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1. Tel: 09 85 59 59
HENOK WORKU
Auto Body
Assembly Project
Proposal
A Project Proposal for
Manufacturing and Assembling
Heavy duty car Bodies and Spare
parts
ADD: Nefas silk lafto, Around Mekanisa Michael
Tel: 09 11 46 85 02

2. Henok Worku Tel: 09 11 46 85 02 1
1. Executive Summary
Henok Worku car bodies manufacturing and assembly private business
was established before 10 years in 2004 E.C, in sole proprietorship basis.
The main product’s and service’s of the company is The demand of the
related products has increased in high amount as the manufactured
products in our company are constituent of vehicles; the main way of
transportation all over the world in our case from different parts of
neighbouring countries to Addis Ababa and from Addis Ababa to there.
Before establishing his own venture Mr. Henok Worku was working in
other auto body manufacturing and assembling companies for more than
8 years. After gaining enough experience of auto body manufacturing and
assembling he decided to establish his own same business venture.
The products of the company are auto bodies, vehicle spare parts, high
bed, low bed, pin, push and etc. The raw materials which are used for the
manufacture of these products are metal sheet, electrode and round bar.
which are mainly manufactured and purchased locally but, most of the
products, which are manufactured after obtaining the raw material are
import substitute products.
The intention of this feasibility study is to expand an existing vehicle
assembly; upgrading business by using present technological
advancement to fulfill the huge demand gap that exists and to change the
common traditional manufacturing method in order to grow the company
more financially and use the current technological supplements. The
another aim of the company is to be the leading indigenous car assembler.
The company is using the currently available machines in it’s workshop,
but this makes a limit, while delivering the services because with the
available machines, one can only reach limited number of customers and
will consume much delivery time. This makes the manufacturer to loose
the customers and it disabled the company to offer the services faster.
Heavy duty vehicles are the main way of transporting all the necessary
goods/ products from and to the capital and the countrysides. The demand
for such products is always increasing, because the urban population size
of Ethiopia has increased at a rate of 2.21% in 2021, which means they all
consume the imported products such as fuels, medicines, food products,
vehicles and machinery’s and etc, this products need to be transported all
the way to the capital using such transportation from ports. The local
producer(farmer who is living in the countryside), merchants(the people

3. Henok Worku Tel: 09 11 46 85 02 2
who buy and transport the agricultural products from the farmers), they
both use the transportation method to exchange the products.
The increase in production of trucks and buses are is due to rising
demand for freight and passenger transport. According to analysis by
OICA publications, global truck market is valued at USD 809.46 billion
in 2020 is expected to grow at CAGR of 7.5% in the next five years till
2026.
Ethiopia’s automotive market is dominated by second hand imported
vehicles, particularly commercial vehicles. These are the country’s
highest earning automotive export. The rise in price of these
products(second hand vehicles) have been witnessed due to high import
duties and limited supply of vehicles. Thus one can be benefited if he/she
is engaged in the in the manufacture and assembly of auto parts, by
replacing the damaged auto parts, because the rise in the price of vehicles
has made the users to use the old ones by renewing them and one has to
be a good assembler to be a competent and leader in the field.
The general objective of company to be a better car body manufacturer
and assembler in the capital by continuously supplying it’s quality
services and satisfying it’s customers and attracting and being one of the
choices in the capital city. The another aim of the company is to
contribute to the country’s GDP by supporting the governments
industrialization goal and also creating employment opportunity to the
individuals. This project expansion is expected to create employment
opportunity for 9 individuals.
The specific objectives of our company is to manufacture and assemble
car spares that are currently being imported from the foreign markets by
producing them locally, which has a better quality and service life than
the imported ones. This in-turn saves foreign currency which is spent to
import the low quality products and eliminates the hustle that the user of
the vehicle owners has to go through by supplying them a quality and the
spares that has a high service life.
This profile envisages the expansion, machinery and financial needs of
currently operational spare and body manufacturing company which is
located in Addis Ababa. Both the primary and secondary data are utilized
to analyze the market condition for vehicle spare industry which are
mainly used for the replacement of heavy duty cars.

4. Henok Worku Tel: 09 11 46 85 02 3
The total investment requirement for the expansion of the company is
estimated 5,743,200Birr out of which 3,150,000Birr 63.72% is expected
to be covered by loan which is mainly used for the purchase of necessary
machinery and the remaining 1,943,200Birr, 36.27% is expected to be
contributed from the owner of the company.

5. Henok Worku Tel: 09 11 46 85 02 4
2. BACKGROUND AND OBJECTIVES
2.1 About the Owner
Mr. Henok Worku Beyene has been working by being hired in the car
spare manufacturing and assembling ventures for more than 8 years
before establishing his own car spare manufacturing and assembling
company, this has give him the chance to gain experience and expand his
knowledge. He established his own venture in 2004 E.C, this has made
him to enjoy to gain more knowledge and the freedom of working
environment that it gives to one as it makes more creative, risk taker and
problem solver when he is working by himself more than being
employed.
Currently, his company has created a job opportunity to more than 15
individuals. He has a total capital estimated 6 million Ethiopian Birr with
only this business.
2.2 Rationals for expanding the Business
Some of the main reasons for expanding the car body manufacturing and
assembly company, rather than following the traditional way of
manufacturing and assembling parts are:
 To manufacture import substitute products that are better both in
quality and price with that of imported one, by following standard
production method and using high quality raw materials.
 Manufacturing more spares that are demanded by the customers and
by using additional machines that will be available to him in loan
 Introducing new manufacturing method by eliminating the traditional
way of manufacturing by intensive use of technology and knowledge,
thus there will be a technology transfer which is beneficial both for
individuals who are working in the company and the country.
 To contribute to the GDP of the country by manufacturing imported
products locally.
 To create employment opportunity for both literate people and skilled
workers.
 To eliminate the accidents that are occurred due to bad spare that are
replaced in place of the damaged ones by providing quality spares
that will long last.
 Being choice of more customers as manufacturing quality spares in
the area minimizes more risk.
 Resolving the delay that is occurring while delivering the service/
products by reaching more customers at a time, as the currently
available machinery can handle a limited number of customers per
day.

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 Solving the delay that occurs, due to shortage of foreign currency and
the time it takes for shipping such products.
 The current policy of the government is encouraging for the
manufacturing sector.
 The owner of the company having long years of experience and the
company is grateful for its previous works.
 To increase the income of the owner.
2.3 Vision Mission and Strategy
The expanded company with the vision which support it to reach it’s goal
as a company and individual and helps in the growth of the country’s
economy by creating employment opportunity to more individuals; it also
states it’s mission in order for it’s employers to work their duties in order
to achieve the goal of the company and the strategy is also planned in a
way that it will offer quality service and satisfy customer needs.
VISION
To be one of the best car body and spare manufacturers in the capital; all
over the country and more over to the neighbouring countries as heavy
duty vehicle work is border crossing.
MISSION
Being the choice of its customer by providing risk free quality spares that
will last long and delivers its services/ products faster, being choice of its
employees by being a good employer that will update its services and
products with technology thus creating a working environment to its
workers in order to catch more knowledge and experience.
STRATEGY
1. Focus on producing quality products in order to catch more markets.
2. Focus on the majority of the market.
3. Drive growth by continually improving products, processes and sell at
competitive and reasonable prices.
2.4 Purpose of the project
This is a study for the expansion of vehicle body and spare manufacturing
and assembly. The general objectives of this project are:
 Growing the potential of the company by making purchase of
necessary machines which help it to expand it’s products and
manufacturing its products in high amount to reach more customers
eliminating the time delay that it takes.
 Manufacturing import substitute products locally that have better
quality and are better in price than from imported ones.
 Creating employment opportunity for skilled and unskilled citizens.

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 Being a leader in the industry by using most appropriate technology
and process in the field.
 Regulating the market price by fulfilling the high demand gap and
save consumers from unreasonable price added on the product
 To alleviate the existing shortage of the product.
 To contribute to the GDP of the country.
 Eliminating the old traditional method of manufacturing by using
present technology advancements.
2.5 Beneficiaries
Primarily the project benefits the customers who use the products of the
company as heavy duty trucks are exposed to risk than most of vehicles,
one can be benefited by identifying the problem in the sector and creating
solutions and minimizing risks that will occur due to use of low quality
spares. The owner of the company is also going to be benefited as he
project generates revenue and the country is also benefited by reduction
of amount of currency it has to invest to import those products and it
contributes to the GDP and generates good amount profit tax. Apart from
that, individuals who will be employed and by gaining new
manufacturing skills and it also benefits all the users of the products by
saving their money from being spent on imported expensive products.

8. Henok Worku Tel: 09 11 46 85 02 7
3. PRODUCT AND SERVICES OF THE PROJECT AND
THEIR APPLICATION
There are much same business ventures offering such services but they
only make replacements, by purchasing the imported spares from the
market; they do not manufacture the spares by themselves. This will
create inaccuracy and the imported spares aren’t of good quality. The
products and services of the company are heavy duty vehicle spares, pins,
car bodies, high bed, low bed, bushing and etc.
When vehicles stopped services they will not be discarded, but some of
their parts replaced to make them fully functional as before. Most of their
parts came with replacements; parts that will be replaced over and over
again are called vehicle spare parts/ the main parts of the car. If one of
these parts is damaged our vehicle will not function well.
The Clutch
The clutch in manual transmission system allows the driver to smoothly
change gears by acting as a mechanical link between the mechanical link
and gearbox. Therefore it is a key component to disconnect the engine
from the transmission system.
A damaged clutch could cause extensive damages on the truck’s
transmission, which would result in poor truck performance. Unlike
passenger cars, trucks and industrial vehicles experience clutch failure
due to clutch discharging and overloading. To prevent premature
replacement of this component, smooth driving and effective
maintenance must be in place.
The Brake Pads
Without brakes, a truck has no control what’s over. Brake pads are core
component of truck’s breaking system and they tend to wear out,requiring
more and more replacements as the trucker gets bigger. This is because
larger trucks take more brake power to slow down and stop.
On most heavy duty vehicles, replacement is expected every 3 to 5 years.
However this largely depends on driving style, driving paths and the
amount of stop and go traffic the truck drives in. But in a country like as,
where there isn’t enough infrastructure is built maintenance time interval
is short. Most trucks are maintained and their parts are replaced every 3
months. Avoiding fast stops has been shown to extend brake pad life, but
regular checks should always be in place.

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King pins
King pins, the bushings that encircle them, and their related components
are essential for proper steering. The king pin on a truck connects the
steer axle to the steering knuckle, supporting the steering geometry and
allowing the wheel ends to turn the vehicle. These hefty steel pins work
in tandem with the bushings to handle intense forces while keeping the
knuckle in proper alignment.
Signs of king pin wear or damage include uneven front tire wear,
incorrect vehicle alignment, and a pull in the steering. If a worn king pin
is ignored, or a repair is not completed thoroughly, the result can be
costly structural repair. For example, a loose king pin in an axle can
eventually necessitate replacing the entire axle. Especially when
managing a fleet, costs like that accumulate quickly. There are two main
causes of king pin wear: poor maintenance practices and damage due to
an accident. However, by far the most frequent cause for king pin wear is
lack of maintenance.
With proper maintenance, a layer of grease ensures that the king pin does
not make contact with the bushings. Less-than-ideal grease intervals or
use of the incorrect grease will cause the protective layer of grease to
break down, and the interior of the bushing will begin to erode due to the
metal-on-metal contact. Maintaining proper lubrication is the key for the
long life of the parts and the system overall.
In addition to regular lubrication, it’s a good idea to check for steer axle
king pin problems every time a truck is on a lift. Use a dial indicator to
check for end play and keep a log of the findings. This end-play log will
serve to indicate when part replacement becomes necessary, and it can
help prevent premature tire wear. That’s because a worn king pin allows
for too much end play in the tires; it’s much more efficient to detect a
worn king pin by keeping a log than by observing fast-wearing tires.
Even with correct maintenance, king pins are not indestructible. A king
pin will likely need to be replaced one time in the lifespan of a truck. If
part replacement is called for, a king pin kit that is specific to the axle
model—and that contains all the components required to refurbish the
axle and the steering knuckle—can help with this demanding task.
Replacing all of the worn parts at the same time, including the bushings,
seals, shim pack, thrust bearings, and king pins, will help avoid further
downtime later.
King pin wear is inevitable, but following preventive maintenance
practices will prolong part life. By adhering to regular grease intervals,

10. Henok Worku Tel: 09 11 46 85 02 9
tracking end play, and replacing worn parts promptly, you can reduce
downtime, save money, and calculate future repair needs.
High bed and low bed trucks
High bed truck is a truck having a high working platform, it ranges on
1400mm-1650mm and that of low bed is a truck having a platform of
within range of 400mm-1200mm. They later is used to transport
containers and vehicles, the second one is used to transport electronics
and machinery. They are consists of carbon steels and stainless steels.
The availability of the raw materials that are used in the manufacture of
such products in the local market makes the manufacturing and
assembling process easier and cheaper.

11. Henok Worku Tel: 09 11 46 85 02 10
4. MARKET STUDY
Before assessing the market situation of the product under discussion, it is very
important to discuss different concepts of marketing. Marketing encompasses a
diverse set of discussion and activities performed by individuals; both by
business and non-business organizations.
In general, it is the process of planning promotion and executing the conception,
pricing, promotion and distribution of ideas, goods and services to create
exchange that satisfy individual and organizational objectives.
To make the best use of its resources, advantages and meet its objectives, it is
necessary to design a marketing strategy accordingly:
- Target markets will be selected
- Appropriate marketing mix i.e products, price, promotion and distribution
will be developed.
In identifying its target markets, the company will direct its attention towards a
particular portion or segment of the total market for the products. In going so, it
will adopt market segmentation approach. After identifying the markets, it is
important to select a pricing method to reach that goal. The known method of
pricing are:
- Cost based pricing
- Demand based pricing and
- Competition based pricing
In setting prices, two factors are important. The first is recognition that
the market and not firm’s costs, ultimately determines the price at which
a service or a product will sell. The second is awareness that cost and
expected sales can be used only to establish some sort of price floor, the
minimum price at which the firm can sell it’s services or product without
incurring loss. Therefore taking these facts in minimum cost based and
competition based pricing methods will be adopting in setting the prices
of the targeted products.
4.1 Global Truck Body and spare Demand and Supply
The motor vehicle parts market consists of sales of motor vehicle parts
and related services by entities (organizations, sole traders, and
partnerships) that produce motor vehicle gasoline engines and engine
parts, motor vehicle electrical and electronic equipment, motor vehicle
steering, and suspension components (except springs), motor vehicle
brake systems, motor vehicle transmission, and power train parts, motor
vehicle seating and interior trim, motor vehicle metal stampings, and
other motor vehicle parts and accessories. This market includes sales of
rebuilt motor vehicle parts. This market includes sales of both new and
used vehicles.
The main types in motor vehicle parts are motor vehicle body, stamped
metal & other parts, motor vehicle engine, power train & parts, motor

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vehicle electrical & electronic equipment, steering suspension, & interiors.
The motor vehicle body refers to the parts of the motor vehicle that help
in certain functions they perform. The various applications include
passenger vehicles, commercial vehicles. These are used in OEM and
aftermarket.
The global motor vehicle parts market size is expected to grow from
$2,336.07 billion in 2021 to $2,572.01 billion in 2022 at a compound
annual growth rate (CAGR) of 10.1%. The global motor vehicle part
market is expected to grow to $3,638.77 billion in 2026 at a CAGR of
9.1%.
Advances in technology are expected to be a continued driver of motor
vehicle parts manufacturing market growth in the forecast period. The
global transport manufacturing industry has experienced many
technological advances in the last decade and this trend is expected to
intensify. According to Forbes, the ten new features to expect in vehicles
by 2020 include autonomous driving, driver override systems, biometric
vehicle access, comprehensive vehicle tracking, active window displays,
remote vehicle shutdown, active health monitoring, four-cylinder
supercars, smart and personalized in-car marketing and reconfigurable
body panels. These innovations are expected to drive the motor vehicle
parts manufacturing market during the forecast period.
The outbreak of the Coronavirus disease (COVID-19) has acted as a
massive restraint on the motor vehicle parts manufacturing market in
2020 as supply chains were disrupted due to trade restrictions and
consumption declined due to lockdowns imposed by governments
globally. COVID-19 is an infectious disease with flu-like symptoms
including fever, cough, and difficulty in breathing. The virus was first
identified in 2019 in Wuhan, Hubei province of the People's Republic of
China, and spread globally including Western Europe, North America,
and Asia. Transportation manufacturers depend heavily on the supply of
parts and components from different countries across the globe. As many
governments restricted the movement of goods across countries,
manufacturers had to halt production due to a lack of parts and
components. Also, sales of new automobiles decreased significantly due
to a decline in consumer demand as many countries impose lockdowns.
The outbreak is expected to continue to harm businesses throughout 2020
and into 2021. However, it is expected that the motor vehicle parts
manufacturing market will recover from the shock across the forecast
period as it is a 'black swan' event and not related to ongoing or
fundamental weaknesses in the market or the global economy.
The demand for electric vehicles is increasing rapidly and this is expected
to disrupt the automotive value chain. Engines of electric vehicles are less

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complicated than their gasoline counterparts, thus requiring fewer
replacement parts over the lifetime of a car. Electrification of cars also
means that components such as air-conditioning units, water pumps,
brakes, and steering systems will need to be adapted and designed to meet
the requirements of electric cars. Since electric vehicles are manufactured
with one-third the number of internal combustion engine (ICE) cars'
components, less collaboration will be required between an automaker
and parts suppliers. This will decrease vehicle-to-component calibration,
thus allowing parts suppliers to develop products with more autonomy.
According to a report by EY firm, electric vehicles transformation in
India may affect existing automobile spare part sales as EVs are built
with 20 moving parts while vehicles equipped with internal combustion
engines have around 200 spare parts.
4.2 National Truck Body and spare Demand and Supply
Ethiopia’s vehicle market in 2021 has grown by 3.8% leading year to date
sales at 1094 units. It is dominated by second hand imported vehicles
particularly commercial vehicles. Commercial vehicles were Ethiopia’s
second valuable import overall, worth $955 million. On the other hand,
commercial vehicles are also Ethiopia’s highest earning automotive
export.
This can be largely be attributed to Bishoftu Automotive Industry(BAI),
an automotive manufacturing and assembly company run by Ethiopian
military. BAI specializes in assembling, overhauling, upgrading and
localizing buses,pick-ups, SUVs, trucks and military equipment's.
The factors that are increasing the demand for automotive industry are
increased population, growth of manufacturing and trade sector which
both need transporting their necessary items with the help of vehicle,
increased purchasing power, stringent government regulations regarding
the vehicle emission level, and the increasing standard of living of the
citizens in the country.
According to 2016 population and housing census, the urban population
growth rate in Ethiopia is 4.79% per year, which leads to increasing
demand for transportation; The construction sector has raises at a rate of
3.1% in the past year 2020 and is expected to grow by 4.7% in 2021.
Thus, construction sector is thought to be the main consumer of
automotive products.

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The country has the lowest motorization rate globally, with only two cars
per 1,000 inhabitants. Recent report estimates that in 2019 there were
175,000 vehicles in use, of which 100,000 were passenger vehicles and
65,000 were commercial vehicles. Between 2010 and 2020, total vehicles
in use grew at CAGR of almost 2.1%. according to Ethiopia’s ministry of
Transport approximately 84% of the market is passenger vehicles while
commercial vehicles make up 16%.
Second-hand vehicles tend to appreciate in value due to high import
duties and limited supply of vehicles. As a result second-hand vehicles
dominate the market. Approximately 85% of vehicles are second-hand
imports, which are primarily imported from Gulf states.
Although there is almost no publicly available reliable data on vehicle
sales in the Ethiopia, it is however estimated that 18,000 vehicles are
brought into Ethiopia each year. The main drivers of new commercial
vehicle sales are construction, agri- business and retail while passenger
vehicle sales are driven by government (including diplomatic corps and
purchases).
Generally, as population size grows, there is a need for transportation and
as demand for transportation grows, there is a need for car spares that has
to be change regularly when damaged. Demand for vehicle spare grows
with demand for vehicle. One can be benefited from the sector highly by
being spare manufacturer than spare importer and merchant. It is a double
advantage that, when one is both manufacturer and assembler of the part.
More over, as we have said earlier parts that are imported of low quality.
4.3 Raw Material
The raw materials that we use to upgrade vehicles and manufacture their
bodies depend on its application. The raw materials that are used to make
High bed and low bed are low carbon steel, stainless steel fiber reinforced
plastic(FRP). The application of them is transporting a variety of dry
goods, Pharmaceuticals and packed goods.
Most of the raw materials that are required for manufacturing are locally
manufactured and available in the market, mostly they are electrodes,
stainless steel, carbon steel, aluminium and round bar. Steel is used to
construct a cars chassis and body including the roof, door panels and the
beams between the doors. It is always used in mufflers and exhaust pipes.
Plastics are the challenger to steel for prominence in auto manufacturing.
Finally aluminum is used because of it’s malleability and light weight
nature.

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S.No. Raw material Unit Price Monthly
Consumption
in pieces
Monthly
expense
1 Metal Sheet 8mm 26,000 2 52,000
2 Round Bar 12,000 2 24,000
3 Electrode 1,000 10 Carton 10,000
4 Paint 350 6kg 2,100
Monthly Total
Raw material
Expense
8,100
Table: Showing monthly raw material expense for the planned project
expansion
4.4 Market Strategy
Marketing is the very necessary aspect of a company as much as the
providing quality products and services; in order to gain more customers
and to make more revenues. As an entrepreneur, it is very important for
auto companies to source for finance with which to expand the business
and grow it to certain extent, it is equally important to engage in activities
that will generate revenue and sustain the company. With marketing one
is expected to anticipate the wants of the customers and look towards
meeting their needs, by giving them the quality of products and services.
Most of the manufactured spares are used for maintaining the vehicles
that came to our workshop for being serviced. Until now our company
doesn’t have shortage of customers because of it’s quality service and
products. The only shortage is we cannot reach all the available
customers with the machinery we have now.
Insurance companies such as Medhin, Tsehay, Birhan Nile and etc are
our regular clients. And we also service trucks of construction companies
and individuals. Moreover, our company planned to participate bids that
are conducted by different government and non government organizations.
Bids are very necessary for one business to grow in a faster rate, as there
is any problem occurred on a vehicle our company will take all the fixture
parts and furnish the cracked parts.
Moreover, our company planned to follow other marketing strategies that are
mentioned below to generate a good amount of revenue. Those are:
 Placing advertisement on local and national newspaper and construction
magazines.
 By keeping our current customers by continuing offering our quality
services .

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 Actively manage the negative key word in auto industry
 More over by by keeping offering quality services and by always being on
the top of other auto body and spare manufacturers both in technology and
fast delivery time.

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5. SWOT ANALYSIS
Strength
 The country policy is encouraging for the sector by providing credits
and allowing us to import necessary raw materials with duty-free.
 The construction sector is increased by 3.1% in 2020 despite of the
pandemic breakout which impacted most of the manufacturing
economy and is expected to grow by 4.7% in 2021. Which means
they need trucks and vans to transport different construction input
materials and the all the automotive’s need spare when they are
damaged; their parts must be replaced..
 The agricultural sector has shown growth over the last decades and is
grown by 6.2%in 2021; meaning they need their products to be
transported and to be sold in the cities.
 According to 2016 population and housing census, the urban
population growth rate in Ethiopia is 4.79% per year, which leads to
increasing demand for transportation to move in the cities; the need
for transportation rises.
 The company has a long year of experience.
 Ethiopia’s vehicle market in 2021 has grown by 3.8% leading year to
date sales at 1094 units. It is dominated by second hand imported
vehicles particularly commercial vehicles. It is a good opportunity for
one to enter or expand his business to auto related manufacturing
business. This will save millions of foreign currency from spending
them on the imported products; moreover, it will eliminates the hassle
it takes to get the currency and cuts off the delay it takes while
shipping the vehicle spare.
 The raw material that is available in the local market can be used to
manufacture the product.
Weakness
 The machinery that are needed to manufacture auto parts are
expensive and are difficult to purchase them from ones limited source
of income.
 It is impossible for the company to handle all the orders with the
currently available machinery’s, some of the customers have to wait
for some time until their vehicles are maintained. The owner of the
company has found it necessary to purchase additional machines to
manufacture and deliver it’s products faster, and satisfy it’s
customers.

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Opportunity
 The policy of the government for the manufacturing sector is highly
encouraging and it is a good chance for anyone to invest his money
and knowledge in the area.
 Ethiopian auto spare market is dominated by imported spares having
low quality which expose the users to accidents and unnecessary costs;
moreover, this is not at a satisfactory rate because of the issue of
foreign currency is being a headache and also and the taxation rate is
also high.
 The owner of the company having long year experience and knowledge in
the sector.
 Availability of lease financing for the purchase of machinery.
Threat
 The unstable condition of peace and order that sometimes occur in the
country can be mentioned as a threat; in order for truck parts to be
crushed they must move from place to place this will happen in a
peaceful and stable country.

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6. TECHNICAL STUDY
6.1 Area of the Project
The location of the project is suitable and conforms with the laws that regulate
the manufacturing industries as it is found in the area inhabited by peoples and
the factory doesn’t release noise and hazardous chemicals, as it uses the most
usual machinery that doesn’t have much effect on the habitants in the area. The
area that is selected for the factory is ideal place for the distribution and
processing having main roads and makes it easy to access to the supplying route
and market. The production site has extra working space and electricity power
supply and it is possible to use the available space to expand the project.
6.2 Project Engineering
The factory is located at Addis Ababa, Nefas Silk Lafto subcity, woreda 02,
around St. Michael Cathedral Church. Addis Ababa is the capital to the country
being the center of supply and distribution of all necessary goods being a broad
market; this makes the site of the project a correct selection.
6.3 The manufacturing Process
As we have seen earlier vehicle bodies are made of electrode, stainless steel,
carbon steel, fiber reinforced plastics, round bar and paint. The manufacturing
process involves starting from drawing and designing the parts to assembling
and delivering the end products. The process involves drawing and designing
the parts to be manufactured on AUTO CAD, preparing the raw materials,
Cutting and bending, welding(fixing and assorting), assembling, painting(full
cleaning, anti- rust and polishing) and delivery. The below steps are not
necessarly applied to all spare/ auto parts manufacturing some steps will be
eliminated while manufacturing, but as a general rule we will follow the below
steps.
6.3.1 Purchasing Raw Material
The raw material that are required for manufacturing the auto bodies have
to be purchased in order to commence the manufacturing process. The
raw materials that are required to manufacture the body are electrode,
stainless steel, carbon steel, fiber reinforced plastics, round bar and paint.
All of them are manufactured and available in the local market.
6.3.2 Drawing and designing the auto bodies
Automotive design is the process of developing the appearance(and to
some extent the ergonomics) of motor vehicles- including high bed and
low beds trucks.
Automotive design focuses primarily on developing the visual appearance
or aesthetics of vehicles, while also becoming involved in the creation of

20. Henok Worku Tel: 09 11 46 85 02 19
product concepts. Automotive design is designed by ou mechanical
design engineers. It has a standard dimension for any type of vehicle so
the shapes and structures are done on appropriate AUTO CAD soft ware.
This step is skipped for manufacture of pin and bushing; it can be done by
taking random measurement of the damaged part.
6.3.3 Cutting and Bending(Forming)
One of the most important thing about metal is that it can undergo plastic
deformation, it literally can take on almost any shape that we can imagine.
The process of deformation begins with a blank, a quantity of metal in
some basic form that will undergo the change in shape. The blank will
come the work piece- the piece of metal to be reshaped- in the metal
forming process. The blank is made of metal sheet, which can be stamped,
cut or bent into a shape needed for an automobile body.
The metal sheet is then cut into the wanted size, the extra parts are not
necessary they are removed or stored for reuse. In bending force is
applied to a sheet metal workplace to produce a curvature of the surface.
It is generally used to produce simple curved surfaces rather than
complex ones. A mechanically operated press drives a punch against
sheet metal, forcing it into a simple die with enough pressure to produce a
permanent shape in a metal’s shape.
The scraps that are produced during the process will not be discarded,
they are reused in another step or will be sold into market to be recycled.
6.3.4 Welding(fixing and assorting)
The cut and bent parts are welded together by an appropriate graphite in
order to obtain the wanted shape and make it ready for the next assembly
step. It includes fixing parts together and assorting the same parts or parts
that are assembled in the same area. It is the process that decides the
service life of a vehicle; it must be done carefully.
The most commonly used welding methods for automotive applications
are resistance spot welding, resistance seam welding, metal inert gas
(GMAW) welding, tungsten inert gas (GTAW) welding, as also laser
beam welding (FW), and plasma arc welding (PAW).
6.3.5 Assembling
It is a manufacturing process key to achieving both compatibility and
safety. Even in equipment planning, designing lines flexibility requiring
thorough pursuit of quality and efficiency. This is done by pressing and
welding the parts together. This may be done by replacing the newly

21. Henok Worku Tel: 09 11 46 85 02 20
manufactured spares to the truck parts. The pressing aims at
strengthening the body without increasing the the thickness of the steel
sheet, which is an important processes and responsible for the safety and
design of the car body.
In addition to conventional technologies such as spot welding, in which
the base material s are joined together by resistive heat, friction heat and
rivet heat is also utilized.
6.3.6 Quality Control
The final products must meet certain quality standards for chemical resistance,
wear resistance and must be able to carry the capacity of load that they designed
for and also, they are checked for defects before being transferred to the next
painting step.
6.3.7 Painting
This is the process that gives vividly dressed and coloring to the gray iron
colored mass. It is required for the function of the design that colors the
vehicle, the function as a guard to protect the body from fading and
scratches and rust protection as well.
Paint application and dry baking process is operated repeatedly in paint
process. It takes approximately 5-8hrs to paint one vehicle.
6.4 Building and Civil works
The project requires sufficient area to install machinery and equipment,
the necessary infrastructure must be fulfilled, it doesn’t need to be in a
place where inhabited with people because it doesn’t emit hazardous
chemical to the environment, they use ordinary manufacturing process.
which conform with the environmental issues. The machines doesn’t
create much noises and doesn’t release harmful chemicals. Thus, the task
of the machines will be bending, cutting and polishing sheet and round
bar to obtain the required structure. Another consideration that must be
taken into account is that, the factory must have enough power supply to
operate, thus we are operating in a workshop that we have rented earlier
having it’s own transformer electric power of 150KW. So, there is no
construction and civil works are needed to be done for installing the
machinery.
6.5 Machinery and Equipment
A total of 4,200,000Birr is needed for purchase and installation of
necessary machines and equipment's by lease financing in loan scheme.
After purchase and installation of the necessary machinery the company’s

22. Henok Worku Tel: 09 11 46 85 02 21
operating capacity will be three times more than the present operation
capacity. The machinery that’s going to be installed will have high
production capacity than much of the currently operational machines in
the country. The machinery we are going to purchase is a usual
machinery that the other car body manufacturing and assembling
companies are using; it can easily be maintained by local professionals.
The machine will help us to improve our products and services by
delivering faster than before, moreover it will help us to be a better
manufacturer in the area and offer quality products in the market. The
following table shows list of machines that the company is requesting to
be purchased by loan.
S.No. Description Unit Quantity
1 Lath Machine Set 3
2 Radial Drill
Machine
Set 1
3 Milling Machine Set 1
4
Total Price in Birr 4,200,000
Table: List of machines required by the project
6.6 Office Furniture and Equipment
For furnishing the office and purchase of office equipment a total of
Birr100,000 is allocated. Office equipment includes furniture, copier,
computers with accessories and so on.
No. Description of items Price
1 Office furniture 30,000
2 Computers and copier Machine 70,000
Total 100,000
Table: List of office furniture and equipment required by the project
6.7 Other Fixed Cost
Intangible assets and other fixed capital costs that will be required for the
purchase of necessary tools, equipment for the workshop and other costs
like fee for legal services are required for the project. This is very
necessary to commence the implementation within the desired time frame
and facilitate easy and appropriate working conditions. For this purpose,
an estimated amount of Birr50, 000.00 will be necessary.

23. Henok Worku Tel: 09 11 46 85 02 22
6.8 Project Implementation Plan
The aim of the project is to an existing auto body manufacturing and
assembly company. The major activities to be undertaken in the future
during the implementation of the project involve the processing of the
bank loan, employee recruitment, training, procurement and installation
of the necessary machinery to continue the operation in a better way.
Of all procurement and installation of the machinery takes the major
share of the implementation period. The business will be expected to be
fully implemented within 1 months and it is assumed to start operation as
of June 20, 2022.

24. Henok Worku Tel: 09 11 46 85 02 23
7. MAN POWER REQUIREMENT AND MANAGEMENT
7.1 Organization
Our company has been working since 2004 E.C and has; as it is getting
more customers, has found it necessary to expand the business by
purchasing additional materials and by renting more areas that are used a
workshop. The expanded organizational structure is designed in such a
way that the owner of the company will be participating in administrative
activities and will also directly participate in managing and supervising
the company.
As the machinery needs skilled professionals, the owner of the company
has skill in operating with the machinery that is going to be purchased
also has skilled employees and planned to recruit other additional
employees having machinery skills. The other works that are expected to
be done is controlling the stock balance, purchasing raw materials,
manufacturing products and etc.
Thus, a total of 13 workers are proposed to be working in the company as
to expand the business. All of these will be permanent workers of the
staff.
The following table shows the requirement of human resources in the
established company.
S.No
.
Description No. Of
employe
es
Salary/Po
sition in
Birr
Total
Expense/Mo
nth in Birr
Salary/An
nual
1 Lath Machine Operator 3 6,000 18,000 216,000
2 Milling Machine
Operator
1 7,000 7,000 84,000
3 Radial Drill Machine
Operator
1 4,000 4,000 48,000
4 Assistant Operator 4 2,500 10,000 120,000
5 Finance 1 4,000 4,000 48,000
6 Purchaser and Store
Keeper
1 3,000 3,000 36,000
7 Guard 1 2,000 2,000 24,000
8 Janitor and General
Service
1 2,000 2,000 24,000
Total 13 50,000 600,000
Table: Showing personnel requirement for the project
There are other personnel's that aren’t listed in this table bu will be hired
on temporary basis.

25. Henok Worku Tel: 09 11 46 85 02 24
8. FINANCIAL ANALYSIS
8.1 The Assumptions used in Financial Analysis
We have planned to manufacture our products more than usual, as we
will have additional machinery, we will be able to reach more customers.
Our production capacity will be amounted at 593,200Birr/ month after the
necessary machines are purchased and begin operation.
Annual working days excluding Sundays, public holidays and annual
maintenance days (we take annual maintenance days to be 10 considering
the time lost when there is power fluctuation) is 290 days.
The financial analysis of the business expansion is based on the data
presented in the previous chapters and the following assumptions:-
 Interest rate 14%.
 The depreciation rate for machinery and equipment 10% using
straight line method.
 Repair and maintenance for the machinery is 2% of the cost of
machinery.
 Taxes, the profit tax is assumed to be 35% with one year of tax
holiday.
 The annual cost for the repair and maintenance will be 84,000Birr.
8.2 Price
8.2.1 Price of raw materials
 Cost of raw materials is 88,100Birr per month and the project assumes
increment of raw material price by 5% every year. The annual cost of raw
material is 1,057,200Birr.
 We have planned our monthly revenue to be 593,200Birr, which is
summed up by mixing up variety of our company products/services
together.
Thus total cost of raw material may look exaggerated but this comes scattered
through the months and the cash flows in and out throughout the process, the
trend in this industry is, we will first accept advance payment of the vehicle we
are going to upgrade. Thus it’s fair to say it can be afforded to keep the
production going without any financial shortage.
8.3 Costs
Based on the above assumptions, the costs of different items related to the
production of processed sheet metal and pipe are given below.
Annual Factory Overhead Costs
S. No Item Costs in Birr
1 Electricity 600,000
2 Water 12,000
Total 612,000
Table:Annual Factory Overhead Costs

26. Henok Worku Tel: 09 11 46 85 02 25
8.4 Capital and Expenditures
Capital expenditures are equivalent to the total financial requirements of
the project. In other words, they are initial investment outlay required to
enter the project to the operational stage. These capital expenditures are
constituted of fixed investment costs, pre-production and initial working
capital. The total costs and breakdown are presented as follows:
No. Description Cost in Birr
1 Machinery and Equipment 4,200,000
2 Office Furniture and Equipment 30,000
3 Initial Working Capital 711,200
Total 4,941,200
Table: Summary of investment costs
8.5 Fixed investment
Fixed investment costs are expenditures on the required fixed assets. The
major component of fixed cost is constituted of expenditures of land,
building, machinery and equipment, vehicles and office equipment.
According to estimates made by this project the total fixed cost will be
Birr4,230,000.
No. Description Cost in Birr
1 Machinery and Equipment 4,200,000
3 Office Equipment 30,000
Total 4,230,000
Table: Summary of Fixed Investment Cost
8.6 Working Capital
Working capital is annual operation cost and is required to make the
project operational. Except for some operational costs, their yearly
expense is as it is; some limited monthly expenses were taken to forecast
the working capital requirement of the project. According to the forecast
made, the amount of initial working capital is estimated 713,200Birr.
No. Description Cost in Birr
1 Raw material Cost (2 months) 176,200
2 Salary Expenses (3 months) 150,000
3 Utility (2 month) 102,000
4 Factory Rent Cost 120,000
5 Transportation Cost 15,000
6 Cash in hand 150,000
Total 713,200
Table: Working Capital Requirement

27. Henok Worku Tel: 09 11 46 85 02 26
8.7 Source of Capital Expenditures
The above financial requirement forecast is planned to be contributed
from the promoter and loan from bank (Addis Capital Goods Finance
Business S.C). The promoter of the project raises 36.27% of the total
capital, while the remaining 63.72% is assumed to be obtained from the
local bank in loan basis. The equity both is presented in the table below:
No. Item Total Source of Fund
Owner’s Bank
1 Machinery and Equipment 4,200,000 1,050,000 3,150,000
2 Office Equipment 30,000 30,000 -
3 Initial Working Capital 713,200 713,200 -
Total investment 4,943,200 1,793,200 3,150,000
Source(%) 100 36.27 63.72
Table: Source of Capital Expenditures
8.8 Loan Repayment Program
The bank loan repayment schedule is made based on the the following
basic assumptions:
 Interest rate 14%
 4 year loan repayment Period
 4 month grace period
The repayment of loan principal and interest charge will be principally
scheduled by the Addis Capital Goods Finance Business S.C itself. The
promoter in this case is expected to settle it’s debt as per the formal to be
agreed up on with the share company. Given this the processed
repayment schedule has been presented in the table below just to caution
the client with regards to an obligation ahead. The project assumes that

28. Henok Worku Tel: 09 11 46 85 02 27
14% interest rate and with 4 years loan repayment period and 4 months
grace period.
Accordingly the table below shows the annual repayment schedule of the
bank loan. The total loan requested 4,200,000Birr will be paid in 4 years
time with total interest of 1,102,500Birr and that will goes up to the total
loan repayment of 5,302,500Birr.
Year
Outstanding
balance
Interest Rate
14% (Annual
Amortization)
Principal
Total
Repayment
Grace Period 4,200,000 147,000
1st
1st Quarter 4,200,000 110,250 262,500 372,750
2nd Quarter 3,937,500 110,250 262,500 372,750
3rd Quarter 3,675,000 110,250 262,500 372,750
4th Quarter 3,412,500 110,250 262,500 372,750
441,000 1,050,000 1,491,000
2nd
1st Quarter 3,150,000 82,687.50 262,500 345,187.50
2nd Quarter 2,887,500 82,687.50 262,500 345,187.50
3rd Quarter 2,625,000 82,687.50 262,500 345,187.50
4th Quarter 2,362,500 82,687.50 262,500 345,187.50
330,750 1,050,000 1,380,750
3rd
1st Quarter 2,100,000 73,500 262,500 336,000
2nd Quarter 1,837,500 73,500 262,500 336,000
3rd Quarter 1,575,000 73,500 262,500 336,000
4th Quarter 1,312,500 73,500 262,500 336,000
220,500 1,050,000 1,270,500
4th
1st Quarter 1,050,000 27,562.50 262,500 290,062.50
2nd Quarter 787,500 27,562.50 262,500 290,062.50
3rd Quarter 525,000 27,562.50 262,500 290,062.50
4th Quarter 262,500 27,562.50 262,500 290,062.50
110,250 1,050,000 1,105,000
Total Repayment 1,102,500.00 4,200,000.00 5,302,500.00
Table: proposed Loan Repayment Schedule

29. Henok Worku Tel: 09 11 46 85 02 28
9. CONCLUSION AND RECOMMENDATION
The proposed plant, as it’s clearly presented in the financial analysis, is
promising and attractive for the investor. The plant is liquid starting from
the first year of it’s operation. It will break-even in the first year of
operation. Since the plant is profitable, will introduce new manufacturing
method and can accommodate employment opportunity for 13 workers, it
is beneficial both for the promoter as well as the country to expand the
business.
Overall the project has the following merits which would justify the need
for giving priority in it’s finance:
 The project is highly consistent with the government industrialization
plan which calls to optimal use of scarce financial resource to value
added products. This is among the bank's priority area.
 According to the current data, half percent of the product which is
used is being exported from foreign countries, so the project
contributes in saving foreign currency and in increasing the country’s
GDP.
 As the machines that are required for this project are expensive, it is
difficult to mobilize fund from the owners limited income and it’s
preferable and mandatory to implement such project in collaboration
with financial institutions, which would otherwise be difficult at
individual level.
 The project will create employment opportunity to several people
both in the city as well as migrants from other locations on permanent
and temporary basis.
The project deserves giving priority in financing and worthful to give
special support to the project promoters so as to expand their business on
the already operational auto manufacturing and assembly factory, which
is highly consistent with the bank’s priority area and revitalization of the
plan of the city.

30. Henok Worku Tel: 09 11 46 85 02 29
ANNEX;
FINANCIAL
SUPPORTING TABLES

31. Henok Worku Tel: 09 11 46 85 02 30
Annex 1: Project Cost Assumption
Project Assumption
Project life is 10 years Salary expense increase by 5% each year.
Debt 63.25% Utility expense increase by 3% each year.
Equity 36.75% Benefit and allowance Expense 3% of
salary cost in each year and starts after 2nd
year.
Interest rate is 14%
4 months Grace period for loan
Operating cost assumptions
No of working day ------------290
No of shift -----------------------1
No of hours in one shift --------8hrs