Project Proposal For Two and Three Wheel Motercycle and Parts

PROJECT PROPOSAL
FOR
TWO WHEEL AND THREE WHEEL MOTOR CYCLE
ASSEMBLY AND PARTS MANUFACTURING PLANT
PROJECT TO BE IMPLEMENTED IN OROMIA REGIONAL STATE JIMMA
TOWN
PRMOTER- WOZAN & AHIMED GENERAL TRADING PLC
September, 2022
Jimma, Ethiopia
TABLE OF CONTENT
TABLE OF CONTENT.................................................................................................................................2
EXECUTIVE SUMMARY........................................................................................................................... 4
1. INTRODUCTION................................................................................................................................. 5
1.1. Background of the Promoter..........................................................................................................5
1.2. Reason for Project Change.............................................................................................................5
1.3. Project Justification........................................................................................................................6
1.4. Objective of the project..................................................................................................................7
1.5. The Socio Economic Significance of the Project.......................................................................... 7
1.6. Location and Premises Required................................................................................................... 9
1.7. Location Map of the Area............................................................................................................ 11
2. MARKET STUDY AND PLANT CAPACITY..................................................................................12
2.1. Market Study................................................................................................................................12
2.1.1. Market Demand................................................................................................................... 12
2.1.1. Past and Present Demand for Two Wheel Motor Cycle in Ethiopia................................... 14
2.1.2. Projected Demand for Two Wheel Motor Cycle................................................................. 15
2.1.3. Marketing Strategy and Promotion......................................................................................16
2.1.4. Market Share........................................................................................................................17
2.2. Plant Capacity and Production Program...................................................................................... 17
2.3. Pricing.......................................................................................................................................... 18
3. TECHNICAL STUDY OF THE PROJECT........................................................................................19
3.1. Product Nature and Description...................................................................................................19
3.2. Raw materials and Input.............................................................................................................. 22
3.3. Production Process and Technology............................................................................................22
3.4. Assembly Process Flow............................................................................................................... 23
3.5. Source of Technology.................................................................................................................. 24
3.6. Machinery and Equipments/Assembly facility............................................................................24
3.7. Project Design and Work............................................................................................................. 37
3.8. Construction and Civil Works..................................................................................................... 37
3.9. Utilities.........................................................................................................................................40
3.10. Project Implementation Plan/ Action Plan...............................................................................41
4. MANPOWER AND ORANIZATIONAL MANAGEMENT.............................................................42
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Project Proposal for Two Wheel and Three Wheel Motor Cycle Assembly and Parts manufacturing Plant
4.1. Organization and Management.................................................................................................... 42

4.2. Man Power................................................................................................................................... 42
4.3. ORGANIZATIONAL STRUCTURE......................................................................................... 44
a. Training Requirement...................................................................................................................... 48
5. FINANCIAL REQUIRMENT AND ANALYSIS.............................................................................. 49
5.1. Total Initial Investment Cost....................................................................................................... 49
5.2. Financial Analysis and Statements.............................................................................................. 50
5.2.1. Underlying Assumption....................................................................................................... 50
5.2.2. Sources of Fund................................................................................................................... 51
5.2.3. Loan repayment Schedule....................................................................................................51
5.2.4. Depreciation Schedule......................................................................................................... 52
5.2.5. Revenue Projection.............................................................................................................. 53
5.2.6. Balance Sheet (Beginning).................................................................................................. 54
5.2.7. Income Loss Statement........................................................................................................ 55
5.2.8. Cash Flow Statement........................................................................................................... 56
5.2.9. Profitability.......................................................................................................................... 57
5.2.10. Pay-Back Period...............................................................................................................57
6. FUTURE DEVELOPMENT............................................................................................................... 58
7. ENVIRONMENTAL IMPACT OF THE PROJECT.......................................................................... 59
II
EXECUTIVE SUMMARY
1. Project name Two Wheel and Three Wheel Motor Cycle Assembly and Parts manufacturing
Plant
2. Project Owner Wozan & Ahimed General trading PLC
3. Nationality Ethiopian
4. Project Location Oromia Regional State, Jimma Town
5. Project Composition To assemble two wheel motor cycle with model with annual capacity of 30,000 per
year at full capacity in phase 1 In Phase 2 - Three Wheel Motor Cycle Assembly
and Phase 3- Parts manufacturing Plant
6. Premises Required The promoter already owned a total of 0.2 hectare, which is equivalent to 2,000M2
7. Total Initial Investment Br. 60,840,010 of which 30% equivalent to Br. 18,252,003 financed by the
Capital owners equity and the rest 70% equivalent to Br. 42,588,007 financed through
bank loan
8. Employment The total manpower required for the plant will be 204 employees at full capacity.
Opportunity
 Permanent workers 181
 Skilled 161
 Unskilled 20
 Temporary workers 23
 Skilled 3
 Unskilled 20
9. Market Share The project will supply 60% of products for Domestic market and 40% for
export (International market) mainly for neighboring countries like South
Sudan, Sudan and Kenya.
10. Benefits of the factory Assembled and supply quality motor cycle, add value to the economy, Source of
For The Region/ Revenue, Employment opportunity, Import substitution and export promotion,
Country Benefit for the Local Community, Stimulate the Local Economy and technology
transfer
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1. INTRODUCTION
In dynamic economic environment, like the one currently exist in Ethiopia, the development of
higher metal industry and supportive manufacturing sector has a great role to make the overall
economic growth to be persistent. In this regard, motor cycle assembly has a great role to make
the economic growth to be persistent.
The government of Ethiopia has a conducive investment polices and guidelines that promote the
private sectors involvement in the economic development through the various investment and
business endeavors.
In this regard, the owner of the envisioned motor cycle assembly plant planned, Wozan &
Ahimed General trading PLC to invest in Jimma Town, carried out this pre-project study to
check the market, technical and financial feasibility of this project. The result of the study is very
sound and promising for the owner to start the project in this area.
The promoter has a good business reputation in two and three wheel motor cycle importing
business. He is very determined to commence the project. Hence, he expects to get the required
support from the Federal and town governments to make the project operational.
1.1. Background of the Promoter
The promoter of the proposed project, has ample business experience in importing and trade
mainly distribution of spare parts for two and three wheel motor cycle. Currently, he needs to
extend his rich business and capital to two wheel and three wheel motor cycle assembly and parts
manufacturing project.
1.2. Reason for Project Change

The main reason to change from mixed use to two wheel and three wheel motor cycle assembly
and parts manufacturing plant;
 Higher capital and employment
 Import substitution and export to east Africa via that the project will generate
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 Promoter related experience in motorcycle and parts
 Current location of the project is more suitable for the proposed project
1.3. Project Justification
Ethiopia has a great economic potential in Africa. The current double digit and dynamic
economic growth in all sectors supports the idea to become a great nation. As components of the
economy, agricultural and construction sectors are growing in the fastest rate. Therefore, there is
a need for parallel growth in other manufacturing industries that have a value chain and pair
(backward and forward) relationship with these sectors to make the growth long-lasting.
In this regard, Motor Cycle Assembling plant would have two basic advantages for the
development of an economy. First it facilitates transport of people and goods cheaply. Second, it
facilitates the process of industrial development through the creation of backward linkages for
the manufacture of parts and components.
Besides, the establishment of a low cost vehicle assembly plant in Ethiopia increases the supply
of and motorized vehicles for personnel as well as for good transport in the urban and possibly in
the rural areas. Such facilities will not only care the transportation current transport problem but
are also expected to bring about some qualitative change in the lives of the population at large.
Since Ethiopia is one of the nation with the least number of vehicles per individuals, the
expansion of vehicle assembly and manufacturing factory has a great impact to alleviate this
problem. Therefore, establishment of motor cycle assembling plant will have a good market in
the country.
In addition to the above facts, the following points further explain the rationales for
establishment for the envisioned plant by the owners.
 The promoter successful business experience in motor cycle business

 High market demand and few plant in this sector
 High population.
 Favorable and attractive investment incentives packages by the governments
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 The government of Ethiopia promising five year growth and transformation development
plan II (2015/16-2019/20), the will bring prosperity to its citizens with collaboration with
private sector investment actions through industrialization.
 Availability of skilled labor force at reasonable price
1.4. Objective of the project

The main objective of the plant is to assembling two wheel motor cycles at reasonable price and
better quality for domestic market and international market.
1.5. The Socio Economic Significance of the Project
The envisaged project deemed to contribute to the economic development of the nation and
region in the following ways:
A. Supply of Quality Assembled Motor Cycle
The project under discussion will provide quality and fair priced assembled Bajaj Motor Cycle
work service for the country market. This will benefits the users to get better product with better
price and durability.
B. Value Add
The establishment of this factory will add a value to the manufacturing sector in specific and in
the economy in general.
C. Source of Revenue
As public policy of any nation, the government collects different forms of taxes from different
business organizations and individuals. Among the different forms of taxes, business income
taxes, VAT and payroll taxes are collected from undertaking business activities. Therefore, the
factory will serve as sources of revenue for both the region and nation in general.
D. Employment Opportunity
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One of the problems that our country faced is unemployment. Therefore, the current objective of
the government is working on tackling the problem of unemployment and fostering the
development process either through creating self employment or employment in other
organization. Hence, this factory will hire around 204 persons.
E. Save the Country’s Foreign Exchange
By minimizing the market gab for Motor Cycle demand and supply, the factory will help to
reduce the nation’s foreign exchange cost to import these materials. This will save the foreign
exchange resource of the nation.
F. Benefit for The Local Community
As a corporate responsibility the company will engage in different development activities on the
surrounding areas (Jimma Town). This will better worth the community and contribute for the
development of the region.
G. Stimulate the Local and National Economy
This factory has positive externality in the zone that will encourage the economic movement of
local economy. Hence, there will be economic relationship and transactions among different
actors.
H. Technology Transfer
By assembled Motor Cycle, the project will train and develops the capacity of the technical staffs.
By doing this, the company will add value in technology transfer for the nation.
I. Will solve transport problem
By assembly two wheel motor cycle, the project will contribute in solving transport problem of
the nation.
1.6. Location and Premises Required
i. Location
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The envisioned project will be located in Jimma town, , which is 355 kms from Addis Ababa.
The main justifications behind the selection of this location are:
 Strategically located to the central and largest market of the nation (Addis Ababa)
 Relatively advanced development in infrastructure (Power, Water, Telephone internet,
road etc.
 All asphalt road to the nearest market outlets
 Availability of huge skilled labor force
 Conducive investment policy and governance
 Environmentally fit for manufacturing industry
ii. Premises Required
The total area of land owned by the promoter for the envisioned project is estimated to be 0.2
hectare, which is equivalent to 2,000 m2. This land planned to use as indicated in table below.
Table 1 Premises Required and Land Use Plan
SN Description Land Requirement(M2) Remark

1 Assembling Hall 1,000.00 Constructed
2 Building (G+4)
2.1 Ground Floor (Finished Product Warehouse) 600.00 To be Constructed
2.2 First Floor (Raw Materials and Input/CKD Warehouse) 600.00 To be Constructed
2.3 Second Floor ( Show Room & Display) 600.00 To be Constructed
2.4 Third Floor (Worker Cafeteria) 600.00 To be Constructed
2.5 Fourth Floor (Office) 600.00 To be Constructed
Total Ground area 600.00
3 Guard House 20.00 Constructed
4 Generator House 15.00 Constructed
5 Loading unloading 250.00 Constructed
6 Parking and Green area 115.00 Constructed
Total 2,000.00
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1.7. Location Map of the Area
2. MARKET STUDY AND PLANT CAPACITY
2.1. Market Study
2.1.1. Market Demand

The market demand for auto products including two wheel motor cycle influenced by the many
factors like the overall fast economic growth, transport subsector growth, and demography.
These factors are explained as follows;
1. Fast Economic Growth
The overall Ethiopian economy has been experiencing dynamic and double digit growth that
experienced annual average growth of 11.4% in past 8 years. According to Ministry of Finance
and Economic Development (MOFED), the forecasted economic growth the economic growth
(GDP at constant basic price) for 2011/2012 is estimated to be 10.4 %. As per the estimates,
annual growth rates of the major sectors, i.e. Agriculture, industry and service were 7.6 %, 10.6
% and 13.0 %; respectively and their shares out of the total GDP were 42%, 13% and 45 %,
respectively. This continuous and a-two-digit high growth would place Ethiopia among the fast
growing countries in the world.
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As sectors of the economy, the agriculture and construction sector also grows with double digit
with the average annual growth 10.31% and 12% respectively in the past 8 years. As shown in
the table below the growth of the sectors directly related with the economy as parts of the
economy.
Table Major Economic Indicators
Trends in Performance of the Economy: Growth Rates (%)
Item 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10

GDP in 1999/00 Prices -2.1 11.7 12.6 11.5 11.5 11.6 10 10.4
Agriculture -10.5 16.9 13.5 10.9 9.4 7.5 6.4 7.6
Industry 6.5 11.6 9.4 10.2 10.2 10.4
O/w: Manufacturing 0.8 6.6 12.8 10.6 8.3 7.1
Construction 13.6 19.5 7.5 10.5 10.9 11.3 11.7 10.9
Services 6 6.3 12.8 13.3 14.3 17
O/w: Banking and insurance 10.8 19.7 24.2 28.7 15.1 24.9 16.5 13.7
Distributive services 5.5 6.4 14.7 14.2 16 15.2
Other services 6.5 6.1 10.9 12.5 13.1 14.2
Real GDP per capita GDP -4.6 10.7 9 8 7.5 7.6
Inflation 15.1 8.6 6.1 10.6 15.8 25.3
Source: MOFED & NBE
This fast growth of these sectors resulted from different bodies like government, non government
and private activities in Ethiopia is growing in the fastest rate. Moreover, the current five years
Ethiopian Growth and transformation plan will expand the economic growth paramount level by
harnessing the resource and expanding industrialization.
When there exist fast economic growth, the economy demands parallel fast growth to the
transport sector. Hence, as one auxiliary components of the transport sector, the demand for two
wheel motor cycle products will increase.
3. Demography
In addition to the economy growth, population is one factor. The rate of growth of the urban
population is increasing from year to year. The latest report of the United Fund for Population
Agency revealed that Ethiopia’s population has reached 73 million in July 2005, which puts
Ethiopia as the second most populous country in Africa. According to the Central Statistics
Authority (CSA), current population growth is estimated to be 2.8% per annum, and the growth
rate is expected to remain above 2% for the next 20 years. Rural population is growing at about
3.0% while the urban population is growing at about 4.3%. Total population is projected to reach
129 million by 2030. In Ethiopia, of the total population, about 16.0% is estimated to reside in
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the urban areas. The trend suggests that the size of urban population is likely to continue to grow
at a high speed in the future. The share of urban population will rise from 16.0% in 2005 to about
23% by 2030. Nearly 30 million of the total 129 million will live in cities and towns by 2030.
In general having a huge population is a potential for any business including two wheel motor
cycle products.
2.1.1. Past and Present Demand for Two Wheel Motor Cycle in
Ethiopia
Bicycles are widely used in developing countries particularly in well-developed cities,
moderately developed urban centers as well as in semi-urban areas for personal transport as well
as movement of light goods. In Ethiopia bicycles are used in most of the urban areas where the
topography is suitable for riding a bicycle.
As there is no a plant which manufactures or assemble bicycles in the country the entire demand
for the product is met through import. According to the data obtained from Ethiopian Revenues
& Customs Authority the bulk of import originated from China and India. Import of bicycles
during the period 2002 – 2011 is shown in the table below
Table Import of Bicycles (Units)
Source: - Ethiopian Revenue & Customs Authority
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As can be seen from the table above, import of bicycles is characterized by fluctuations from
year to year with out a clear trend. During the period 2002--2011 the maximum import registered
was 76,521 units in 2007 while the minimum (19,840 units) was imported in year 2002.
However, during the period under consideration, the average annual import of bicycles was
about 47,937 units.
In the absence of a clear trend in the import or apparent consumption of bicycles, the average of
the recent five years (2007--2011) is assumed to approximate the current effective demand.
Accordingly, the present (2012) demand is estimated at 48,950 bicycles per annum.
2.1.2. Projected Demand for Two Wheel Motor Cycle

The demand for bicycles is related with urbanization, population growth as well as income rise.
According to the National Bank of Ethiopia (NBE) the gross domestic product (GDP) of the
country has registered an average annual growth rate of 11 % during the period 2004- 2010. The
positive performance of the Ethiopian economy is expected to continue in the future. According
to the government’s “Growth and Transformation Plan” during the period 2010 – 2015 the GDP
of the country is expected to grow at a minimum average annual growth rate of 11.4%. Moreover,
urban population growth is estimated at 4%.
Hence, to project the future demand for bicycles a 7% annual growth rate (the average of
expected GDP growth rate and urban population growth rate) is considered. Accordingly, the
projected demand for bicycles using the estimated present demand as a base and applying a
growth rate of 7% is depicted in the table below.
Table Projected Demand For Bicycles (Units)
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2.1.3. Marketing Strategy and Promotion
The company will follow the following promotional methods:
 Electronic Medias
 Advertising(Media, flayer and news paper)
 Public Relations
 Branding( based on the international partner for the company)
The marketing strategy mainly focus on the satisfying the needs, orders and the requirement of
the customers.
2.1.4. Market Share
The project will supply 60% of products for Domestic market and 40% for export (International
market) mainly for neighboring countries like South Sudan, Sudan and Kenya.
2.2. Plant Capacity and Production Program
Considering the gradual growth of demand and the time required to develop the required skill the
rate of capacity utilization during the first, second, third year and fourth year of production will
be 60%, 80%, 90% and 100% respectively, which is 15% of growth annually. Full capacity
utilization will be reached during the fourth year of operation. The plant will operate 300 days
11
per year and one shift system(8 hours) and will assemble 30,000 units of two wheel boxer Bajaj
motor cycles per year at full capacity.
Table 4 Production Programme and plant capacity
Description Year
1 2 3 4_10
Capacity utilization (%) 60 80 90 100
Assembled 2 wheel motor cycle in Unit 18,000.00 24,000.00 27,000 30,000.00
2.3. Pricing
It would be important to examine the possible level of price based on the competitor’s action. In
this connection, the existing average prices of other brand imported motor cycle in Addis Ababa
were assessed for the benefit of comparison. Based on the existing price in the market the project
stetted the motor cycle price for domestic and export market as follows;
Table 5 Pricing of the Plant
Product UOM Price of the project before VAT in Br

Assembled 2WH Motor Cycle in Unit Unit 27,000.00
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3. TECHNICAL STUDY OF THE PROJECT
3.1. Product Nature and Description

Bicycles usually consisting of two wheels fixed to a frame, steered by handlebars, and propelled by
an arrangement of pedals and gears that are driven by the feet. Different types of bicycles are
tailored for different kinds of riding. The term bicycle is sometimes extended to include
riderpropelled three-wheeled tricycles, which are favored by young children and others, who lack
the balance needed to operate a two wheeled bicycle.
Bicycles are very useful and popular simple machines that serve as personal means of transport.
Designed mainly for one man ride (and non sportive use) in this project, the bicycles can also be
made for two people ride and also to carry goods. A carrier is added to the assembly for goods and
people In case of options, the bicycle being free from any fuel input it is cheap to use and preferred
by many people of all ages and income. Bicycles are very popular in many cities of our country
where the landscape of the city is level and free from steep roads.
This envisaged project will assemble two wheel motor cycle with Bajaj brand model for Boxer-s
and BM 150 in phase I.
Boxer-S BM150
Table- Specification of the Motor Cycle
The Boxer BM 150 was the highest displacement "Bajaj Boxer" ever made. The bike had 144.8cc
4-stroke air cooled engine, 130mm drum brakes at both the ends and robust large front telescopic
fork. Bajaj discontinued this bike quite early.
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Bajaj Boxer BM 150 Specifications
GENERAL:
Price Discontinued
Launched 2011
ENGINE:
Engine Displacement 144.82 and 150 CC
Engine Type Air cooled, 4 stroke
Number Of Cylinders 1
Valves Per Cylinder 2
Max Power 12.0 PS @7500 rpm
Max Torque 12.3 Nm @5500 rpm
Bore x Stroke N/A
Fuel Type Petrol
Starter Electric-Kick
TRANSMISSION:
Transmission Type Manual
Number Of Speed Gears 4
Final Drive (Rear Wheel) Chain
WHEELS & TYRES:
Front Tyre (Full Spec) 3.00 X 17
Rear Tyre (Full Spec) 100 / 90 x 17
BRAKES:
Front Brake Type 130 mm Drum
Rear Brake Type 130 mm Drum
SUSPENSION:
Suspension Front Telescopic, 125mm Fork travel
Suspension Rear 100 mm rear wheel travel, SNS shock absorber
DIMENSIONS:
Overall Length 2016 mm
Overall Width 760 mm
Overall Height 1028 mm
Wheelbase 1285 mm
Ground Clearance 190 mm
Kerb Weight 123 kg
Fuel Capacity 11.0 Litres
3.2. Raw materials and Input

The project will employ main raw materials for the assembly of motor cycle is the CKD is
imported from India. .
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The total cost of the inputs and raw materials required for motor cycle assembly at full capacity
is estimated to be Birr 712,800,000.00 as shown in the table below;
Table 6- Total cost of machineries and equipments listed in the table below;
S Description Unit Qty Unit Price in br Total Price in Remark

N measur br.
e
Dismantle main 88% 0f the selling
1 parts/CKD kit set 30,000.00 23,760.00 712,800,000.00 price
Total 712,800,000.00
3.3. Production Process and Technology

The major activities (unit operations) involved in the manufacture of motorcycles are:-
- Unloading crated (CKD Kits)
- Checking contents and storing
- Batching components for sub and final assembling
- Preparing sub-assemblies
. Font wheels - Truing, tyre fitting inflating
. Rear wheels - truing, tyre fitting, inflating
- Final assembly
- Inspection
- Packing
- Storage
3.4. Assembly Process Flow

CKD Assembly Process Flow
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Process Flow - Box Unloading to Assembly Conveyor
3.5. Source of Technology

The machinery, equipment and technology of assembling can be secured from India. In General the
company will use the state of art technology of the time in its two and three wheel motor cycles
assembling from its partnership and branding agreement.
3.6. Machinery and Equipments/Assembly facility

The following are the list of necessary machineries and equipments for the envisioned motor
cycle assembly;
1. Assembly Facility and Overhead Structure
 Motorized Conveyor
 Work station
 Air compressor & reservoir
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 Pin Lines
 Overhead structures
 Adopters
 Air hoses
 Spring balancers
 Rails and trolleys
 Electric lines
 Conveyor Ramp
 Hoists & Manipulators
 FRL units
Assembly Facilities - CKD Unpacking Conveyor
2W CKD Assembly Conveyor with Vehicle Unloading Ramp
 Length of conveyor: 24.0 m
 Assembly line body height: 575 m
 Static bearing capacity: 150 kg / m
 Moving bearing capacity: 100 kg / m
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 Line body dimensions:
 Width: 660 mm
 Height: 600 mm
 Effective width: 500 mm.
 Line speed: 0.8 to 4 m / min
 Pitch: 2.4 m
 Line body stents: 600 x 40 x 2.5 mm flat
Overhead Structure
Overhead structure to accommodate:
 Spring balancer for holding tools.
 Structure for tool handling.
 Rail for hanging tool balancer
 Compressed air lines
 Lightening facilities.
 Electrical fans.
 VCS boards.
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Structure – MS
 Structure length – 26 m
 Structure width – 2.6 m
 Structure height – 3-4
2. Tools and Fixture
 Sub assembly Fixtures
 Main line fixtures
 Tightening tools
 Bits and sockets
 Special tools
 Click Torque wrenches
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Sub Assembly work stations & Fixtures
Battery Charging Facility:
3. Machine Hydraulic (MH) Facilities
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 Fork lift
 Hand pallet truck
 Frame Trolley
 Engine Trolley
 Wheel Trolley
 Muffler Trolley
 Seat Trolley
 Tank trolley
 Kitting Trolley
 Storage rack
 Flexible bin/ crate
 Dock leveler & X lift
 Ramp for Vehicle loading
4. Unpacking & Line supply
Unpacked material Storage: Unpacked material should be stored in crates & Bins.
Material Supply to Line: Material should be supplied to line in dedicated trolleys to avoid handling
damages
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Material Supply to Line: Material should be supplied to line by Hand pallets.
5. Inspection facilities
 Torque wrenches
 Co Analyzer
 Chassis dynamometer
Multi roller test bench
To check the mileage and speed of the vehicle after assembly as per the test standard.
Type - Digital, steel structure with Roller Assembly
 Over all dimensions - Length = ~2300 mm, Width = ~1250mm Installation - In Trench
or on floor
 Report - Individual Display
 Top sheet - M.S steel structure isolated with 3-4 mm Aluminum checked plate
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 Weight – 200-300 Kg. (Approx) Power - 220 volt 5 Amp electric supply, 50 Hz. Vehicle
Cooling - With moveable, high speed Fan.
6. Utilities
i. Compressor
 Type – Rotary screw, Single-stage compression, Oil cooled
 Rated pressure – 102 psi (7 bar)
 Air output – 2.21 m3/m (63 cfm.)
 Air tank capacity – ~0.03 m3
ii. Diesel Generator
 Type – Two cylinder Air cooled
 Power Rating KVA – 18KVA
 No of Phases – 3 & 1
 Output Voltage – 415/230 V
 Frequency – 50 Hz
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 Fuel – Diesel
7. Standards and Procedures
 Process flow diagram
 Quality control process chart
 Operation standard
 Torque standard
 Process and Product parameter check sheet
8. Signage boards
Performance VCS Operation display Operation standard display
Table 7- total cost of machineries and equipments listed in the table below;
SN Description UOM Quantity Unit Price Total Price
in Br in Br.
1 Assembly Facility and Overhead Structure Set 2 1,306,000.00 2,612,000.00
2 Tools and Fixture Set 3 408,581.00 1,225,743.00
3 Machine Hydraulic (MH) Facilities Set 2 1,034,210.00 2,068,420.00
4 Unpacking & Line supply Set 3 185,470.00 556,410.00
5 Inspection facilities Set 2 365,025.00 730,050.00
6 Compressor Set 1 148,210.00 148,210.00
7 Diesel Generator 400kVA Set 1 760,210.00 760,210.00
8 Standards and Procedures Set 5 15,200.00 76,000.00
9 Signage boards Set 20 6,500.00 130,000.00
Total 8,307,043.00
Fright, Insurance, bank charge, transport, installation etc (13%) 1,079,915.59
Grand Total 9,386,958.59
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9. Vehicles
 Truck
 Service Bus
 Pick Up 4 WD
Table 8-Total cost of vehicle
SN Description Qty Unit Price in br. Total Price in br. Remark

1 Pick up 1 1,060,000.00 1,060,000.00 Duty free
2 Mini Bus 1 650,000.00 650,000.00 Duty free
3 Worker Service Bus 2 1,500,000.00 3,000,000.00 Duty free
4 Isuzu Truck 3.5 Ton 2 920,000.00 1,840,000.00 Duty free
Total 6 6,550,000
10. Office equipments
Table 9-Total cost of Office equipments
SN Description Qty Unit cost in Br. Total cost in Br.

1 Managerial Tables with chair 6 10500 63,000
2 Secretarial chairs 2 6000 12,000
3 Office Chairs with tables 35 3500 122,500
4 Computer with its printer 9 15,000 135,000
5 Assembly set 1 65,000 65,000
6 Shelf 8 9500 76,000
7 Telephone and fax machine 4 2300 9,200
8 Filing Cabinets 4 5500 22,000
9 Decoration and others 110,000
10 Miscellaneous Equp. 50,000
Total 664,700
25
26
3.7. Project Design and Work
The proposed project comprises stock of different components to be executed at different phases
of the project life. These activities include: Design and Construction of various buildings
(workshops), importing of machineries, inputs and other raw materials, import of vehicles and
other tasks.
The total cost of pre-service expenses described below;
Table 10- Pre-service expenses
SN Description Total Cost in br

1 Project proposal Study 25,000
2 Promotion and Advertisement 250,000
3 Environmental Impact Assessment 30,000
4 Staff Capacity Building 100,000
5 Licensing fee and others 20,000.00
Total 425,000
3.8. Construction and Civil Works
As indicated in part 1 the total land holding of the project is estimated to be 2,000M2.The
buildings are planned to accommodate assembly houses, office, warehouse (input and finished )
and other utility requirements as well as offices and a social rooms/constructions.
In general the buildings must be capable of being kept clean and provision should be made for
keeping the sewerages drained out properly and room temperature is attained to keep healthy
environment. In most environments, equipment should be totally enclosed in a light structure:
where the climate is suitable. A concrete floor, which can be swept, is usual. Besides, the loading
and offloading areas together with incoming and outgoing roads are proposed to be paved to
ensure a clean environment around the project site. The site will be encircled by a chain linked
fence fastened to concrete posts. The project construction is designed by professional engineers
and construction will be done under close supervision and collaboration of the engineers. The
following are the features of the building;
27
 Building Height - ~7Meter (Clear under Truss)
 Building Floor - Concrete
 Building Floor Load Capacity - 2 Ton/ Sq. Meter
 Building Floor Height - 1.2 mtrs above ground (reference floor.)
 Paved road for Incoming & Out going container / trucks.
 Ramp for unloading container & loading finished good trucks.
 2 Shutters of 3 mtrs wide & 4 mtrs height.
 2 Doors for entry & exit.
 Air ventilation by circulators.
 Separate room for DG set
 Rest & dress change room provision on shop floor.
 Storage & Dispatch
 Container Unloading & Loading Dock: Constructed or fabricated (To be arranged by

distributor)
 Covered Material Storage: Concrete floor & storage layout
CKD Box Unloading facilities: Forklift (To be arranged by distributor)
28
Covered Material Storage: Concrete floor & storage layout
Finished Goods Storage: Covered finished goods storage area
FG Dispatch: Ramp for finished vehicles goods loading to dedicated trucks.
The total cost of Building and construction works listed in the table below;
29
Table 11- Total cost of Building and construction works
SN Description Land Unit cost in Total cost in Remark

Requirement(M2) Br. Br.
1 Assembling Hall 1,000.00 3500 3,500,000.00 Constructed
2 Ground to Fourth 600.00
Floor 5000*5 15,000,000.00 To be Constructed
3 Guard House 600.00 3200 1,920,000.00 To be constructed
4 Generator House 600.00 3100 1,860,000.00 To be constructed
5 Loading unloading 20.00 500 336,000.00 Constructed
6 Parking and Green
area 15.00 250 3,750.00 Constructed
7 Fence and other 300,000.00 Constructed
8 Site Clearing 100,000.00 Done
9 Electric Installation 850,000.00 Done
10 Water line installation 275,000.00 Done
11 Design and
Supervision 500,000.00 Done
12 Initial land lease _ 127,400.00 Paid
Total 24,772,150.00
3.9. Utilities
A number of utilities would be put in place in order to ensure smooth functioning of the factory.
These utilities include:
 Water Supply,
 Supplementary Electricity supply,
 Telephone line
 Fuel
 Oil and Lubricants
 Paved Road Transportation,
 Drainage Facility
3.10. Project Implementation Plan/ Action Plan

The project's implementation is expected to take 1 year. The major activities include Bank loan
processing, construction of the building, cleaning the area around the building, procurement of
30
equipments and start rendering services. The time schedule for the above mentioned major
activities is presented below:
Table 12-Project-Implementation-Schedule
S/N Activities Date

1 Project Approval Jan-19
2 Bank loan processing February –March 2019
3 Building and construction work April 2019- Nov 2019
4 Purchasing of Machines and Equipments Dec-19
5 Production execution Jan-20
4. MANPOWER AND ORANIZATIONAL MANAGEMENT
4.1. Organization and Management
The organizational structure should be in a way that the company able to achieve its objectives as
well as the satisfaction of standard requirement.
4.2. Man Power
The total manpower required for the plant will be 204 employees at full capacity.
 Permanent workers 181

 Skilled 161
 Unskilled 20
 Temporary workers 23
 Skilled 3
 Unskilled 20
At initial stage of the project operation technical expatriate staff will be hired from India.
The total number of manpower, Manpower list, qualification, salary and sex composition are
listed in the table 13.
31
Table 13-Total manpower cost and composition

Position No Qualification Monthly Annual
. Salary Salary in
in Br br.
I Permanent Worker
18,000.0
1 General Manager 1 MSC in Automotive Engineering 0 216,000.00
BSC in Mechanical/Industrial 10,000.0
2 Operational Manager 1 Engineering 0 120,000.00
3 Line managers 2 BSC in Mechanical Engineering 6,000.00 144,000.00
4 Technical Inspector 18 Diploma in Automotive technology 2,500.00 540,000.00
1,680,000.0
5 Senior Mechanic 40 Diploma in Automotive technology 3,500.00 0
6 Electrician 12 Diploma in Electricity 2,200.00 316,800.00
7 Designer 2 BSC in Auto-design 3,500.00 84,000.00
1,320,000.0
8 Junior mechanic 55 10+2 in Automotive technology 2,000.00 0
Head, Administration
9 & Finance Dept. 1 BA in Mgt/Acct 6,000.00 72,000.00
10 Personnel 1 BA in HRM 1,800.00 21,600.00
Head, Commercial
11 Dept 1 BA in Marketing Management 6,000.00 72,000.00
12 Sales & promotion 8 BA in Sales Mgt/Marketing 3,000.00 288,000.00
13 Accountant 3 BA In Accounting 3,500.00 126,000.00
14 Cashier 3 10+3 in Bookkeeping 1,700.00 61,200.00
15 Secretary 2 Diploma in Secretariat science 2,000.00 48,000.00
16 Cleaner 6 Unskilled 900 64,800.00
17 Store keeper 3 Diploma in logistic mgt 2,000.00 72,000.00
18 Purchaser 2 Diploma in supp. & Put. Mgt 2,000.00 48,000.00
19 Guard/Security 8 Basic 1,000.00 96,000.00
20 Driver 6 10 completed + certification 1,500.00 108,000.00
21 Ass. Driver 4 Basic 1,000.00 48,000.00
22 Gardner 2 Unskilled 900 21,600.00
18 81,000.0 5,568,000.0
Sub Total 1 0 0
II Temporary Worker
1 Transit 1 BA in Management & certification 2,500.00 30,000.00
2 Plumber 2 10+2 in Plumbering 1,500.00 36,000.00
3 Laborer 20 Unskilled 1000 240,000.00
Sub Total 23 5,000.00 306,000.00
20 5,874,000.0
Total 4 0
Benefits(20% of Basic 1,113,600.0
Salary) 0
20 6,987,600.0
Grand Total 4 0
32
4.3. ORGANIZATIONAL STRUCTURE
The organizational structure of the project is designed by including all the necessary personnel
under the right division. At the top of the organizational structure, there will be manager with the
responsibility of supervising the overall activity of the plant. Depending up on the nature of the
center and the amount of work to be performs; there exist auxiliary units under the general
manager.
Employees under each unit will be supervised by the department head that is accountable for the
general manager. General Manager is appointed by board of director.
33
Owner
Owner
Audit Inspection
Legal Service
service
Executive General Manager Executive

motor cycles R&D
Secretary Officer
Production
Admin & Finance Commercial
Department
Department Department
Marketing & Sales

Design Section Assembly Inspection & testing
Advertisement
Section Section
Planning HR & Personnel Public relation Finance & General Service &
Procurement Logistics
Fig-Organizational-Structure
34
Hence the following section deals with the duties and responsibilities of some departments.
1. General Manager
Duties and responsibilities
 She/he will plan, organize, direct and control the overall activities of the factory
 She/he will devise policies and strategies that will enable the factory to be profitable.
 She/he will incorporate modern technological innovation that will facilitate the service
delivery of the project center and increase customer’s satisfaction.
 He/he will plan, organize, direct and control the human and non-human resources of the
plant so as to achieve the short and long run objectives of the organization.
2. The Production Department
Duties and responsibilities:-
It is the core department of the project center and has the following responsibilities.
 Design and prepared prototype for motor cycles based on the plant standard and
customer preferences
 Use modern manufacture, processing and technologies that will enhance the quality of
the motor cycles.
 Produce quality product that will enable the plant competent both in the domestic and
international market.
 Use appropriate technology to manage its products.
 Control on the quality of raw materials, inputs, quality of the product and also the overall
production process.
 Produce products in least cost so that the profitability of the center is guaranteed.
 Moreover control over the quality of the final products .
3. Administration and Finance Department
 Will plan, organize direct and control the financial transaction of the plant by using the
entire necessary document.
35
 Will develop sound financial control system by developing modern financial control
systems.
 Will prepare the annual financial statements and prepare condensed reports for the
general manager, owner and other concerned government body.
 Will control the human and non human resources of the plant, which include: effective
handling of the different inventories of the machineries, equipments, raw materials,
finished products, and devise strategies of controlling against fraud and damage.
 Manage and execute the company national and international procurement procedure
 Administer and control the company logistic resource
 Effectively administer the company Procurement process domestically as well as
internationally.
 Manage the public relation of the company/factory with external parties/stakeholders
 Provide and manage general supportive service to the plant.
4. Commercial Department
 Will handle the overall marketing activities of the organization which include planning,
organizing, directing, and controlling.
 Provide cost estimates in preparation for securing ...
 Gather information on new product design, profile
 Approval of new products profile & brand plan analyzes market research.
 Plan and execute sales.
 Will develop effective customer handling strategies
 Will design and implement effective advertisement and promotion schemes
 Will develop the marketing strategies for future project center’s development.
 Conduct both foreign and domestic market research for expanding the sales of the
company
a. Training Requirement
The manufacturing employees of the plant expected to take basic metal and automotive
technology manufacturing skill training for 10 days. In addition training could be given to the
36
mechanic and to the supervisor will also take skill training from one of TVET Colleges or similar
undertaking factories in Addis Ababa.
5. FINANCIAL REQUIRMENT AND ANALYSIS
5.1. Total Initial Investment Cost

The total amount of money that is required to establish the envisaged plant is estimated to be
Birr 60,840,010
Table 14- Total Initial Investment Capital
SN Description Cost in birr

1 Land, Building & Construction 24,772,150.00
2 Machines & Equipments 9,386,958.59
3 Vehicles 6,550,000.00
4 Office Equipment 664,700.00
Total Fixed Investment Cost 41,373,808.59
6 Pre service Expense 425,000.00
7 Initial Working capital 16,144,058.00
Total 57,942,866.59
Contingency (5 %) 2,897,143
Total Initial Investment Capital 60,840,010
Table 15 Annual Utility and other Operating Expenses at full capacity
SN Description Annual Cost in br Assumption Used

1 Property Insurance 620,607.13 1.5 % of fixed Investment Cost
2 Audit & Legal Fee 96,000.00 Br. 8000 per month
3 Worker Uniforms 50,000.00 250 *Br. 200
4 Telephone, fax and postal 78,000.00 Br. 6500 per month
5 Cleaning goods supplies 42,000.00 Br.3500 per month
6 Repair and maintainace cost 1,034,345.21 2.5 % of the Fixed Cost
7 Advertisement 1,200,000.00 Lump sum
8 Stationery and other office supplies 48,000.00 Br. 4000 per month
9 Electricity 375,000.00 1.25*300,000KW per year
10 Water 10,000.00 Br. 2 .*5,000m3 per year
11 Fuel 450,031.00 24326 lit*Br. 18.5 per year
12 Oil and lubricant 45,003.10 10% Oil and lubricants
13 Spare parts 620,607.13 1% of fixed Investment Cost
14 Miscellaneous Expense 180,000.00 Br. 15000 per month
Total 4,849,593.57
37
5.2. Financial Analysis and Statements
5.2.1. Underlying Assumption
The financial analysis of the envisioned plant is based on the data provided in the preceding
sections and the following assumptions.
A. Construction and Finance
Construction period 10 months
Source of finance 30% equity and 70% loan
Tax holidays 2 years
Bank interest rate 10 %
Operating Costs increase by 5% after year 3
Raw materials and wages increase by 5% after year 3
Salary and wages increase by 3 % after year 3
Sales price increased by 5% after year 3
B. Depreciation
Building 5%
Machinery and equipment 20%
Office furniture 20%
Vehicles 20%
Software 25%
38
C. Working Capital
Accounts receivable 30 days
Raw material local 30days
CKD inventory : 25 Days Finished goods inventory : 05 Days
Raw materials, import 90 days
Work in progress 5 days
Finished products 30 days
Cash in hand 5 days
Accounts payable 30 days
5.2.2. Sources of Fund

SN Description % share Amount(in birr)
1 Owners Share 30 18,252,003
2 Bank Loan 70 42,588,007
Total 100 60,840,010
5.2.3. Loan repayment Schedule

Total Annual Remaining
Year Principal Payment Interest (10%) Payment in br. Balance
0 0 0 0 42588007
1 4258801 4258801 8517601 38329206
2 4258801 3832921 8091721 34070406
3 4258801 3407041 7665841 29811605
4 4258801 2981160 7239961 25552804
5 4258801 2555280 6814081 21294003
6 4258801 2129400 6388201 17035203
7 4258801 1703520 5962321 12776402
8 4258801 1277640 5536441 8517601
9 4258801 851760 5110561 4258801
10 4258801 425880 4684681 0
39
5.2.4. Depreciation Schedule

SN Description Original Value In Birr Depreciation rate in % Depreciation Per year
1 Construction and Civil Work 24,772,150.00 5 1,238,607.50
2 Machineries & Equipments 9,386,959 20 1,877,391.72
3 Vehicles 6,550,000 20 1,310,000.00
4 Office Equipment 664,700 20 132,940.00
Total 41,373,809 4,558,939.22
40
5.2.5. Revenue Projection
Based on the price and the capacity program of the factory indicated in previous chapter (chapter 2), the revenue of the plant projected
at full capacity1 is shown in the table below;
Table 18- Revenue projection
Description Year 1 Year 2 Year 3 Year 4_10

Assembled 2WH Motor Cycle
Unit 486,000,000.00 648,000,000.00 729,000,000.00 810,000,000.00
Total 486,000,000.00 648,000,000.00 729,000,000.00 810,000,000.00
1
At third year of Operation
41
5.2.6. Balance Sheet (Beginning)

Asset
Current Asset Value in Br.
Cash 3,322,143
Inventory of raw materials and inputs 16,144,058
Total Current Asset 19,466,201
Fixed Asset
Land, Building and Construction 24,772,150
Machineries and Equipments 9,386,959
Office Equipment 664,700
Vehicles 6,550,000
Total fixed Asset 41,373,809
Total Asset 60,840,010
Liability
Account payable 42,588,007
Owners Equity
Capital 18,252,003
Total Liability & Owners’ Equity 60,840,010
42
5.2.7. Income Loss Statement

Revenue Year 1 Year 2 Year 3 Year 4_10
Sales Revenue
486,000,000.00 648,000,000.00 729,000,000.00 810,000,000.00
Purchase of Raw Material & Inputs 427,680,000.00 570,240,000.00 641,520,000.00 712,800,000.00
Gross profit 58,320,000.00 77,760,000.00 87,480,000.00 97,200,000.00
Expenses
Salary Expense 5,240,700.00 5,590,080.00 6,288,840.00 6,987,600.00
Other Operating Expenses 4,849,593.57
4,849,593.57 4,364,634.22 4,849,593.57
Deprecation Building 1,238,607.50 1,238,607.50 1,238,607.50
1,238,607.50
Deprecation Vehicles 1,310,000.00 1,310,000.00 1,310,000.00 1,310,000.00
Deprecation Machineries & equp. 1,877,391.72 1,877,391.72 1,877,391.72
1,877,391.72
Deprecation office Equip 132,940.00 132,940.00 132,940.00 132,940.00
Interest Expense 4,258,800.69 3,832,920.62 3,407,040.56 2,981,160.49
Lease payment 23,400.00 23,400.00 23,400.00 23,400.00
Total Expense 18,931,433.48 18,854,933.42 18,642,853.99 19,400,693.28
Profit Before Tax 39,388,566.52 58,905,066.58 68,837,146.01 77,799,306.72
Tax(30% ) 20,651,143.80 23,339,792.02
Net Profit 39,388,566.52 58,905,066.58 48,186,002.21 54,459,514.71
43
5.2.8. Cash Flow Statement

Year Year 0 Year 1 Year 2 Year 3 Year 4-10
Equity Capital 18,252,003
Loan principal 42,588,007
Net sale 0 486,000,000 648,000,000 729,000,000 810,000,000
Total cash in flow 60,840,010 486,000,000 648,000,000 729,000,000 810,000,000
Cash payment
Purchase of raw materials 0 570,240,000
& inputs 427,680,000 641,520,000 712,800,000
Pre operating expense 425,000 0 0 0 0
Investment 41,373,809 0 0 0 0
Other Operating cost 0 4,849,594 4,849,594 4,364,634 4,849,594
loan repayment 0 8,517,601 8,091,721 7,665,841 7,239,961
Lease payment 127,400 23,400 23,400 23,400 23,400
Tax payment 0 0 0 20,651,144 23,339,792
Total payment 41,926,209 441,070,595 583,204,715 674,225,019 748,252,747
Cash surplus / Deficit 18,913,801 44,929,405 64,795,285 54,774,981 61,747,253
Cumulative cash flow
44,929,405 109,724,690 164,499,671 226,246,924
44
5.2.9. Profitability
According to the projected income statement, the project will start generating profit inthe 1st 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 an increasing
trend during the lifetime of the project.
The income statement and the other indicators of profitability show that the project is viable.
5.2.10. Pay-Back Period

The investment cost and income statement projection are used to project the pay-back period.
The project's initial investment will be fully recovered within 1.4 years of operation.
6. FUTURE DEVELOPMENT
Every business undertakings be it large or small should have future development plan. It is a
plain fact that business activities are undertook in a dynamic business nature and different
environment. Therefore, the plant will have an expansion phase depending on the condition of
the industry character particularly the following areas;
Phase 2 Three wheel Motor Cycle Assembly
Phase 3 Spare parts Manufacturing
7. ENVIRONMENTAL IMPACT OF THE PROJECT

Currently the issue of environment and envelopment get due emphasis and thus every citizen
called exert their maximum effort for fighting against any negative impacts on the environment
so as to result in a win-win solution on common agenda that is creating environmentally friendly
business environment. The project has some impact on the environment and the independent EIA
report is required.
45

Project Proposal For Two and Three Wheel Motercycle and Parts

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PROJECT PROPOSAL

PRMOTER- WOZAN & AHIMED GENERAL TRADING PLC

4.1. Organization and Management.................................................................................................... 42

2. Project Owner Wozan & Ahimed General trading PLC

4. Project Location Oromia Regional State, Jimma Town

1.1. Background of the Promoter

1.2. Reason for Project Change

 Higher capital and employment

 Promoter related experience in motorcycle and parts

1.3. Project Justification

 The promoter successful business experience in motor cycle business

1.4. Objective of the project

1.5. The Socio Economic Significance of the Project

A. Supply of Quality Assembled Motor Cycle

E. Save the Country’s Foreign Exchange

F. Benefit for The Local Community

G. Stimulate the Local and National Economy

I. Will solve transport problem

1.6. Location and Premises Required

ii. Premises Required

Table 1 Premises Required and Land Use Plan

SN Description Land Requirement(M2) Remark

1.7. Location Map of the Area

2. MARKET STUDY AND PLANT CAPACITY

2.1. Market Study

2.1.1. Market Demand

Item 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10

Source: - Ethiopian Revenue & Customs Authority

2.1.2. Projected Demand for Two Wheel Motor Cycle

Table Projected Demand For Bicycles (Units)

2.1.3. Marketing Strategy and Promotion

The company will follow the following promotional methods:

 Advertising(Media, flayer and news paper)

 Branding( based on the international partner for the company)

2.1.4. Market Share

2.2. Plant Capacity and Production Program

Table 4 Production Programme and plant capacity

Table 5 Pricing of the Plant

Product UOM Price of the project before VAT in Br

3. TECHNICAL STUDY OF THE PROJECT

3.1. Product Nature and Description

Table- Specification of the Motor Cycle

Bajaj Boxer BM 150 Specifications

3.2. Raw materials and Input

S Description Unit Qty Unit Price in br Total Price in Remark

3.3. Production Process and Technology

3.4. Assembly Process Flow

Process Flow - Box Unloading to Assembly Conveyor

3.5. Source of Technology

3.6. Machinery and Equipments/Assembly facility

1. Assembly Facility and Overhead Structure

 Air compressor & reservoir

 Rails and trolleys

 Hoists & Manipulators

Assembly Facilities - CKD Unpacking Conveyor

2W CKD Assembly Conveyor with Vehicle Unloading Ramp

 Length of conveyor: 24.0 m

 Assembly line body height: 575 m

 Static bearing capacity: 150 kg / m

 Moving bearing capacity: 100 kg / m

 Line body dimensions:

 Effective width: 500 mm.