear saddle
Fix elevated discharge
hoses
and feed Dry test load test
Documentation
with water and
paint

The production processer for trailer is shown below

Designing

Detailing

Material procurement

Cutting of side boards chases cross

members

Bending of left rear side boards

Bending of auxiliary chases

18
 Fitting of side and rare boards: cross
members rein for cement members’
winches gussets

Welding of joints

Assembly of parts (auxiliary chases with

bottom plate and rare side boards

Sand blasting

Painting

3. Machinery and equipment

The machinery includes among other the following bindingmachine, shearing
machine, at the machine radial drill. Power hacksaw, milling machine and
trading machine most of the machineries can be used for production of other
engineering products including the envisaged project products. Accordingto
perform invoke submitted from machinery and equipment suppliers. The total
cost of machinery and equipment inclusive to all the inland costs at the project
site is estimated to be birr 9 million. The table below depicts the list of
machinery and equipment with respective cost and quantity.

Table 13: list of machinery equipment

Item Description Specification Qyt

1. Bending machine 500 ton 6 mm bend with 6-meter 1
length
2. Shearing machine 12mm cut with 6-meter 1
length
3. Roiling machine 16 mm thickness with 3 1
meters

19
 4. Bench metal Central distance 300mm 1
5. Radial drilling machine Max.50mm 1
6. Power hack saw Size 300mm 1
7. Circular cutting machine Max.30mm 1
8. Horizontal milling machine 1
9. Threading machine 4pipe 1
10. Magnetic drilling machine Max 32mm 1
11. Air compressor 11bar 11
12. ARC compressor 400 A 1
13. MIG welding machine 300A 1
14. Spot welding machine 30kva 1
15. Airless spray painting gun 200-300 CC&6.5-7HP 11
16. Painting spray gun 1
17. Hand drill machine 16mm diameter 1
18. Hand grinding machine 180mm(3PCS)&125MM(2PCS)
19. Flame cutting set
20. Hose crimping machine About 3 “ hydraulic hose
21. Sand blasting machine
22. Forklift 7 ton
23. Overhead crane 10 ton
24. Miscellaneous tolls

4. Land use plan

The required land size is 50,000m2

Description Estimated area in m2

Assembly/ manufacturing /hall 10,000

Store for raw materials 5000

Store for production or finished product 5,300

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 Administration finance building 2000

Show room 5000

Parts ware housed 5000

Paint room 2500

Green area 3000

Parking 5000
Shade 3000
Canteen, change rooms 1000

Inside road 3000

Guard house 200

Total 50,000

4.1. Civil work

The building will be made of steel structure and concrete, the smarted cost
is 13,790,000 of ETB.

4.2. Organization and management

4.2.1. .Organizational structure

The project promoter understands the importance of loyal and enthusiastic
team to reduce turnover and increase productively. Our management
philosophy will encourage responsibility and nutgallrespect. While we will
present a strong decisive management team, we well also foster an
atmosphere of genuine employee appreciation and open communication.
Thefollowing organizational structure will continue to apply

General Manager

Admin and finance Production Commercial Engineering

department department department department
manager

General Service 21
 Cashier
Accountants
Personal head

4.2.2. Man power requirement

The total work force requirement for both the plant and administration has
been estimated to be 2170 persons, 1385 of them are permanently employed
and 758 employed shall be temporary workers

Based on functional requirement of a modem manufacturing plant as shown in

the table below lit some employee with associated labor cost.

Position No Salary /wage Annual cot

General Manager 1 15000 180,000
Vice Manager 5 13000 780,000
Production Manager 10 14500 1,740,000
Secretary 20 2500 600,000
Finance and admins 25 10000 3,000,000

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Marketing and sale 40 10000 4,800,000
Accountants 14 500 84,000
Marketing officer 20 5000 1,200,000
General service 50 4000 2,400,000
Cashiers 20 2500 600,000
Cleaners 50 1000 600,000
Guards 35 1000 420,000
Driver 30 2500 900,000
Production and technique
head 5 10000 600,000
Electrician 10 3000 360,000
Purchaser 10 3000 360,000
Store keeper 20 2000 480,000
Technician 20 3000 720,000
Production Forman 10 5000 600,000
Mechanical engineering 10 7000 840,000
Machine operators 50 2500 1,500,000
Ass. Operators 30 2000 720,000
Supporting stuff 900 2500 27,000,000
Subtotal permanent 1385 121500 50,484,000
Daily laborers 785 1500 14,130,000
Total 2170   64,614,000

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 4.3. Financial study
The financial resource is a prime resource of undertaking any activates hence
for implementing this project a total of 452,350,000eth birr required. From this
70%or 316,645,000 birr will be bank loan and 30% or 135,705,000.000 birr
will be contributed by the promoter of the project.

Therefore, the said amount of finance is needed for undertaking the following

4.3.1. Fixed investment

4.3.1.1. Building and construction

s/n Description Total cost in birr

1 Assembly/ manufacturing/ hall 55,750,000.00

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.       
2 Administration &finance boiling 2,750,000.
.       
3 Show room 2,250,000.00
.       
4 Parts warehouses 3,750,000
.       
5 Paint room 1,150,000
.       
6 Green area 1,600,000
.       
7 Shade 1,750,000
.       
8 Canteen, chine room and shower 2,100,000
.       
9 Inside road 2,160,000
.       
1 Machinery 150,000,000
10 Gourd house 1,250,000
  Sub total 224,510,000
11 Site clearing 3,300,000
12 Working Capital 200,000,000
12 Design and supervision 400,000
13 Water line and electric installation 2,150,000
14 Land lease initial fee 10,500,000
  Sub-total 216,350,000
15 Total 452,350,000

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4.3.2 factory Machineries
The machineries or the plants for these construction materials producing
plants are imported from abroad. The cost required machinery and equipment
for different kinds of product intended to produce with all workshop
accessories and the total machine cost is estimated to be birr. 80,000,000.
based on the current exchange rate.

4.3.3. Vehicles
No Commodity description Qty Unit cost Total cost
1 Truck 18-20m3 3 2,000,000 6,000,000
2 Truck with crane fixed, 3 800,000 2,400,000
10Tone
3 Pick-up car 5 800,000 4,000,000
4 Workers service car, 5 1,000,000 5,000,000
Minibus
Sub total 17,400,000
5 Fob 400,000
6 Shipping 150,000
7 Insurance 220,000
8 Transport from port to 140,000
site
Sub total 910,000
Grand total 18,310,000

4.4. Office Equipment

No Commodity description Qty Unit cost Total cost
1 Managerial tables 4 6,000 24,000
2 Managerial chairs 4 1,500 6,000
3 Computer tables 3 700 2,100
4 Secretarial chairs 2 450 900

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5 Computer with its 4 11,000 44,000
accessories
6 Shelf 4 4,000 16,000
7 Filing cabinet 4 1,500 6,000
8 Guest chairs 16 500 8,000
9 Assembly halls tables 2 800 16,000
10 Assembly hall chairs 20 500 10,000
11 Cash register 2 5,000 15,000
12 TV set 3 5,000 15,000
13 Photocopy machine 1 15,000 15,000
Total 175,000

4.4.1. . Other operating expenses

No List of items Qty Unit of Unit Total cost per year
measure cost
1 Computer paper 10 Pack 45 1450
2 Staples 10 “ 7 270
3 Pens, pencils, and others 20 “ 75 1500
4 Detergents 1000 Pcs 30 30,000
5 Uniforms 20 Pes 200 44000
6 Water 8000
7 Electricity 178000
8 Transportation cost 100000
9 Telephone 12000
10 Fuel 340000
11 Miscellaneous costs 50000
Total 765,220

4.5. Pre-service expense

No Cost of items unit qty Unit Total cost per

27
 cost year
1 Business plan Set 1 4,865 4,865
2 Feasibility study Set 1 14,577.5 14,577.5
3 Environmental impact Set 1 14,577.5 14,577.5
assessment
4 Market study and Set 2 48,615 97,230
processing with suppliers
5 Import processing 2 24,308 48,615
6 License processing 2 24,308 48,615
7 Billboards 2 1,452.5 14,525
8 Management and 10 34,020 34,020
financial manuals and
systems
9 Developing administrative, 1 14,557.50
logistics and financial
formats
Total 291,602.50

4.6. Summary of financial requirement and source of fund

No Description Cost in birr

1 Fixed investment  

1.1 Building and construction 188,460,000

1.2. Machinery 10,350,000

1.3 Office equipment 5,175,000
1.4 Vehicles 18,310,000

Total fixed investment cost 206,338,300

2 Operating expense  
2.1 Raw material purchase 5,160,000
28
 No Description Cost in birr

2.2 Salary expense 7,013,000

2.3 Other operating expense 2,765,097
2.4 Pre-service expense 2,091,602.50
Total operating cost 17,029,700

Total 95,368,000

Contingence (8.52%) 4,642,000

Grand total cost 452,350,000

The contingent costs will used for covering all other costs which are not
stated in the financial summary in addition to price fluctuation. For
example, the salary of the contractual workers, promotional costs and any
other costs which are not visible in the project.

Sources fund; -Source of fund to finance the project is planned to be from two
sources. These are promoter’s equity and bank loan. The loan is expected to be
obtained from one the local lending institutions. Since, the project is expected
to take some times take time to be repay its depts, the bank loan is assumed to
obtain on long term credit basis. Taking the financial position of the promoter
in to account, equity contribution and bank loan to finance the total
investment outlays of the project are assumed to be 30% and 70% respectively.
Accordingly, the total financial requirement from the source will be;

5. Source of fund
No Description %share amount
1 Owners share 30% 135,705,000

2 Bank loan 70% 316,645,000

29
 Total 100% 452,350,000

5.1. Bank loan payment schedule

year principal Interest Total Remaining
10% payment Balance
0 0 0 0 316,645,000
1 31,664,500 31,664,500 101,326,400.00 455,968,800

2 31,664,500 45,596,880 96,260,080.00 405,305,600

3 31,664,500 40,530,560 91,193,760.00 354,642,400

4 31,664,500 35,464,240 86,127,440.00 303,979,200

5 31,664,500 30,397,920 81,061,120.00 253,316,000

6 31,664,500 25,331,600 75,994,800.00 202,652,800

7 31,664,500 20,265,280 70,928,480.00 151,989,600

8 31,664,500 15,198,960 65,862,160.00 101,326,400

9 31,664,500 10,132,640 60,795,840.00 31,664,500

10 31,664,500 5,066,320 55,729,520.00 0

6. Project Assumption
Project basics

Descriptions Days Remark

Working days per 25 days
months
Working days per 300 days
annum
Number of shifts 1
Working hours 8
Concern mixer assembly line

30
Portable concrete mixer 40 Pcs /year
Truck mounted concert 15 Pcs /year
mixer
Tipper body 20 Pcs /year

Product mix % No
Total production capacity in 75
unit
Tipper production capacity 27 20
pcs
Concrete mixer pcs 53 40
Truck mounted concert 20 15
mixers pcs

7. Annual production capacity

Capacity utilization Annual production capacity
Years 1 2 3 4-10
% 70% 80% 90% >100%
Tipper production capacity 20 36 68 136
in pcs
Concrete mixer pcs 40 72 137 274
Truck mounted concert 15 27 51 102
mixers pcs
Louder in Number 250 450 750 1520
Grader in number 150 350 500 1250
Dozer in number 200 420 650 1500

31
Average selling price
Portable concrete mixer 120,000 Per pcs
Truck mounted concert 650,000 Per pcs
mixer
Tipper body 800,000 Per pcs

REVENUE
Products Year 1 Year 2 >year 3
Portable concrete mixer 3,360,000 3,840,000 4,320,000
Truck mounted concert 6,825,000 7,800,000 8,775,000
mixer
Tipper body 11,200,000 12,800,000 14,400,000
Total 21385,000 24,440,000 27,495,000

32
 8. Cost of production
Item Material Measureme Unit Unit Total Total
requirement nt price(bir requireme requireme cost(birr)
r) nt (qty) nt (qty)
Truck mounted
concert mixer parts
Coli form / frusta sheet sqm 964.00 41.50 623.00 600,000.00
conical shell metal .5mm
thick
Dome like head sheet sqm 2.59 39.00 49,632.00
metal .5mm 1,280.00
thick
Mixing sheet sqm 23.50 353.00 405,000.00
chamber/compartm metal .4mm 1,149.00
ent thick
Elevated discharge sheet sqm 9.00 135.00 187,500.00
shell metal .4mm 1,389.00
thick
Fixture, gussets, sheet sqm 2.50 38.00 90,000.00
brackets metal .5mm 2,400.00
thick

33
 Item Material Measureme Unit Unit Total Total
requirement nt price(bir requireme requireme cost(birr)
r) nt (qty) nt (qty)
Bolts and nuts, m16 fine thread pcs 83.00 30.00 450.00 37,500.00
hinges
Support for mixer it is a part with set 5.00 75.00 277,500.00
from cabins side external bearing 3,700.00
and self aligning
The mixer is a set with round set 500.00 75.00 37,500.00
supported at rear gear 5,000.00
support, mixer frame
Drive wheels support the shell set 5.00 75.00 75,000.00
for reduction of 1,000.00
roiling friction
Drive coupling gear type set 5.00 75.00 90,000.00
mechanical 1,200.00
coupling 1 set
Engine set 40,000.0 5.00 300.00 3,000,000.0
0 0
Water tank sheet metal sqm 750.00 20.00 75.00 22,500.00
3mm,4
Piping and fittings set 1,500.0 5.00 263.00 112,500.00

34
 Item Material Measureme Unit Unit Total Total
requirement nt price(bir requireme requireme cost(birr)
r) nt (qty) nt (qty)
0
Tank sheet metal sqm 857.00 17.50 105,000.0 22,500.00
3mm, 0
Level switches, flow set 1.00 7,000.00 18,000.00 105,000.00
rate measuring
devices
Frame RHS100*50*5.12 set 1.00 1,200.00 18,000.00 18,000.00
m
For all from 16m to pcs 56.00 12.00 180.00 10,050.00
24m , 12pcs
each
Set of mechanisms set 2,400.0 1.00 15.00 36,000.00
0
Sub total sqm 5,918,682.
00
Concert mixer sqm -
Conform or frusta sheet metal sqm 964.00 8.30 125.00 120,000.00
conical shell 5mm thick
Dome like head sheet metal sqm 1,280.0 2.50 38.00 48,000.00

35
 Item Material Measureme Unit Unit Total Total
requirement nt price(bir requireme requireme cost(birr)
r) nt (qty) nt (qty)
5mm thick 0
Mixing chamber/ sheet metal sqm 1,149.0 4.70 71.00 81,000.00
compartment 4mm thick 0
Elevated discharge sheet metal Pcs 1,389.0 1.80 27.00 375,008.00
shell 4mm thick 0
Fixture, gussets, sheet metal sqm 2,400.0 0.50 8.00 18,000.00
brackets 5mm thick 0
Bolts and nuts m16 fine thread pcs 83.00 6.00 90.00 7,500.00
hinges
Support for mixer it is a part with set 3,700.0 1.00 15.00 55,500.00
from cabins side external bearing 0
and self-aligning
The mixer is a set with round set 5,000.0 1.00 15.00 75,000.00
supported at rear, gear 0
rear support, mixer
frame

36
 Item Material Measureme Unit Unit Total Total
requirement nt price(bir requireme requireme cost(birr)
r) nt (qty) nt (qty)
Drive wheels support the shell set 1,000.0 1.00 15.00 15,000.00
for reduction of 0
roiling friction
Drive couples gear type set 1,200.0 1.00 15.00 18,000.00
mechanical 0
coupling 1 set
Engine set 40,000. 1.00 15.00 600,000.00
00
Water tank sheet metal sqm 750.00 4.00 60.00 45,000.00
3mm,4
Piping and fittings set 1,500.0 1.00 15.00 22,500.00
0
Tank sheet metal with sqm 857.00 3.50 53.00 45,000.00
3mm
Level switches, flow set 1.00 3,000.00 45,000.00 45,000.00
rate measuring
devices
Frame RHS100*50*5.12 set 1.00 1,200.00 18,000.00 18,000.00

37
 Item Material Measureme Unit Unit Total Total
requirement nt price(bir requireme requireme cost(birr)
r) nt (qty) nt (qty)
m
For all from 16m to pcs 56.00 12.00 180.00 10,050.00
24m , 12pcs
each
Set of mechanisms set 2,400.0 1.00 15.00 36,000.00
0
Sub total 1,297,050.
00
Grand total 7,215,732.
00

38
 As clearly indicated in the project income statement part the project will
return its initial cost soon.

Assumptions

Salary expense increased by 10% after 3rd year, operating expenses

increased by 10% from 3rd year onwards.

Depreciation expense is assumed on straight line method

For equipment life time assumed to be 5 years and rate of dep. 20%
For building with the life time of 25 years with depreciation rate of 5%
For vehicles life 5 years dep. rate of 20%

From the income statement, the promoter of the project has sufficient
amount of money that enable them pays the bank loan with in a short
period of time and expand their investment on additional land of his
interest.

In general, the financial statement the project shows that the project under
discussion will cover its entire investment costs with in short period of time.

8.1. Profitability
According to the projected income statement, the recreation resort will start
generating profit in the 2 nd 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 on increasing
trend during the life of the project.

The income statement and the other indicators of profitability show that the
project is viable.

39
8.2. Pay-back period
The investment cost and income statement projection are used to project
the pay-back period. The projects initial investment will be fully recovered
with in this shows that this project is a long term business.

8.3. Future development and exit strategies

Every business undertaking be it large or small should have to have future
development plan. It is a plain fact that business activities are undertook in
a dynamic and turbulent environment. Hence, to overcome or minimize the
risks of uncertain future business should device effective strategies that
enable them to successful in their operation. Likewise, the envisaged project
has devised strategies to overcome the future risk of operation. The first
strategy is diversification of its activities to different other business forms.
The 2nd future development plan of the project is expanding its branches in
many other parts of the region. The third strategy of the center is making a
joint venture with other similar business undertakings either in the
domestic country or from abroad. The final strategy of the center is selling
to other organization or individuals.

9. Environmental impact of the project

A variety of pollutants are generated during the various manufacturing
steps; these emissions must be controlled to meet their control standards.
Among the pollutants produced in the manufacture are fluorine and lead
compounds, which are produced during firing and glazing. Lead compounds
have been significantly reduced with the recent development of no-lead or
low lead glazes. Fluorine emission can be controlled with scrubbers, devices
that basically spray the gasses with water to remove harmful pollutants.
They can also be controlled by dry processes, such fabric filters coated with
lime. This lime can be recycled as a row material for future tile.

The entire industry is also developing processes to recycled wastewater and

sludge produced during milling, glazing, and spray drying. Already some

40
plants recycle the excess powder generated during dry pressing as well as
the overspray produced during glazing. Waste glaze and rejected tile are
also returned to the body preparation process for reuse.

41
Contents
Executive summary..................................................................................................2

1. Introduction.......................................................................................................3

1.1. Back ground of the project..............................................................................3

1.2. Scope and objective of the project...................................................................4

1.2.1. Scope of the project..................................................................................4

1.3. Objectives.......................................................................................................4

1.4. Marketing study.............................................................................................5

1.4.1. Concert mixers import..............................................................................5

Road development data.........................................................................................8

1.5. Marketing strategy..........................................................................................8

1.6. Generic strategy.............................................................................................9

1.7. The marketing mix..........................................................................................9

1.8. Technical study..............................................................................................9

1.9. Raw material...............................................................................................9

1.8. Technical study...............................................................................................10

1.8.1. Location....................................................................................................10

2. Technology machinery and equipment.............................................................11

3. Machinery and equipment...............................................................................17

4. Land use plan..................................................................................................18

4.1. Civil work.....................................................................................................19

4.2. Organization and management.....................................................................20

4.2.1. .Organizational structure...........................................................................20

42
4.2.2. Man power requirement.............................................................................21

4.3. Financial study.............................................................................................22

4.3.1. Fixed investment.......................................................................................22

4.3.2 factory Machineries.......................................................................................23

4.3.3. Vehicles....................................................................................................23

4.4. Office Equipment..........................................................................................23

4.4.1. . Other operating expenses.....................................................................24

4.5. Pre-service expense...................................................................................25

4.6. Summary of financial requirement and source of fund..................................25

5. Source of fund.................................................................................................26

5.1. Bank loan payment schedule.......................................................................27

6. Project Assumption..........................................................................................27

7. Annual production capacity.............................................................................28

Average selling price............................................................................................28

8. Cost of production...........................................................................................29

8.1. Profitability..................................................................................................32

8.2. Pay-back period............................................................................................32

8.3. Future development and exit strategies.....................................................33

9. Environmental impact of the project................................................................33

43