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Ethiopia.

Feasibility Study for Diesel

Engine Assembly Plant Project
Proposal Business Plan in
Ethiopia.
by Suleman Mossa

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Assembly of Diesel Engine Project Proposal

Project Proposal on Assembly of Diesel Engine Business Plan in Ethiopia.

This pro le envisages the establishment of a plant for the assembly of diesel engine
with a capacity of 21,000 units per annum. Diesel engines are used as prime movers in
many machines performing various jobs.

The demand for diesel engine is met entirely through import. The present (2021)
demand for diesel engine is estimated at 20,501 units. The demand for diesel engine is
projected to reach 26,165 units and 33,394 units by the year 2025 and 2030,
respectively.

The principal raw materials required are semi assembled diesel engines which have to
be imported.

The total investment cost of the project including working capital is estimated at Birr
78.58 million. From the total investment cost the highest share (Birr 67.32 million or
85.68%) is accounted by initial working capital followed by xed investment cost (Birr
5.69 million or 7.25%) and pre operation cost (Birr 5.55 million or 7.07%). From the total
investment cost Birr 1.82 million or 2.31% is required in foreign currency.

The project is nancially viable with an internal rate of return (IRR) of 32.50% and a net
present value (NPV) of Birr 106.02 million discounted at 10%.

The project can create employment for 50 persons. The establishment of such factory
will have a foreign exchange saving effect to the country by substituting the current
imports. The project will also create forward linkage with construction, transport, and
mining sub sectors and the agricultural sector and also generates income for the
Government in terms of tax revenue and payroll tax. .

Product Description and Application

Diesel engines are used as prime movers in many machines performing various jobs.
These jobs include concert mixing, water well drilling, water pumping, air compressing
to power hammer jacks, log saws, small fork lifts, site trucks and many other works; in
the eld of agriculture, building and road construction, transport ,mining and the like.

In spite of their diversity, their power has to be limited in a given range for having a
limited diversity in the assembly technology. Many local factories and workshops
produce the above machines and t these imported diesel engines as their prime
movers.

Plant Capacity

From the market study and taking into consideration the complexity of the assembly
process, and employing about 30 persons on three assembly lines, the capacity of the
plant is taken as 21,000
units of engines annually during the start up period of three years.

Production Program

Considering the assembly process involved the plant is assumed to attain its full
capacity in the third year of operation. In the rst and second year it will operate at 75%
and 85% of its installed capacity (see Table 3.3)

Raw and Auxiliary Materials

The main raw material of the plant is semi assembled diesel engines from the selected
manufacturer and supplier of the engine. The required raw materials and their cost for
the production are listed in Table 4.1.

Assembly Process Discription

The Engine is mainly imported partially assembled and packed in categories for easy
unpacking on the assembly table. A total of 70 diesel engines are to be assembled daily
on the line. Ten assembly lines have to be arranged for unpacking, assembly, testing and
checking of seven engines each in a working day of 8 hours. Three people with two
mechanics and one electrician form one group on each assembly line.

The group performs the jobs of unpacking, identifying and arranging parts in categories
for quick tting, assemble and t each part in accordance with the blue print plan from
the factory. Final checking and testing on each engine is done followed by delivery to
the packing line.

Plant Machinery and Equipment

Total cost of machinery and equipment is Birr 2,276,000 of which Birr 1,820,800 is
required in foreign currency. The machinery and equipment that are required for the
assembly of the envisaged diesel engine are listed in Table 5.1.

Land, Building and Civil Works Cost

The total land required by the project is about 800 m2, of which 300 m2 is built-up area.
The cost of building and civil works is estimated at Birr 1,500,000.

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Standard Project Report – Map of National Bank of Ethiopia

 A Standard project report for new business ventures is quite important in getting the
project itself off the ground. Therefore the project Feasibility Study report should be
prepared as per National Bank Standards.

The project report covers all the aspects of business; from analyzing the market,
con rming availability of various necessities such as plant & machinery, raw materials to
forecasting the nancial requirements. The project also provides sectoral information,
brief on Government policies and international scenario, which have some bearing on
the project itself.

The scope of the report includes assessing market potential and investment decision
making. in a very planned manner by formulating detailed manufacturing techniques
and forecasting nancial aspects by estimating the cost of raw material, formulating the
cash ow statement, projecting the balance sheet etc.

A SWOT analysis is often carried out in the initial reports. This helps to identify the
strengths, weaknesses, opportunities and threats of the business or a project.

The project so formulated considering the below-mentioned aspects and submitting

to any bank for availing credit facility for establishment of the project. The bank will
then examine the project for its technical feasibility, nancial viability and
bankability.

Need Customized Feasibility Study or Business Plan for Bank Loan?

Ask for FREE project related details with our consultant/industry expert.

Our realistic project reports for bank Loan accompanied by a detailed nancial plan can
make all the difference to get the funding you need.

Our consulting rm can prepare successful and standard project reports for
commercial agriculture, agro-processing, manufacturing and service enterprises as
per National Bank Standards.

Al lProject Feasibility Studies| Business Plans will be prepared by experienced certi ed

consultants and the market research and analysis are supported by computerized data
bank.

Our Service Packages

Haqiqa Business Solution helps entrepreneurs all over the world to start and grow businesses successfully
and pro tably. We provide you with business ideas and smart solutions that help you to build a pro table
business empire. We have plenty of resources that will assist you in your entrepreneurship journey.

Auditing Financial Statements

Preparation of Successful Business Plans | Feasibility Study, Project Pro les for
Manufacturing Plant, Commercial Agriculture. Agro Processing and Service
Enterprises.
 Preparation of  Project Proposals for NGOs,
Market Research Study, which will make it easier for your to start and run your
business pro tably. 
Technical  and Commercial Counseling for setting up new industrial project and
Most Pro table Small Scale Business.

PROJECT REPORT TABLE INDEX.

Each ‘Haqiqa Business Solution’ MARKET OVERVIEW CUM DETAILED TECHNO

ECONOMIC FEASIBILITY REPORT (Complete Report) tentatively covers.

01  Executive Summary

02  Product Description and Application
03  Market Study   

Present Demand and Supply

Export & Import Statistics Data
Projected Demand
Names and Addresses of Existing Units (Present Manufactures) 
Pricing and Distribution

01  Technical Study

Plant Capacity and Production Program

Availability and Source of Raw and Auxiliary materials
Material Requirement and Cost
Electri cation, Electric Load and Water
Location and Site

01  Technology and Engineering

TECHNOLOGY
Production Process
Machinery and Equipment
ENGINEERING             
Construction Process
Civil Engineering Cost
Plant Layout

01  Human Resource and Training Requirement

Human Resource.
Training Requirement

01  Economic and Social Bene t and Justi cation

Pro t Generation
Import Substitution and Foreign Exchange Saving
Employment and Income Generation
Environmental Impact

Financial Analysis details as under:

01  Underlying Assumption

02  Initial Investment Cost
03  Production Cost
04  Sources of Finance
05  Financial Evaluation:
Break-Even Analysis and pro tability analysis
Simple Rate of Return
Internal Rate of Return/IRR and Net Present Value/NPV
Sensitivity Analysis

Annexure-Financial Statements will be for 5 to 10 Years:

Annexure:: Net Working Capital

Annexure:: Projected Cash Flow
Annexure:: Discounted Cash Flow
Annexure:: Projected Income Statement
Annexure:: Projected Balance Sheet
Annexure:: Loan Amortization Schedule
Annexure:: Project Implementation Schedule

_______________________________________________________________________________________________________________

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Get In Touch//

Suleman Mossa General Manager     

Mobile = +251 944-22-82-55 

WhatApp, Telegram, imo and Messanger Contact = +251 944-22-82-55 

Piazza, Kelifa Business Center Of ce No.507 Addis Ababa, Ethiopia

E-mail:   haqiqa2000@gmail.com

Website ፡   www.ethiopianauditor.wordpress.com

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