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Project Proposal, Investment Consulting Firm in
Ethiopia.

Feasibility Study for Disc Brake

Pads Manufacturing Project
Proposal in Ethiopia.
by Suleman Mossa

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Brake Pads, Linings Production in Ethiopia

Project Proposal on Disc Brake Pads Manufacturing Business Plan in

Ethiopia.

This pro le envisages the establishment of a plant for the production of disc brake pads, linings
with a capacity of 40,000 pieces (145 gm per piece average weight) per annum. Disk brake
linings are friction materials used in vehicles for the purpose of generating friction between two
contact surfaces in order to produce a required effect.

The demand for disc brake pads, linings is met entirely through import. The present (2021)
demand for disc brake linings is estimated at 590 tons. The demand for disc brake linings is
projected to reach 947 tons and 1,329 tons by the year 2025 and 2030, respectively.

The principal raw materials required are asbestos and resin, which have to be imported.

The total investment cost of the project including working capital is estimated at Birr 6 million.
From the total investment cost the highest share (Birr 4.22 million or 70.45%) is accounted by
xed investment cost followed by initial working capital (Birr 998.86 thousand or 16.64%) and
pre operation cost (Birr 774.36 thousand or 12.90%). From the total investment cost Birr 932.25
thousand or 15.53% is required in foreign currency.

The project is  nancially viable with an internal rate of return (IRR) of 26.74% and a net present
value (NPV) of Birr 5.19 million discounted at 10%.

The project can create employment for 21 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 the automotive sub sector and also generates income for the
Government in terms of tax revenue and payroll tax.

Product Description and Application

Disk brake linings are friction materials used in vehicles for the purpose of generating friction
between two contact surfaces in order to produce a required effect. One requirement of brake
linings is to withstand heat and wear, whenever friction is generated.

Automotive and industrial brakes use lining made of either woven form of asbestos  bers mixed
with  llers and bonding material, and some cotton or copper wire or other suitable materials.

Materials used to bind and saturate the linings to make them imperious to oil and moisture are
asphalt, natural gum, oil and synthetic resin

Plant Capacity

The market study shows high demand gap for disc brake lining. However, it is advisable to start
production at a lower scale. It is thus proposed that a plant with a production capacity of 40,000
pieces (145 gm per piece average weight) of brake lining per annum, be established. 

The brake
lining will have a speci cation of 45 x 5.6 x 240.110 R or (width x thickness x length-
inside of
lining x radius). The plant will operate by a single shift of eight hours a day, and 300 days a
year.

Production Program

The plant will start operation at 75% of its installed capacity. Production capacity will then build
up to 85% and 100% in the second and third year respectively. It is then assumed that
production will be maintained at 100% in the subsequent years. Table 3.3 below shows
production program of disc brake lining.

Raw and Auxiliary Materials

Here, it is intended to use asbestos and resin as major raw materials. The aggregate cost of raw
materials required by the plant is estimated at Birr 3.96 million, out of which about Birr 3.6
million will be required in foreign currency. The raw materials indicated above are not available
locally. They are to be imported from Europe, Middle East, and Asia. Auxiliary materials
required by the proposed plant include friction particles, organic and inorganic  llers. Annual
requirement of raw and auxiliary materials and corresponding costs are shown in Table 4.1.

Production Process Discription

The production process of brake lining (for vehicles) involves sequential operations. The dry
powder is  rst formed in to appropriate shape. It is formed in to a continuous sheet, and then
baked in to rigid form, curved in one direction with a diameter corresponding to the  nished
diameter of the brake lining. In the case of large linings are half blocks for diameter of the brake
lining. In the case of large linings are half blocks for commercial vehicles linings are baked
individually. 

The linings are then  nished by cutting precisely to size a grinding to ensure exact
alignment with the shoe (for bonded types) and the brake drum. The linings are then drilled and
riveted, and bonded to the prepared brake shoes, which may be either new or trade-
in parts from garages.

Plant Machinery and Equipment

Total cost of machinery and equipment is Birr 1,057,250. Machinery and equipment required by
brake lining producing plant and the corresponding costs are shown in Table 5.1.

Land, Building and Civil Works Cost

The total land area required is 800 m2 of which the total built-
up area of the plant is estimated to be
400 m2. The cost of building and civil work at the rate of Birr 5,000 per m2 is estimated at Birr 2
million.

…………………………………….#######……………………………………………

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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:   [email protected]

Website ፡   www.ethiopianauditor.wordpress.com

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