Assemply Plant

Project Profile on the Establishment of
Bajaj Assembling Plant At Modjo
Submitted to: - Oromia Investment Office
Promoter ;- Izamudin Abrar
October,2022
Finfine, Ethiopia
Table of Contents
1.Executive Summary....................................................................................................3
2.Product Description and Application.......................................................................3
3.Market Study, Plant Capacity and Production Program.......................................3
3.1Market Study..................................................................................................................................3
3.1.1Present Demand and Supply...................................................................................................3
3.1.2Projected Demand...................................................................................................................6
3.2Plant Capacity................................................................................................................................7
3.3Production Program.......................................................................................................................7
4.Raw Materials and Utilities.......................................................................................8
4.1Availability and Source of Raw Materials.....................................................................................8
4.2Annual Requirement and Cost of Raw Materials and Utilities......................................................8
5.Location and Site........................................................................................................9
6.Technology and Engineering.....................................................................................9
6.1Production Process.........................................................................................................................9
6.2Machinery and Equipment...........................................................................................................11
6.3Civil Engineering Cost.................................................................................................................12
7.Human Resource and Training Requirement........................................................12
7.1Human Resource..........................................................................................................................12
7.2Training Requirement..................................................................................................................14
7.3Underlying Assumption...............................................................................................................14
7.4Investment....................................................................................................................................16
7.5Production Costs..........................................................................................................................17
7.6Financial Evaluation....................................................................................................................19
8.Economic and Social Benefit and Justification......................................................20
ANNEXES....................................................................................................................23
1. Executive Summary
The project envisages assembling of 5000 Bajaj per annum. The total investment requirement of
the project including the working capital is estimated at about Birr 5.5 million; of which Birr 3
million is for machinery and equipment and around Birr 718 thousand is the cost of the working
capital and. Based on the cash flow statement, the calculated internal rate of return (IRR) and
simple rate of return (SRS) of the project are 23.5 % and 22.6 %, respectively. The net present
value (NPV) at 18 % discounting rate is about Birr 1131 thousand. The plant is expected to
create employment opportunities for about 30 persons.
2. Product Description and Application
A Bajaj is a three wheeled vehicle that is used for human transport. Bajaj s are widely used in
developing countries in both urban and rural areas.
3. Market Study, Plant Capacity and Production Program

3.1 Market Study
3.1.1 Present Demand and Supply

A Bajaj is a very efficient form of personal transport. Some say Ethiopia is not suitable for using
Bajaj s because it is mountainous. But the experience of other countries shows that Bajaj s can
be as popular in mountainous countries as they are in plane countries. The main difference is
that Bajaj s used in mountainous countries can be with different gears. Even in Ethiopia there are
many places where Bajaj s can be used without any difficulty. The ever increasing price of
petroleum is a warning sign that using petroleum consuming vehicle is going to be very
expensive in the future. This requires substituting cheaper means of transport that are least cost
in terms of acquisition and operation. Such type of transport is provided by Bajaj s which are
relatively cheaper to buy and does not require expensive running costs.
3
Bajaj manufacturing would have two basic advantages for the development of an economy. First it
facilitates transport of people cheaply as it does not involve high running and acquisition costs.
Second, it facilitates the process of industrial development through the creation of backward
linkages for the manufacture of parts and components.
Until now the demand for Bajaj in Ethiopia was met through imports. The import of Bajaj has been so
little in the first half of 1990’s while it has shown significant growth in the second half of the past
decade. The import of Bajaj s between 1989 E.C and 1999 E.C is provided in Table 3.1.
IMPORT OF BAJAJ
Table 3.1
Year E.C Imports of Bajaj
2002 18247
2003 9169
2004 21748
2005 10285
2006 13906
2007 19841
2008 30314
2009 74261
2010 52466
2011 536
2012 76522
Total 327,295
Average Import per
29,754
Year
Source: Compiled From CSA’s Import Data of Different Years
As can be observed from the above table, the total import of Bajaj between 2002 E.C and 2012
E.C was 327,295; implies, nearly 30,000 Bajaj s per annum have been imported in the past 11
years. Though this figure is small as compared to the population size of the country, it is an
indication for the existence of some demand for Bajaj that justifies the establishment of Bajaj
4
assembly plant in the country. The ANRS has many places where it is convenient to use Bajaj s.
In fact, compared to other regions of the country, more Bajaj s are used in the ANRS. Bahir- Dar
has more Bajaj s per capita than any urban center in the country. Considering these factors,
establishing a Bajaj assembly plant in ANRS will be viable.
3.1.2 Projected Demand
Basically, the demand for Bajaj is a function of population growth, topography and economic
growth. Of the three factors, economic growth is the most important variable influencing the
demand for Bajaj . Consequently, the rate of economic growth of the country forecasted for the
coming 5 years has been taken to determine the rate of growth of demand for Bajaj . Also, the
average volume of import for the last five years is assumed to be the current effective demand
for Bajaj .
The economy of the country is anticipated to grow by 8 % in real terms for the coming 5 years.
Accordingly the projected demanded in given in table 3.2.
Table 3.2 DEMAND PROJECTION
Year Projected Demand

2015 46820
2016 50565
2017 54611
2018 58979
2019 63698
2020 68794
2021 74297
2022 80241
2023 86660
2024 93593
2025 101080
5
As it is given in the above demand projection table, the demand for Bajaj is expected to reach
68,794 in the 2015 E.C and 101,080 in 2025. And, this figure is reasonable to establish
financially viable Bajaj assembly plant in the country.
3.2 Plant Capacity
This profile envisages the production of roadster model Bajaj s in various adult sizes. The
capacity of the plant in one shift operation and 275 working days per annum basis would be 5000
Bajaj s. The working days are set by deducting all Sundays and public holidays in a year and 25
days for annual maintenance and unexpected interruption of work.
3.3 Production Program
The production program follows gradual capacity utilization due to market and technological
reasons. Market reasons refer to the competition that the firm faces from Bajaj importers while
the technology refers to the speed with which the operators assimilate the process know how.
Accordingly, 50 %, 75% and 100 % capacity utilization are assumed for the first and the second
years of the operation, respectively. The third year onwards, 100 % capacity utilization is
assumed.
4. Raw Materials and Utilities
4.1 Availability and Source of Raw Materials
The raw material requirement of the project has to be met from imports until local ancillary
industries are developed and large scale Bajaj and tricycle production starts in the country.
4.2 Annual Requirement and Cost of Raw Materials and Utilities
6
The raw material requirement is provided in Table 4.1
Table 4.1 RAW MATERIAL REQUREMENT
Cost Birr
Item
F.C L.C Total
1. Bajaj Frame Tubing 115038 49302 164340
2. Rubbing for Bottom 121275 51975 173250
3. Flat Strip and Sheet Steel 103950 44550 148500
4. Lugs and Bottom Bract 180180 77220 257400
5. Components 194040 83160 277200
6. Lugs and Bottom Bract 228690 98010 326700
Total 943,173 404,217 1,347,390
The total cost of raw material would be Birr 1.3 million of which the foreign currency component
is 70 %.The annual cost of utilities amounts Birr 74,600. The annual electrical energy requirement
is estimated to be 126,000 KWH and the annual water requirement is estimated to be 2000 cubic
meters. The corresponding annual costs will be Birr 69,300 and Birr 5,300, respectively.
5. Location and Site
For its convenience for distribution to different parts of the country Ethiopia, Modjo is an
appropriate choice for the Bajaj assembling plant in Ethiopia.
7
6. Technology and Engineering
6.1 Production Process
In general, to assemble Bajaj the following process would be required:
➢ Cutting, forming and bending of steel tubing and sheet
➢ Joining of frame component and forks by welding in jigs
➢ Painting
➢ Baking
➢ Strength testing
➢ Assembly of wheels
➢ Bajaj Assembly
A recent development, has been a legless design using MIG welding techniques and suitable jigs
and futures allowing semi-skilled workers to produce high quality frames efficiently. This design
would eliminate import of lugs and also allow the bottom bracket to be made from a simple
threaded tube. This technique has been adopted for the project under consideration.
Alternatively, instead of using a legless design using MIG welding techniques, the traditional
Bajaj frames have been built using lugs at brazed joints. In this case, the lugs and complex
button bracket (which houses the pedai-axle) should be imported.
8
6.2 Machinery and Equipment
The list of machinery and equipment that are required to assemble Bajaj is given below:
 Power Press and Diers 2sets
 Tube Threading Machine 1”
 Shearing Machine 1”
 Drilling Machine 1”
 MIG Welding Equipment 2”
 Frame and Fork Assembly Jigs 3”
 Phosphatizing and Rinse Tank 3”
 Painting Both With Dipping Tanks 3”
 Baking Oven 1”
 Load Testing Jig 2”
 Grinder 3”
The cost of machinery and equipment would be Birr 3 million including erection and
commissioning fees as well as 20 % local costs.
9
Machinery Suppliers Address:
Diversified Machine, Inc.
307-31st Avenue South,
Waite Park, MN 56387
USA
6.3 Civil Engineering Cost
The building area required by the plant is estimated to be 2700m 2, and it costs Birr 1,500,000.
This would include cost of land preparation and associated civil works. The total land area of the
plant, including the open space, is 2000 m2 and its lease cost equals Birr 109,000. The cost of the
land lease is as per ANRS land lease rate for Modjo which is equal to Birr 84.50 per sq m for
industrial purpose. Of the total cost of the lease 5% is paid in the beginning while the rest will be
paid in 40years.
10
7. Human Resource and Training Requirement
7.1 Human Resource
Details of the manpower requirement of the plant is shown in Table 7.1
Table 7.1
MANPOWER REQUIREMENT
Description No Monthly Salary Annual
(Birr) Salary (Birr)
A. Administration
1. Manager 1 3,0000 360,000
2.Engineers 2 20,000 480,000
3. Supervisors 1 10,000 12,0000
4.Seretary 1 8,000 96,000
5.Slaesman 2 8,000 192,000
6. Cashier 1 6,000 72,000
7. Storekeeper 1 6,000 72,000
8.Guards 3 4,000 144,000
Sub-total 12 153,6000
B. Production
1. Skilled Workers 6 12,000 72,000
2. Semi-skilled Workers 12 6,000

72,000
Benefits (20%) 652,800
30 391,6800
The total annual wages and salary, including 20 % benefits, amount to Birr 391,680.
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7.2 Training Requirement
One month on job training is required for the technical personnel. And this can be managed by
hiring one expert in the area from the technology suppliers. Financial Analysis
7.3 Underlying Assumption
The financial analysis of Bajaj Assembling plant is based on the data provided in the preceding
chapters and the following assumptions.
A. Construction and Finance
Construction Period 2 Years
Source Of Finance 40% Equity and 60% Loan
Tax Holidays 2Years
Bank Interest Rate 12%
Discount For Cash Flow 18%
Value Of Land Based on Lease Rate of ANRS
Spare Parts, Repair & Maintenance 3% of the Fixed Investment
B. Depreciation
12
Building 5%
Machinery And Equipment 10%
Office Furniture 10%
Vehicles 20%
Pre-Production (Amortization) 20%
C. Working Capital (Minimum Days of Coverage)
Raw Material-Local 30 Days
Raw Material-Foreign 120 Days
Factory Supplies In Stock 30 Days
Spare Parts In Stock And Maintenance 30 Days
Work In Progress 10 Days
Finished Products 15 Days
Accounts Receivable 30 Days
Cash In Hand 30 Days
Accounts Payable 30 Days
13
7.4 Investment
The total investment cost of the project including working capital is estimated at Birr 5.5 million
as shown in Table 8.1 below. The Owner shall contribute 40 % of the finance in the form of
equity while the remaining 60 % is to be financed by bank loan.
TABLE 8.1
Total Initial Investment
Items L.C F.C Total
Land
5,450 5,450
Building and Civil Works

1,500,000 1,500,000
Office Equipment
50,000 50,000
Vehicles
0 0
Plant Machinery & Equipment

600,000 2,400,000 3,000,000
Total Fixed Investment Cost

2,155,450 2,400,000 4,555,450
Pre Production Capital
Expenditure* 107,773 227,773
Total Initial Investment

2,263,223 2,400,000 4,783,223
Working Capital at Full Capacity

306,855 411,566 718,421
Total 2,570,077 2,811,566 5,501,644
14
*Pre-production capital expenditure includes - all expenses for pre-investment studies,
consultancy fee during construction and expenses for company‘s establishment, project
administration expenses, commission expenses, preproduction marketing and interest expenses
during construction.
The foreign component of the project accounts for Birr 2.8 million or 51.1 % of the
total investment cost.
7.5 Production Costs
The total production cost at full capacity operation is estimated at Birr 2.7 (see
Table 8.2). Raw materials and utilities account for 52.5 %
15
Table 8.2
PRODUCTION COST AT FULL CAPACITY
Raw Material
Requirement Cost
1.Local Raw Materials 404,217
2.Foreign Raw Materials 943,173
Total Production Cost at full Capacity
Items Cost
1. Raw materials 1,347,390
2. Utilities 74,600
3. Wages and Salaries 391,680
4. Spares and Maintenance 136,664
Factory costs 1,950,334
5. Depreciation 425,555
6. Financial costs
330,099
Total Production Cost 2,705,987
16
7.6 Financial Evaluation
I. Profitability
According to the projected income statement (see Annex 4) the project will generate profit
beginning from the second year of operation and increases on wards. The income statement and
other profitability indicators also show that the project is viable.
II. Breakeven Analysis
The breakeven point of the projects is given by the formula:
BEP = Fixed Cost
Sale –Variable Cost at full capacity.
The project will break even at 27.2 % of capacity utilization

III. Payback Period
Investment cost and income statement projection are used in estimating the project payback
period. The project will payback fully the initial investment less working capital in four years.
IV. Simple Rate of Return
The project’s simple rate of return (SRR) is given by the formula:
SRR= (Net Profit + Interest)/ (Total Investment Outlay) at full capacity utilization.
The SRR would be 22.6 % at full capacity utilization.
V. Internal Rate of Return and Net Present Value
Based on cash flow statement (See Annex 2) the calculated internal rate of return (IRR) of the
project is 23.5 % and the net present value (NPV) at 18 % discount is Birr 1131 thousands.
17
VI. Sensitivity Analysis
The sensitivity test result which undertaken by increasing the cost of production by 10 % still
indicates that the project would be viable.
8. Economic and Social Benefit and Justification
Based on the foregoing presentation and analysis, we can learn that the proposed project
possesses wide range of benefits that complement the financial feasibility obtained earlier. In
general, the envisaged project promotes the socio-economic goals and objectives stated in the
strategic plan of the Amhara National Regional State. These benefits are listed as follows:
A. Profit Generation
The project is found to be financially viable and earns on average a profit of Birr 941 thousand
per year and Birr 9.4 million within the project life. Such result induces the project promoters to
reinvest the profit which, th
18
erefore, increases the investment magnitude in the region.
Tax Revenue
In the project life under consideration, the region will collect about Birr 3.8 million from
corporate tax payment alone (i.e. excluding income tax, sales tax and VAT). Such result create
additional fund for the regional government that will be used in expanding social and other basic
services in the region
B. Import Substitution and Foreign Exchange Saving
As there is Bajaj Assembling Plant in the country, the commencement of this project relieves a
portion of the import burden. That is, based on the projected figure we learn that in the project
life an estimated amount of US Dollar 3.7 million will be saved as a result of the proposed
project. This will create room for the saved hard currency to be allocated on other vital and
strategic sectors
C. Employment and Income Generation
The proposed project is expected to create employment opportunity to several citizens of the
country. That is, it will provide permanent employment to 30 professionals as well as support
stuffs. Consequently the project creates income of Birr 392 thousands per year. This would be
one of the commendable accomplishments of the project.
D. Pro Environment Project
The proposed production process is environment friendly.
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ANNEXES
Annex 1: Total Net Working Capital Requirements (in Birr)
CONSTRUCTION PRODUCTION
Year 1 Year 2 1 2 3 4
Capacity Utilization (%) 0 0 50% 75% 100% 100%
1. Total Inventory 0.00 0.00 561608.53 842412.79 1123217.06 1123217.06
Raw Materials in Stock- Total 0.00 0.00 227831.40 341747.10 455662.80 455662.80
Raw Material-Local 0.00 0.00 22048.20 33072.30 44096.40 44096.40
Raw Material-Foreign 0.00 0.00 205783.20 308674.80 411566.40 411566.40
Factory Supplies in Stock 0.00 0.00 1295.94 1943.91 2591.88 2591.88
Spare Parts in Stock and Maintenance 0.00 0.00 7454.37 11181.56 14908.75 14908.75
Work in Progress 0.00 0.00 32398.47 48597.71 64796.95 64796.95

Finished Products 0.00 0.00 64796.95 97195.42 129593.89 129593.89
2. Accounts Receivable 0.00 0.00 218181.82 327272.73 436363.64 436363.64
3. Cash in Hand 0.00 0.00 25433.45 38150.18 50866.91 50866.91
CURRENT ASSETS 0.00 0.00 577392.40 866088.60 1154784.81 1154784.81
4. Current Liabilities 0.00 0.00 218181.82 327272.73 436363.64 436363.64
Accounts Payable 0.00 0.00 218181.82 327272.73 436363.64 436363.64
TOTAL NET WORKING CAPITAL 0.00 0.00 359210.58 538815.88 718421.17 718421.17
REQUIRMENTS
INCREASE IN NET WORKING CAPITAL 0.00 0.00 359210.58 179605.29 179605.29 0.00
PRODUCTION
5 6 7 8 9 10
Capacity Utilization (%) 100% 100% 100% 100% 100% 100%
1. Total Inventory 1123217.06 1123217.06 1123217.06 1123217.06 1123217.06 1123217.06
Raw Materials in Stock-Total 455662.80 455662.80 455662.80 455662.80 455662.80 455662.80
Raw Material-Local 44096.40 44096.40 44096.40 44096.40 44096.40 44096.40
Raw Material-Foreign 411566.40 411566.40 411566.40 411566.40 411566.40 411566.40
Factory Supplies in Stock 2591.88 2591.88 2591.88 2591.88 2591.88 2591.88
Spare Parts in Stock and Maintenance 14908.75 14908.75 14908.75 14908.75 14908.75 14908.75
Work in Progress 64796.95 64796.95 64796.95 64796.95 64796.95 64796.95
Finished Products 129593.89 129593.89 129593.89 129593.89 129593.89 129593.89
2. Accounts Receivable 436363.64 436363.64 436363.64 436363.64 436363.64 436363.64
3. Cash in Hand 50866.91 50866.91 50866.91 50866.91 50866.91 50866.91
CURRENT ASSETS 1154784.81 1154784.81 1154784.81 1154784.81 1154784.81 1154784.81
4. Current Liabilities 436363.64 436363.64 436363.64 436363.64 436363.64 436363.64

TOTAL NET WORKING CAPITAL REQUIRMENTS 718421.17 718421.17 718421.17 718421.17 718421.17 718421.17
INCREASE IN NET WORKING CAPITAL 0.00 0.00 0.00 0.00 0.00 0.00
Annex 1: Total Net Working Capital Requirements (in Birr) (continued)
Annex 2: Cash Flow Statement (in Birr)
Year 1 Year 2 1 2 3 4
TOTAL CASH INFLOW 2391611.25 3110032.42 2218181.82 3109090.91 4109090.91 4000000.00
1. Inflow Funds 2391611.25 3110032.42 218181.82 109090.91 109090.91 0.00
Total Equity 956644.50 1244012.97 0.00 0.00 0.00 0.00
Total Long Term Loan 1434966.75 1866019.45 0.00 0.00 0.00 0.00
Total Short Term Finances 0.00 0.00 218181.82 109090.91 109090.91 0.00
2. Inflow Operation 0.00 0.00 2000000.00 3000000.00 4000000.00 4000000.00
Sales Revenue 0.00 0.00 2000000.00 3000000.00 4000000.00 4000000.00

Interest on Securities 0.00 0.00 0.00 0.00 0.00 0.00
3. Other Income 0.00 0.00 0.00 0.00 0.00 0.00
TOTAL CASH OUTFLOW 2391611.25 2391611.25 2422301.17 2661193.82 3462163.74 3127253.74
4. Increase In Fixed Assets 2391611.25 2391611.25 0.00 0.00 0.00 0.00
Fixed Investments 2277725.00 2277725.00 0.00 0.00 0.00 0.00
Pre-production Expenditures
113886.25 113886.25 0.00 0.00 0.00 0.00
5. Increase in Current Assets 0.00 0.00 577392.40 288696.20 288696.20 0.00
6. Operating Costs 0.00 0.00 966857.69 1426214.91 1885572.13 1885572.13
7. Corporate Tax Paid 0.00 0.00 0.00 0.00 407632.42 427438.34
8. Interest Paid 0.00 0.00 878051.08 396118.34 330098.62 264078.90
9.Loan Repayments 0.00 0.00 0.00 550164.37 550164.37 550164.37
10.Dividends Paid 0.00 0.00 0.00 0.00 0.00 0.00
Surplus(Deficit) 0.00 718421.17 -204119.35 447897.09 646927.17 872746.26
Cumulative Cash Balance 0.00 718421.17 514301.82 962198.90 1609126.07 2481872.33

Annex 2: Cash Flow Statement (in Birr): Continued
PRODUCTION
5 6 7 8 9 10
1. Inflow Funds 0.00 0.00 0.00 0.00 0.00 0.00
Total Equity 0.00 0.00 0.00 0.00 0.00 0.00
Total Long Term Loan 0.00 0.00 0.00 0.00 0.00 0.00
Total Short Term Finances 0.00 0.00 0.00 0.00 0.00 0.00
Sales Revenue 4000000.00 4000000.00 4000000.00 4000000.00 4000000.00 4000000.00
3. Other Income 0.00 0.00 0.00 0.00 0.00 0.00
4. Increase In Fixed Assets 0.00 0.00 0.00 0.00 0.00 0.00
Pre-production Expenditures 0.00 0.00 0.00 0.00 0.00 0.00
25
5. Increase in Current Assets 0.00 0.00 0.00 0.00 0.00 0.00
6. Operating Costs 1885572.13 1885572.13 1885572.13 1885572.13 1885572.13 1885572.13
8. Interest Paid 198059.17 132039.45 66019.72 0.00 0.00 0.00
9. Loan Repayments 550164.37 550164.37 550164.37 0.00 0.00 0.00
10.Dividends Paid 0.00 0.00 0.00 0.00 0.00 0.00
Surplus(Deficit) 918960.07 951507.53 997721.34 1594099.51 1594099.51 1594099.51
Cumulative Cash Balance 3400832.41 4352339.93 5350061.27 6944160.78 8538260.29 10132359.80
26
Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED
27
Year 1 Year 2 1 2 3 4
Sales Revenue 0.00 0.00 2000000.00 3000000.00 4000000.00 4000000.00
2. Other Income 0.00 0.00 0.00 0.00 0.00 0.00
3. Increase in Fixed Assets 2391611.25 2391611.25 0.00 0.00 0.00 0.00
4. Increase in Net Working Capital 0.00 0.00 359210.58 179605.29 179605.29 0.00
5. Operating Costs 0.00 0.00 966857.69 1426214.91 1885572.13 1885572.13
NET CASH FLOW -2391611.25 -2391611.25 673931.73 1394179.80 1934822.58 1686989.53
CUMMULATIVE NET CASH FLOW -2391611.25 -4783222.50 -4109290.77 -2715110.98 -780288.40 906701.13
Net Present Value (at 18%) -2391611.25 -2026789.19 484007.27 848540.87 997959.96 737398.67
Cumulative Net present Value -2391611.25 -4418400.44 -3934393.17 -3085852.31 -2087892.34 -1350493.67 28
29
PRODUCTION
5 6 7 8 9 10
Sales Revenue 4000000.00 4000000.00 4000000.00 4000000.00 4000000.00 4000000.00
2. Other Income 0.00 0.00 0.00 0.00 0.00 0.00
3. Increase in Fixed Assets 0.00 0.00 0.00 0.00 0.00 0.00
4. Increase in Net Working Capital 0.00 0.00 0.00 0.00 0.00 0.00
5. Operating Costs 1885572.13 1885572.13 1885572.13 1885572.13 1885572.13 1885572.13
NET CASH FLOW 1667183.61 1633711.34 1613905.43 1594099.51 1594099.51 1594099.51
30
CUMMULATIVE NET CASH FLOW 2573884.74 4207596.08 5821501.51 7415601.02 9009700.53 10603800.04
Net Present Value (at 18%) 617577.39 512862.89 429360.44 359399.41 304575.77 258115.06
Cumulative Net present Value -732916.28 -220053.40 209307.04 568706.45 873282.23 1131397.29
Net Present Value (at 18%) 1,131,397.29
Internal Rate of Return 23.5%
31
Annex 4: NET INCOME STATEMENT ( in Birr)
PRODUCTION
1 2 3 4 5
Capacity Utilization (%) 50% 75% 100% 100% 100%
1. Total Income 2000000.00 3000000.00 4000000.00 4000000.00 4000000.00
Sales Revenue 2000000.00 3000000.00 4000000.00 4000000.00 4000000.00
Other Income 0.00 0.00 0.00 0.00 0.00
2. Less Variable Cost 840378.44 1260567.66 1680756.88 1680756.88 1680756.88
VARIABLE MARGIN 1159621.56 1739432.34 2319243.12 2319243.12 2319243.12
(In % of Total Income) 57.98 57.98 57.98 57.98 57.98
3. Less Fixed Costs 552033.75 591201.75 630369.75 630369.75 630369.75
OPERATIONAL MARGIN 607587.81 1148230.59 1688873.37 1688873.37 1688873.37
4. Less Cost of Finance 878051.08 396118.34 330098.62 264078.90 198059.17
32
5. GROSS PROFIT -270463.27 752112.25 1358774.75 1424794.47 1490814.20
6. Income (Corporate) Tax 0.00 0.00 407632.42 427438.34 447244.26
7. NET PROFIT -270463.27 752112.25 951142.32 997356.13 1043569.94
RATIOS (%)
Gross Profit/Sales -13.52% 25.07% 33.97% 35.62% 37.27%
Net Profit After Tax/Sales -13.52% 25.07% 23.78% 24.93% 26.09%
Return on Investment 11.82% 21.58% 23.29% 22.93% 22.57%
Return on Equity -12.29% 34.18% 43.22% 45.32% 47.42%
33
Annex 4: NET INCOME STATEMENT (in Birr):Continued
PRODUCTION
6 7 8 9 10
Capacity Utilization (%) 100% 100% 100% 100% 100%
1. Total Income 4000000.00 4000000.00 4000000.00 4000000.00 4000000.00
Sales Revenue 4000000.00 4000000.00 4000000.00 4000000.00 4000000.00
Other Income 0.00 0.00 0.00 0.00 0.00
2. Less Variable Cost 1680756.88 1680756.88 1680756.88 1680756.88 1680756.88
VARIABLE MARGIN 2319243.12 2319243.12 2319243.12 2319243.12 2319243.12
3. Less Fixed Costs 584815.25 584815.25 584815.25 584815.25 584815.25
OPERATIONAL MARGIN 1734427.87 1734427.87 1734427.87 1734427.87 1734427.87
4. Less Cost of Finance 132039.45 66019.72 0.00 0.00 0.00
34
5. GROSS PROFIT 1602388.42 1668408.15 1734427.87 1734427.87 1734427.87
6. Income (Corporate) Tax 480716.53 500522.44 520328.36 520328.36 520328.36
7. NET PROFIT 1121671.90 1167885.70 1214099.51 1214099.51 1214099.51
RATIOS (%)
Gross Profit/Sales 40.06% 41.71% 43.36% 43.36% 43.36%
Net Profit After Tax/Sales 28.04% 29.20% 30.35% 30.35% 30.35%
Return on Investment 22.79% 22.43% 22.07% 22.07% 22.07%
Return on Equity 50.97% 53.07% 55.17% 55.17% 55.17%
35
36
Annex 5: Projected Balance Sheet (in Birr)
Year 1 Year 2 1 2 3
TOTAL ASSETS 2391611.25 5501643.67 5719825.49 5760401.01 6270469.87
1. Total Current Assets 0.00 718421.17 1091694.22 1828287.51 2763910.87
Inventory on Materials and Supplies 0.00 0.00 236581.71 354872.57 473163.42
Work in Progress 0.00 0.00 32398.47 48597.71 64796.95
Finished Products in Stock 0.00 0.00 64796.95 97195.42 129593.89
Accounts Receivable 0.00 0.00 218181.82 327272.73 436363.64
Cash in Hand 0.00 0.00 25433.45 38150.18 50866.91
Cash Surplus, Finance Available 0.00 718421.17 514301.82 962198.90 1609126.07
Securities 0.00 0.00 0.00 0.00 0.00
2. Total Fixed Assets, Net of Depreciation 2391611.25 4783222.50 4357668.00 3932113.50 3506559.00
37
Fixed Investment 0.00 2277725.00 4555450.00 4555450.00 4555450.00
Construction in Progress 2277725.00 2277725.00 0.00 0.00 0.00
Pre-Production Expenditure 113886.25 227772.50 227772.50 227772.50 227772.50
Less Accumulated Depreciation 0.00 0.00 425554.50 851109.00 1276663.50
3. Accumulated Losses Brought Forward 0.00 0.00 0.00 0.00 0.00
4. Loss in Current Year 0.00 0.00 270463.27 0.00 0.00
TOTAL LIABILITIES 2391611.25 5501643.67 5719825.49 5760401.01 6270469.87
5. Total Current Liabilities 0.00 0.00 218181.82 327272.73 436363.64
Accounts Payable 0.00 0.00 218181.82 327272.73 436363.64
Bank Overdraft 0.00 0.00 0.00 0.00 0.00
6. Total Long-term Debt 1434966.75 3300986.20 3300986.20 2750821.83 2200657.47
Loan A 1434966.75 3300986.20 3300986.20 2750821.83 2200657.47
Loan B 0.00 0.00 0.00 0.00 0.00
7. Total Equity Capital 956644.50 2200657.47 2200657.47 2200657.47 2200657.47
Ordinary Capital 956644.50 2200657.47 2200657.47 2200657.47 2200657.47
Preference Capital 0.00 0.00 0.00 0.00 0.00
Subsidies 0.00 0.00 0.00 0.00 0.00
8. Reserves, Retained Profits Brought Forward
0.00 0.00 0.00 -270463.27 481648.98
38
9.Net Profit After Tax 0.00 0.00 0.00 752112.25 951142.32
Dividends Payable 0.00 0.00 0.00 0.00 0.00
Retained Profits 0.00 0.00 0.00 752112.25 951142.32
39
4
6717661.64
3636657.14
473163.42
64796.95
129593.89
436363.64
50866.91
2481872.33
0.00
3081004.50
4555450.00
0.00
227772.50
1702218.00
0.00
40
0.00
6717661.64
436363.64
436363.64
0.00
1650493.10
1650493.10
0.00
2200657.47
2200657.47
0.00
0.00
1432791.30
997356.13
0.00
997356.13
41
Annex 5: Projected Balance Sheet (in Birr): Continued
PRODUCTION
5 6 7 8 9 10
TOTAL ASSETS 7211067.21 7782574.74 8400296.08 9614395.58 10828495.09 12042594.60
1. Total Current Assets 4555617.21 5507124.74 6504846.08 8098945.58 9693045.09 11287144.60
Inventory on Materials and Supplies 473163.42 473163.42 473163.42 473163.42 473163.42 473163.42
Work in Progress 64796.95 64796.95 64796.95 64796.95 64796.95 64796.95
Finished Products in Stock 129593.89 129593.89 129593.89 129593.89 129593.89 129593.89
Accounts Receivable 436363.64 436363.64 436363.64 436363.64 436363.64 436363.64
Cash in Hand 50866.91 50866.91 50866.91 50866.91 50866.91 50866.91
Cash Surplus, Finance Available 3400832.41 4352339.93 5350061.27 6944160.78 8538260.29 10132359.80
Securities 0.00 0.00 0.00 0.00 0.00 0.00
2. Total Fixed Assets, Net of Depreciation 2655450.00 2275450.00 1895450.00 1515450.00 1135450.00 755450.00
Fixed Investment 4555450.00 4555450.00 4555450.00 4555450.00 4555450.00 4555450.00
Construction in Progress 0.00 0.00 0.00 0.00 0.00 0.00
42
Pre-Production Expenditure 227772.50 227772.50 227772.50 227772.50 227772.50 227772.50
Less Accumulated Depreciation 2127772.50 2507772.50 2887772.50 3267772.50 3647772.50 4027772.50
3. Accumulated Losses Brought Forward 0.00 0.00 0.00 0.00 0.00 0.00
4. Loss in Current Year 0.00 0.00 0.00 0.00 0.00 0.00
TOTAL LIABILITIES 7211067.21 7782574.74 8400296.08 9614395.58 10828495.09 12042594.60
5. Total Current Liabilities 436363.64 436363.64 436363.64 436363.64 436363.64 436363.64
Bank Overdraft 0.00 0.00 0.00 0.00 0.00 0.00
6. Total Long-term Debt 1100328.73 550164.37 0.00 0.00 0.00 0.00
Loan A 1100328.73 550164.37 0.00 0.00 0.00 0.00
Loan B 0.00 0.00 0.00 0.00 0.00 0.00
7. Total Equity Capital 2200657.47 2200657.47 2200657.47 2200657.47 2200657.47 2200657.47
Ordinary Capital 2200657.47 2200657.47 2200657.47 2200657.47 2200657.47 2200657.47
Preference Capital 0.00 0.00 0.00 0.00 0.00 0.00
Subsidies 0.00 0.00 0.00 0.00 0.00 0.00
8. Reserves, Retained Profits Brought Forward
2430147.44 3473717.37 4595389.27 5763274.97 6977374.48 8191473.99
43
9. Net Profit After Tax 1043569.94 1121671.90 1167885.70 1214099.51 1214099.51 1214099.51
Dividends Payable 0.00 0.00 0.00 0.00 0.00 0.00
Retained Profits 1043569.94 1121671.90 1167885.70 1214099.51 1214099.51 1214099.51
44

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Project Profile on the Establishment of

Bajaj Assembling Plant At Modjo

Submitted to: - Oromia Investment Office

Promoter ;- Izamudin Abrar

create employment opportunities for about 30 persons.

2. Product Description and Application

developing countries in both urban and rural areas.

3. Market Study, Plant Capacity and Production Program

3.1.1 Present Demand and Supply

linkages for the manufacture of parts and components.

Source: Compiled From CSA’s Import Data of Different Years

establishing a Bajaj assembly plant in ANRS will be viable.

3.1.2 Projected Demand

Accordingly the projected demanded in given in table 3.2.

Table 3.2 DEMAND PROJECTION

Year Projected Demand

financially viable Bajaj assembly plant in the country.

3.2 Plant Capacity

days for annual maintenance and unexpected interruption of work.

3.3 Production Program

4. Raw Materials and Utilities

4.1 Availability and Source of Raw Materials

4.2 Annual Requirement and Cost of Raw Materials and Utilities

Table 4.1 RAW MATERIAL REQUREMENT

1. Bajaj Frame Tubing 115038 49302 164340

2. Rubbing for Bottom 121275 51975 173250

3. Flat Strip and Sheet Steel 103950 44550 148500

4. Lugs and Bottom Bract 180180 77220 257400

5. Components 194040 83160 277200

6. Lugs and Bottom Bract 228690 98010 326700

Total 943,173 404,217 1,347,390

5. Location and Site

appropriate choice for the Bajaj assembling plant in Ethiopia.

6.1 Production Process

In general, to assemble Bajaj the following process would be required:

➢ Cutting, forming and bending of steel tubing and sheet

➢ Joining of frame component and forks by welding in jigs

button bracket (which houses the pedai-axle) should be imported.

 Power Press and Diers 2sets

 Tube Threading Machine 1”

 MIG Welding Equipment 2”

 Frame and Fork Assembly Jigs 3”

 Phosphatizing and Rinse Tank 3”

 Painting Both With Dipping Tanks 3”

 Load Testing Jig 2”

commissioning fees as well as 20 % local costs.

Diversified Machine, Inc.

307-31st Avenue South,

Waite Park, MN 56387

6.3 Civil Engineering Cost

Description No Monthly Salary Annual

(Birr) Salary (Birr)

1. Manager 1 3,0000 360,000

2.Engineers 2 20,000 480,000

3. Supervisors 1 10,000 12,0000

4.Seretary 1 8,000 96,000

5.Slaesman 2 8,000 192,000

6. Cashier 1 6,000 72,000

7. Storekeeper 1 6,000 72,000

8.Guards 3 4,000 144,000

1. Skilled Workers 6 12,000 72,000

2. Semi-skilled Workers 12 6,000