Pre-Feasibility Study - SeekPartfile.seekpart.com/keywordpdf/2010/12/18/201012184123062.pdfPre-Feasibility Study Prefabricated Construction Blocks ((SSMMEEDDAA DDOOCCUUMMEENNTT)) Small

Pre-Feasibility Study

PPrreeffaabbrriiccaatteedd CCoonnssttrruuccttiioonn BBlloocckkss

(((SSSMMMEEEDDDAAA DDDOOOCCCUUUMMMEEENNNTTT)))

Small and Medium Enterprise Development AuthorityGovernment of Pakistan

www.smeda.org.pk

HEAD OFFICE

Waheed Trade Complex, 1st Floor , 36-Commercial Zone, Phase III, Sector XX, Khayaban-e-Iqbal, DHA LahoreTel: (042) 111-111-456, Fax: (042) 5896619, 5899756

[email protected]

REGIONAL OFFICE PUNJAB

REGIONAL OFFICE SINDH

REGIONAL OFFICE NWFP

REGIONAL OFFICE BALOCHISTAN

Waheed Trade Complex,1st Floor, 36-Commercial Zone,

Phase III, Sector XX,Khayaban-e-Iqbal, DHA Lahore.

Tel: (042) 111-111-456Fax: (042) 5896619, 5899756

[email protected]

5TH Floor, BahriaComplex II, M.T. Khan Road,

Karachi.Tel: (021) 111-111-456

Fax: (021) [email protected]

Ground FloorState Life Building

The Mall, Peshawar.Tel: (091) 9213046-47


Bungalow No. 15-AChaman Housing Scheme

Airport Road, Quetta.Tel: (081) 831623, 831702


December, 2006

Pre-Feasibility Report Prefabricated Construction Blocks

PREF-X/Dec, 2006/Rev1

DISCLAIMER

The purpose and scope of this information memorandum is to introduce the subject

matter and provide a general idea and information on the said area. All the material

included in this document is based on data/information gathered from various sources and

is based on certain assumptions. Although, due care and diligence has been taken to

compile this document, the contained information may vary due to any change in any of

the concerned factors, and the actual results may differ substantially from the presented

information. SMEDA does not assume any liability for any financial or other loss

resulting from this memorandum in consequence of undertaking this activity. Therefore,

the content of this memorandum should not be relied upon for making any decision,

investment or otherwise. The prospective user of this memorandum is encouraged to

carry out his / her own due diligence and gather any information he/she considers

necessary for making an informed decision.

The content of the information memorandum does not bind SMEDA in any legal or other

form.

DOCUMENT CONTROL

Document No. PREF-13

Revision 1

Prepared by SMEDA-Sindh

Approved by Provincial Chief - Sindh

Issue Date December, 2006

Issued by Library Officer



PPRROOJJEECCTT PPRROOFFIILLEE

11..11 OOPPPPOORRTTUUNNIITTYY RRAATTIIOONNAALLEE

Construction sector has been registered with a growth rate of 7.9 percent1. Housing and construction is one of the major drivers of growth in more than 40 allied industries and directly adds to the PREFABRICATED CONSTRUCTION BLOCKS industry. In addition, for the building of roads, flyovers and bypasses there is a mass and consistentneed of prefabricated blocks across the country. Various construction and real estate development projects are in progress and are continuously being commissioned which will have high demand of prefabricated construction material all over the country.

In order to make up the backlog and meet the shortfall in the next 20 years, overall housing construction industry has to be raised to the level of 500,000 housing units per annum. This is the extent of the annual housing market in Pakistan which positively predicts a permanent growth in construction sector which directly adds to the potential in prefabricated building blocks segment of the construction industry.

Massive construction in the public sector especially in Karachi also contributes to the acceleration in construction sector and the quantum of work will continue at least for the next two to three years at the same pace which surely predicts a great investment opportunity in the proposed business.

The aforementioned statistics provide enough evidences and ensure a steep and continuous growth vis-à-vis investment opportunity in the PREFABRICATED CONSTRUCTION BLOCKS business.

11..22 PPRROOJJEECCTT BBRRIIEEFF

The proposed project envisages the setup of a prefabricated construction blocksmanufacturing project. Construction blocks industry is an important industrial sector in the country engaged in producing blocks used as prefabricated material for various construction activities i.e. construction of road side pave ways, garage and parking floorings, walls making, block paved driveways, and floor coverings of commercial buildings, etc.

It is easy to make a concrete block. The successful block yard must however make blocks of uniform quality and sell them at a price high enough to cover costs and make a reasonable profit. Before to start a block yard, it is essential therefore to investigate the

1 Economic Survey of Pakistan 2006



economic feasibility of the venture. Determination of level of demand for blocks in thearea (how many per month) and degree of competition from other block yards are important factors having a significant bearing on the feasibility of the venture. Then comes the cost estimation based on various methods of production and output. Factors which influence unit cost include:

Purchase price or rental of site Cost of site improvements: fencing, paved areas for production and stockpiles,

pathways, roadways and buildings Cost of equipment: concrete mixer, block making machine and miscellaneous

equipment Cost of services: water and electricity Material costs Wastage Maintenance costs of site and equipment Output: number of blocks per day – dimensions of block, solid or hollow. Labor costs Cost of finance etc.

11..33 MMAARRKKEETT EENNTTRRYY TTIIMMIINNGG

Blocks making business depends on activity and movement in construction industry. Housing and construction plus government initiated development projects demand mass availability of blocks all over the year. Therefore, a block manufacturing unit could be established at any time of the year.

11..44 PPRROOPPOOSSEEDD BBUUSSIINNEESSSS LLEEGGAALL SSTTAATTUUSS

The legal status of business tends to play an important role in any setup; the proposed block yard is assumed to operate on Sole Proprietorship basis.

11..55 PPRROOJJEECCTT CCAAPPAACCIITTYY AANNDD RRAATTIIOONNAALLEE

Production capacity of the plant for the proposed prefab construction blocks making unit would be 4,000 blocks per day. It is estimated that Karachi alone has a daily demand of 0.5 million2 prefabricated construction blocks. However, as there are a variety of concrete based prefab construction blocks i.e. hollow block, solid block, kerb block etc., cost will largely depend on the selection of block type. Estimated countrywide requirement of 500,000 housing units per annum and development works in construction and civil sector by the government; all these factors encourage a persistent high growth and mass demand of prefab construction blocks.

2 Based on discussions with the existing business operators in the formal sector of Pakistan



1. Solid Block

2. Hollow Block

3. Pavers

4. Kerb stone / Blocks

1.5.1 Raw Material Sourcing

Raw material to be used for the production of concrete based block is available in the local market at reasonable price. Main production material components include: cement and sand/crushed stone. A number of suppliers are available for Sand and Crush in each region and area of Pakistan and could easily be contacted, whereas, cement could be procured from any well known cement company. Cement suppliers could also be one of the sources for sand and crush supply reference. Low quality Chinese cement is also available in the local market which has been declared substandard for consumption by PSQCA.

Volatility in cement prices is the biggest threat while working in construction industry. This risk can be minimized by making long term supply contracts with the cement manufacturers which is a common practice of large scale industrial consumers of cement.

11..66 PPRROOJJEECCTT IINNVVEESSTTMMEENNTT

A total of Rs. 43.04 million is estimated to be the cost of the project. The working capital requirement is estimated around 0.9 million and Rs. 42.13 million would be the fixed investment.

11..77 PPRROOPPOOSSEEDD PPRROODDUUCCTT MMIIXX

For the purpose of this pre- feasibility, following products are assumed to bemanufactured:



S. No.

Block TypeSize/

DimensionStandard

Production (as % of Total)

ColorSelling

Price/ unit(Rs.)

1 Masonry Block

Solid Block 4”x8”x12” 600-800 psi* 10% Natural Grey 15

Solid Block 5”x8”x12” 600-800 psi 20% Natural Grey 16


Hollow Block 5”x8”x16” 600-800 psi 10% Natural Grey 23

Fair Face Blocks

Solid Block 90x190x390 mm 600-800 psi 15% Natural Grey 28

2 Pavers 300x300x40mm 4000 psi 5% Natural Grey 40

3 Kerb Stone/Block 6”x12”x12” 5000 psi 30% Natural Grey 90* per square inch

11..88 RREECCOOMMMMEENNDDEEDD PPRROOJJEECCTT PPAARRAAMMEETTEERRSS

Capacity Human Resource Technology/Machinery Location50% Capacity Utilisation

(based on 8 working hrs. daily17 Both Local and Imported

Nooriabad, Sindh

Financial Summary

Project Cost IRR NPV Payback PeriodCost of Capital

(WACC)Rs. 43.04 million 26% 14,127,743 4 Years 17.50%

11..99 PPRROOPPOOSSEEDD LLOOCCAATTIIOONN

Proposed location for setting up a prefab construction blocks making unit largely depends on the availability of raw material and its transportation to the factory at low cost; however, factors like availability of manpower, utilities and easy access to the target markets should also be carefully examined. For this pre-feasibility, we propose a location around Karachi somewhere in Hub, Superhighway, Manghopir, Jhampir or Nooriabadwhere all aforementioned resources are available at reasonable price, besides, generous investment for land would also be required which would be difficult to manage in the areas i.e. Korangi or SITE industrial areas where land prices are very high as compared to the other proposed areas. Moreover, construction and allied industries produceenvironmental pollution which may cause bronchial diseases to the people and hence are preferred to be setup at a distance, in dedicated industrial zones.

The prefab construction blocks making units are being operated countrywide. The reason is the demand which is spread all over the country, though is concentrated around



developed cities and towns i.e. Karachi, Lahore, Multan, Faisalabad, Peshawar, Quetta etc.

11..1100 KKEEYY SSUUCCCCEESSSS FFAACCTTOORRSS//PPRRAACCTTIICCAALL TTIIPPSS FFOORR SSUUCCCCEESSSS

Prefab construction blocks business is dependent on the pricing and margins given to builders, suppliers and retail customers. It also depends on efficient supply of blocks to the customer and communication facilities provided to the prospective clients, retailersand order booking agents.

1.10.1 Conventional Order Booking Arrangements – Distribution

As we have discussed earlier, prefab construction blocks is one of the allied sectors of construction industry. Therefore, all raw material suppliers to the construction industryare considered to be the part of the distribution network for the prefab construction blocks.

A block maker when setting up a block yard, institutes contacts with the construction material suppliers, retailers and signup a contract in order to appoint them as orderbooking agents. Generally, construction and building material supplier is the part of the whole chain, and brings together the customers and suppliers. Sometimes the supplier hashis own delivery vehicles and in most of the cases, keeps arrangement with the commercial vehicle operators, material manufacturers, and buyer, having a significance of a pivoting point among them.

1.10.2 Ordering and Delivery Procedure:

Block maker appoints order booking agents (building material suppliers) with in the city who entertain the customer. Customers usually send someone or personally go to the booking office and place the order which includes details indicating quantity, quality, size and time of delivery etc. Booking agent gets the payment in cash (mostly) and issues anorder / delivery slip to the customer, showing order details.

Buyer hires a truck or loading vehicle and goes to the block yard, where he produces the order slip (in local term called perchi) to the person responsible for the physical deliveryof the blocks. That person renders the order as given on the slip. After loading the vehicle he hands it over it to the order booker and here ends the role of the block maker.

Prefab construction blocks producers also book direct orders at site office for the construction contractors, retail customers and builders on phone and supply directly to the identified delivery points; however, these types of facilities are provided only for bulk



orders using hired delivery vehicles. Bulk deliveries typically account for around 30% of the total annual sales.

In the Prefab construction blocks industry, the role of the middle man is played by building material suppliers at a nominal margin of 1% to 2% of the order booked.

11..1111 PPRROODDUUCCTT MMAARRKKEETTIINNGG

In the manufacturing industry, marketing is considered to be of significant importance. In the Prefab construction blocks industry, marketing parameters are very limited and largely associated with the construction sector’s performance. Some of the marketing promotion activities which should duly be rendered are given below:

Developing contacts with the building material suppliers, well known builders and contractors.

Keep up to date information on civil and construction works initiated by local, provincial and central government.

Draw linkages with material suppliers to the housing industry at town level.

Emphasis on image development and building acquaintances across individual contractors who are serving private sector.

Establish contacts with local civil engineering firms, individuals and professionals.

22.. SSEECCTTOORR && IINNDDUUSSTTRRYY AANNAALLYYSSIISS

22..11 SSEECCTTOORR CCHHAARRAACCTTEERRIISSTTIICCSS AANNDD OOVVEERRVVIIEEWW

Construction sector is one of the largest economic sectors of Pakistan in terms of employment3. It directly and indirectly affects more than 40 allied industries which also includes prefab construction material industry. Block making has a significant position in the construction process particularly in the housing sector where prefabricated blocks are used extensively with more than 40% of the total structure of the building.

Traditional construction has been relying on hand made bricks rather than concrete block which has been a high cost option while selecting material for the house construction both in urban and rural areas of the country. Concrete based construction is comparatively new phenomena and historically has been employed in the urban areas where technology and machinery was introduced due to mass demand of building material and comparatively high average income.

3 Economic Survey of Pakistan 2006



Prefab construction block have different categories from smallest size of a brick to a huge sized pre-cast concrete bridges. However, for the purpose of this pre-feasibility, we have focused on the manufacturing setups where various types of blocks are manufacturedwith the help of automatic or semi-automatic plant and machinery. This sector is largely unorganized and no statistics are available in terms of how many block manufacturing units are working and their scale of operations. The prefab construction blocks manufacturing sector can be divided into three categories:

Organized Sector – Machine Blocks

Organized sector constitutes only three major players in Karachi: Envicrete Private Limited, Hubcrete and Izhar Paver Blocks. Only Envicrete is working as a private limited company; other two are operating as sole proprietorship companies. All companies use imported plants and machinery due to their large scale of operations. Standard blocks are generally available in the sizes of 6”x8”x12”, 5”x8”x12” and 4”x8”x12”. Product quality is defined in PSI (per squire inch pressure) which a block can survive. Generally it depends on the use of block which varies from product to product. Housing construction purpose block has a normal PSI of 400 and pavers are manufactured with 5000 PSI strength. Except for Envicrete, other two manufacturers are concentrating only on pavers and kerb stones.

Unorganized Sector – Machine Blocks

This sector mainly includes block yards where hand operated mechanical machines are used to make concrete blocks which lay six and above blocks at a time. Therefore, their operations are limited and usually work on the basis of area to area demand. Hundreds of such setups could be seen in each area of the country where these setups are fulfilling the local housing construction demand of blocks of three different sizes and strengths depending upon the individual requirements of the customer. Standard blocks are generally available in the sizes of 6”x8”x12”, 5”x8”x12” and 4”x8”x12”. As far as PSI is concerned, no defined standard could be found; however, 400 PSI is normal in this sector.

Unorganized Sector – Hand Made Blocks

This sector is gradually shrinking and now operating on a very small scale in the low income areas where concrete based structure is scarce. Single mold is used which lays only one block at a time. Such blocks are easily breakable; therefore they are generally not preferred even by the customers who have very limited capital to invest in house construction. The current scenario of this sector shows that most of such block yard operators are switching to machine made blocks option due to customer preference and production limitations of the hand made blocks making process.



22..22 EENNVVIIRROONNMMEENNTTAALL && PPRROOTTEECCTTIIOONN AASSPPEECCTTSS

Block making results in persistent exposure to the asbestos (due to dust emission), which is a natural fiber found in the dust particles of cement and blocks. To avoid its harmful effect on human health, it is suggested to follow guidelines provided by the provincial agency of environment protection. These procedures do not particularly apply on the block manufacturing industry, rather, a standard material, product and process handling guidelines applicable to construction and allied industries are available on the website: www.environment.gov.pk

33.. MMAARRKKEETT IINNFFOORRMMAATTIIOONN

33..11 MMAARRKKEETT PPOOTTEENNTTIIAALL

Prefab construction blocks making units across the country are working mostly as unorganized sector (about 80%) and no reliable data is available, precisely, for the installed capacity and the number of units working etc. However, since it is an allied industry of the construction sector, growth in construction sector may be considered as a close proxy for the growth in prefab construction blocks sector which is 7.9% (Economic Survey of Pakistan 2006).

33..22 EEXXPPOORRTTSS AANNDD IIMMPPOORRTTSS OOFF PPRREEFFAABB CCOONNSSTTRRUUCCTTIIOONN BBLLOOCCKKSS

Prefabricated construction blocks or other products are heavy; hence there are limited opportunities for export due to high cost of transportation. The market scope for prefab construction blocks is found to be encouraging in local market with the increased demand from construction industry. There is also a sufficient demand from Govt. Contractors for lying of roads and construction of industries.

33..33 PPRROOBBLLEEMM//TTHHRREEAATTSS TTOO TTHHEE PPRREEFFAABB CCOONNSSTTRRUUCCTTIIOONN BBLLOOCCKKSS SSEECCTTOORR

Local customs and traditions, non-availability of infrastructure facilities like roadsand electricity are the major hurdles in the development of the sector.

Absence of developed domestic market. Non-availability of modern machinery in local market at cheaper rates. Lack of investment friendly environment created by the relevant government

agencies.



44.. PPRROODDUUCCTTIIOONN PPRROOCCEESSSS

44..11 PPRREEFFAABB CCOONNSSTTRRUUCCTTIIOONN BBLLOOCCKKSS -- PPRROODDUUCCTTIIOONN PPRROOCCEESSSS FFLLOOWW

PPrreeffaabb ccoonnssttrruuccttiioonn bblloocckkssPPrroocceessss FFllooww

4.1.1 The Manufacturing Process

The production of concrete blocks consists of four basic processes: mixing, molding,curing, and cubing. Some manufacturing plants produce only concrete blocks, while others may produce a wide variety of prefabricated concrete products including blocks, flat paver stones, and decorative landscaping pieces such as lawn edging, etc.

Ordering & Stockpiling

Material

Batching

Mixing

Molding

Curing

Storage & Distribution



The following steps are commonly used to manufacture concrete blocks.

Mixing

The sand and gravel are stored outside in piles and are transferred into storage bins in the plant by a conveyor belt as they are needed. The Portland cement is stored outside in large vertical silos to protect it from moisture.

As a production run starts, the required amounts of sand, gravel, and cement are transferred by gravity or by mechanical means to a weigh batcher, which measures the proper amounts of each material.

The dry materials then flow into a stationary mixer where they are blended together for several minutes. There are two types of mixers commonly used. One type, called a planetary or pan mixer, resembles a shallow pan with a lid. Mixing blades are attached to a vertical rotating shaft inside the mixer. The other type is called a horizontal drum mixer. It resembles a coffee can turned on its side and has mixing blades attached to a horizontal rotating shaft inside the mixer.

After the dry materials are blended, a small amount of water is added to the mixer. If the plant is located in a climate subject to temperature extremes, the water may first pass through a heater or chiller to regulate its temperature. Admixture chemicals and coloring pigments may also be added at this time. The concrete is then mixed for six to eight minutes.

Molding

Once the load of concrete is thoroughly mixed, it is dumped into an inclined bucket conveyor and transported to an elevated hopper. The mixing cycle begins again for the next load.

From the hopper, the concrete is conveyed to another hopper on top of the block machine at a measured flow rate. In the block machine, the concrete is forced downward into molds. The molds consist of an outer mold box containing several mold liners. The liners determine the outer shape of the block and the inner shape of the block cavities. As many as 15 blocks may be molded at one time.

When the molds are full, the concrete is compacted by the weight of the upper mold head coming down on the mold cavities. This compaction may be supplemented by air or hydraulic pressure cylinders acting on the mold head. Most block machines also use a short burst of mechanical vibration to further aid compaction.

The compacted blocks are pushed down and out of the molds onto a flat steel pallet. The pallet and blocks are pushed out of the machine and onto a chain conveyor. In some operations, the blocks then pass under a rotating brush which removes loose material from the top of the blocks.



Curing

The pallets of blocks are conveyed to an automated stacker or loader which places them in a curing rack. Each rack holds several hundred blocks. When a rack is full, it is rolled onto a set of rails and moved into a curing kiln.

The kiln is an enclosed room with the capacity to hold several racks of blocks at a time. There are two basic types of curing kilns. The most common type is a low-pressure steam kiln. In this type, the blocks are held in the kiln for one to three hours at room temperature to allow them to harden slightly. Steam is then gradually introduced to raise the temperature at a controlled rate of not more than 60°F per hour (16°C per hour). Standard weight blocks are usually cured at a temperature of 150-165°F (66-74°C), while lightweight blocks are cured at 170-185°F (77-85°C). When the curing temperature has been reached, the steam is shut off, and the blocks are allowed to soak in the hot, moist air for 12-18 hours. After soaking, the blocks are dried by exhausting the moist air and further raising the temperature in the kiln. The whole curing cycle takes about 24 hours.

Another type of kiln is the high-pressure steam kiln, sometimes called an autoclave. In this type, the temperature is raised to 300-375°F (149-191°C), and the pressure is raised to 80-185 psi (5.5-12.8 bar). The blocks are allowed to soak for five to 10 hours. The pressure is then rapidly vented, which causes the blocks to quickly release their trapped moisture. The autoclave curing process requires more energy and a more expensive kiln, but it can produce blocks in less time.

Cubing

The racks of cured blocks are rolled out of the kiln, and the pallets of blocks are un-stacked and placed on a chain conveyor. The blocks are pushed off the steel pallets, and the empty pallets are fed back into the block machine to receive a new set of molded blocks.

If the blocks are to be made into split-face blocks, they are first molded as two blocks joined together. Once these double blocks are cured, they pass through a splitter, which strikes them with a heavy blade along the section between the two halves. This causes the double block to fracture and form a rough, stone-like texture on one face of each piece.

The blocks pass through a cuber which aligns each block and then stacks them into a cube three blocks across by six blocks deep by three or four blocks high. These cubes are carried outside with a forklift and placed in storage.

Quality control

Three aspects should be monitored to ensure quality masonry units: strength, dimensions and shrinkage.



Strength

Quality of blocks should be controlled so that strengths are adequate (to avoid breakages or rejection by customers) and mixes are as economical as possible. Ideally, blocks should be regularly tested for strength and mixes and production processes modified if necessary. If testing is impracticable or unaffordable, block strength should be continually assessed by noting whether corners and edges, or even whole blocks, tend to break in handling. Strength can also be assessed by knocking two mature bricks together.

Dimensions

The length and width of the units are determined by the mould and will not vary greatly. However, the height can vary and should be monitored using a simple gauge. Units of inconsistent height will lead to difficulties in the construction of masonry and possible rain penetration.

Shrinkage

Concrete masonry units shrink slightly after manufacture. In order to avoid this happening in the wall, blocks should be allowed to dry out for at least seven days before being used for construction.

44..22 RRAAWW MMAATTEERRIIAALL RREEQQUUIIRREEMMEENNTT

Crushed Hard Lime Stone, Sand, Cement and Water will be used as raw material for manufacturing prefab construction blocks. Crushed raw stone and sand could be purchased directly from the excavator (quarry lease holder) or supplier, whereas, cement could be sourced from manufacturers by signing a regular supply contract which would lead to a controlled cost. For the purpose of this pre-feasibility, it is proposed to hold a supply contract with the three types of material suppliers to avoid any possible threat in procuring raw material as well as to keep the project economically stable.

Based on our discussions with the business operators, it has been estimated that 1 sq. ft.of loose aggregate will yield 0.7 sq. ft. of concrete volume. For the proposed project, a total of 5200 sq. ft. of aggregate would be required daily to produce 4000 sq. ft. of concrete blocks. Sand-Cement ratio will largely depend on the type and desired strength of blocks, however, for this pre-feasibility study, assumed ratio is 100:1 (one 50kg bag of cement for each 100 blocks) by loose volumes. Daily cement requirement for the saidproduction would be around 50 bags of 50kg each.



44..33 MMAACCHHIINNEERRYY RREEQQUUIIRREEMMEENNTT

Although small mixing and molding units are available in the local market, yet, complete mechanized plants are not available and organized setups are using imported plant and machinery for concrete block making. European and American plants are available which give good quality output; however, these are very expensive and not generally preferred even by the leading players due to high capital requirement. Therefore, Chinese or any other machinery would be more appropriate for the proposed project which gives good quality output and is relatively more economical.

Machinery with the following specification has been proposed for the project which will cost around Rs. 30 million.

Detailed Plant Description

HCQ6-15III Concrete Block Machine:With a solid and robust welded steel frame, this machine is operated using an advanced control system. Has a compact size (6 x 3.5 x 2.95m), and overall weight of 9.6MT.

Compulsory Mixer with Skip Elevator: The mixer consists of a solid mixing trough and alloy steel rotary mixing blade, 4 vertical supports with foot plates. The platform is adapted for service and working. To mix light weight and high density concrete with 0.5cbm per batch.

Elevator: As the pallet and fresh block convey to the elevator, they are stacked to a maximum height of 1metre which is equivalent to 2.2 ton.

Traveling Material Bin Feeder: Through the conveyor, the slightly moist concrete from the mixer is transported to traveling material bin feeder for separating temporary storage.The material bin is designed in a solid, rugged steel weldment and maintenance free track roller.

Face Mix Section: Specially designed for production of blocks or pavers with two layers (coloring). Equipped with loading hopper with adjustable feeding system. The section can elevate automatically to allow the blocks or pavers to pass through.



Control Panel with Touch Screen: Heart of the control is a PLC with a touch screen color flat display. The operator can select the functions and change the parameter directly via the screen. The recipe can be stored and the statistics data can be downloaded.

There are many Chinese and other suppliers available on the internet and could be contacted and easily accessible. For the purpose of this pre-feasibility, we have explored the following machinery suppliers:

11.. Quanzhou City Licheng Huangshi Machinery Co., Ltd. (Web Address:http://huangshimachinery.en.alibaba.com/)

2. Fujian Quanzhou Honcha Machine Make Co., Ltd.

3. Concrete Pumps

7 Ballance Road, Durban, 4001, South AfricaP. O. Box 262, Westville, 3630, South AfricaTel +27 - 31 - 303 1397 Fax +27 - 31 - 312 0294E-mail address: [email protected] address: www.concretepumps.co.za

44..44 VVEEHHIICCLLEESS FFOORR TTRRAANNSSPPOORRTTAATTIIOONN

The proposed setup would require three to four vehicles (new machinery has beenconsidered for the proposed project) to carryout transportation of raw material and finished products. Besides, dumping and loading vehicles for the transportation offinished product to the stacking points would be a pre-requisite. Details of required vehicles have been provided in the following table:

S. No.

Name of Vehicle/MachinePurpose of the

MachineNo. of Units

RequiredTotal Cost

1 Dumper/TruckMaterial Transportation

1 4,000,000

2 Fork LifterFinished goods transportation

2 1,000,000

3 Other Tools & Equipment 200,000Total 5,200,000

*Machinery cost depends on model and may vary

During the discussions with the market experts and entrepreneurs, it was observed that, though the above machinery/vehicle could also be hired on rent, yet, the incremental cost



difference between rented and purchased machinery would be very close over a long period of time. Therefore it would be preferred to acquire own machinery rather than obtaining these services on rent.

44..55 PPLLAANNTT AANNDD MMAACCHHIINNEERRYY MMAAIINNTTEENNAANNCCEE

Machinery is expected to be serviced on an annual basis. During the projected period, maintenance expenses are estimated to be around 3% of the total cost of machine.

55.. LLAANNDD && BBUUIILLDDIINNGG RREEQQUUIIRREEMMEENNTT

55..11 SSIITTEE DDEEVVEELLOOPPMMEENNTT

The Prefab construction blocks project is estimated to require a total area of one acre,which will be used for stockpiling of raw material, production of blocks, cement storage and storage of finished product. Since heavy machinery and vehicles i.e. dumper, fork lifters etc. would be used which require open space for the movement as well as there will be frequent movement of heavy transportation and delivery vehicles; therefore, large land requirement is being recommended. Moreover, the space would also be used for machinery installation, storage and vehicle parking and different services necessary for the project.

55..22 LLAANNDD && BBUUIILLDDIINNGG RREEQQUUIIRREEMMEENNTTSS

5.2.1 Selecting a site

In selecting a site, consider location, access, ground slope and size. Each of these is discussed below.

Location

This should be considered in relation to: Supply of raw materials Market for blocks Location of the labour force Security of the area Availability of services, i.e. roads, water, sewerage, electricity, etc.

Access

The site must be accessible to trucks delivering aggregates and cement and collecting finished blocks.



Ground slope

Ideally, the site should be level or nearly so. Steep slopes make handling and production difficult. Terracing a steep slope is expensive.

Size

The site should be big enough for aggregate stockpiles, cement storage, production (slab or stationary machine) block stacking, staff facilities, an office and on-site access. With all provisions for the business, one acre would be sufficient for the project.

5.2.2 Establishing the site

The site should have provision for stockpiling aggregates and storing cement, a production area, a stacking area, staff facilities, an office, and access between different areas and facilities. Each of these is discussed below.

5.2.2.1 Aggregate stockpiles

Aggregates must be stockpiled in such a way that: they do not become contaminated by soil, leaves, etc; different aggregates are kept separate; and rainwater can drain away. Ideally therefore, aggregates should be stockpiled on a concrete slab. If this is not done, the layer of aggregates in contact with the soil should not be used for production. Aggregates must not be stockpiled under trees. Partitions should be erected between different types of aggregate. Stockpiles should be on a slight slope so that rainwater does not collect in the aggregates.

5.2.2.2 Cement store

The best way to store cement is in a silo. For small scale block yards, however, cement will be delivered in bags. Cement in bags should preferably be stored in a weather-proof room. Bags should be stacked on a plastic tarpaulin or on closely spaced wooden strips so that they do not absorb damp from the floor. The storeroom should be big enough to hold at least a week’s supply of cement. If it is not possible to provide a storeroom, cement in bags should be stored in stacks raised above the ground and completely covered with tarpaulins.

5.2.2.3 Production area



The size of this area depends on the method of producing blocks. A stationary machine, which forms blocks on pallets, needs a relatively small area with space around it for operators. A mobile “egg-laying” machine needs a fairly large slab on which blocks are made. Details of such a slab are discussed below.

Construction of a production slab

Area

A flat concrete slab, big enough for at least one day’s production, is required. To minimize breakages in cold weather, it is recommended to increase the cement content of the mix or the curing period before moving the blocks. As a guideline, an 80 x 80 ft. in area is suitable for a production of 6000 blocks per day.

Slope

Normally block production is carried out in the open, and the concrete slab should have a minimum slope of 1 in 100 to ensure proper drainage.

Thickness

Large production machines require a minimum slab thickness of 150 mm.

Joints

To prevent uncontrolled cracking of the slab, it should be divided into panels which should be square or as close to square as possible. The half round keyway prevents differential settlement of adjacent slabs. The maximum joint spacing depends on the thickness of the slab and should not exceed 6 m for slab thicknesses of 150 and 200 mm.

Stacking area

An area big enough to stack two weeks’ production is needed for curing and dryingblocks. It is normally not necessary to pave this area. To avoid muddy conditions, a layer of concrete stone, about 100 mm thick, should be enough.

Office and Staff facilities

These include toilets, ablutions, and possibly change rooms. An office should be provided for all but the smallest of yards.

Land and building requirements for the project would be as follows:



DetailsSize/Area (Sq. Ft.)

Civil Works /Construction Cost/Sq. Ft.

Total Construction

Cost

Production & Stacking Area 15,000 150 2,250,000 Cement Store 2500 300 750,000 Office & Staff facilities 400 300 120,000 Storage Area (Sand/Crush) Not limited - 0 Water Tank 4000 200 800,000 Other Services (water plant, tool shop etc.) 500 300 150,000 Total Covered Area 18,400 4,070,000

The factory would be located at Nooriabad, Sindh. The reason for the selection is that utilities, water, electricity and skilled manpower are conveniently available, whereas, comparatively low cost of land, proximity to the target market, good transport and communication facilities, also account for its selection.

66.. HHUUMMAANN RREESSOOUURRCCEE RREEQQUUIIRREEMMEENNTT

Construction and allied industry is a labor intensive industry; therefore, a total 18 persons will be required to handle the production operations of a prefab construction blocksmaking unit. The business unit will work on one shift basis (8 hours daily). Technical staff with relevant experience will be required for operating production plant. The staff will be provided training by the plant & machinery supplier.



Total approximate manpower required for the business operations along with the respective salaries are given in the table below:

(Pak. Rs.)

Staff Title No of PersonsMonthly Salary

Annual Salary

Owner (Business Unit Manager)Production Staff (Quarry/Excavation Site)

2. Forklift Operator 1 8,000 96,000 3. Dumper/Truck Driver 1 8,000 96,000 4. Helper/Laborer 2 8,000 96,000

Production Staff (Crushing Factory)5. Production Incharge / Plant Operator 1 10,000 120,0006. Assistant Production Plant Operator 1 5,000 60,0007. Production Laborers 8 32,000 384,000

Total Production Staff 14 71,000 852,000General Administration/ Selling Staff

8. Office Assistant 1 5,000 60,0009. Security Staff 2 10,000 120,000

Total G A /S Staff 3 15,000 180,000

TOTAL 17 86,000 1,032,000

6.1 Experience Requirement for the Staff

One to two year of experience on mechanized block making plant would be necessary for the person who will operate the prefab construction blocks plant. It is also suggested that preference should be given to literate persons so that they could understand the significance of undertaking health and safety measures.

77.. FFIINNAANNCCIIAALL AANNAALLYYSSIISS && KKEEYY AASSSSUUMMPPTTIIOONNSS

The project cost estimates for the proposed “Prefab construction blocks Business” have been formulated on the basis of discussions with industry stakeholders and experts. The projections cover the cost of land, machinery and equipment including office equipment, fixtures etc. Assumptions regarding machinery have been provided, however, the specific assumptions relating to individual cost components are given as under.

77..11 LLAANNDD && BBUUIILLDDIINNGG

Land for setting up the proposed prefab construction blocks unit would be purchasedwhich will incur a cost of approximately Rs. 1.2 million. Construction and renovation of site will cost around Rs. 4 million which has been assumed to depreciate at 10% per annum using diminishing balance method.



77..22 OOVVEERRAALLLL FFAACCTTOORRYY && OOFFFFIICCEE RREENNOOVVAATTIIOONN

To renovate the factory / office premises in Year 5 and Year 10, certain expenses will be incurred for which an amount equivalent to 5% of the total site/office construction cost is estimated.

77..33 FFAACCTTOORRYY // OOFFFFIICCEE FFUURRNNIITTUURREE

A lump sum provision of Rs. 60,000 for procurement of office/factory furniture is assumed. This would include table, desk, chairs, and office stationery. The breakup of Factory Office Furniture & Fixtures is as follows:

Item Number Total CostTable & Chair for Owner 1 5,000Tables & Chairs for Admin. Staff 1 3,000Waiting Chairs 4 6,000Curtains & Interior Decoration for office - 5,000Chairs for Workers/Labor 6 5000Electrical Fittings & Lights - 30,000Others - 6,000Total 60,000

77..44 DDEEPPRREECCIIAATTIIOONN TTRREEAATTMMEENNTT

The treatment of depreciation would be on a diminishing balance method at the rate of 10% per annum on the following. The method is also expected to provide accurate tax treatment.

1. Plant & machinery2. Land & Building Construction and Renovation3. Vehicles4. Furniture and Fixtures etc.

77..55 UUTTIILLIITTIIEESS

Prefab construction blocks plant will be operated using electricity for productionpurposes. This would draw considerable amount of electricity. Likewise, heavy vehicles i.e. Fork lifter, truck/dumper, etc would require huge quantity of fuel for which diesel



will be used. The cost of the utilities including electricity, diesel/fuel, telephone, and water is estimated to be around Rs. 2 million per annum. Approximate cost of utilities hasbeen given below:

UtilityTotal Monthly

Cost (Rs.)Total Annual

Cost (Rs.)Annual %age

Increase

1. Electricity 58,000 696,000 5%

2. Furnace Oil, Lubricants etc. 5,000 60,000 3%

3. Diesel for Vehicles and Machinery 28,500 342,000 5%

4. Water 70,200 842,400 5%

5. Telephone 5,000 60,000 5%

Total 166,700 2,000,400

77..66 WWOORRKKIINNGG CCAAPPIITTAALL RREEQQUUIIRREEMMEENNTTSS

It is estimated that an additional amount of one million rupees (approximately) will be required as cash in hand to meet the working capital requirements. These provisions havebeen estimated based on the following assumptions for the proposed business.

Utilities - (Office & Factory) 87,1401. Electricity - 01 Month 58,2402. Oil, Lubricants & Other consumables - 01 Month 5,0003. Water - 07 days 18,900

4. Telephone - 01 Month 5,000

Salaries - Three Months (Production Staff) 213,000

Raw Material Inventories (Cement & Sand/Crushed Stone) 238,380

Cement – 01 Month 325,000

Sand and Crushed Stone – 07 Days 31,500

Misc. Expenses - Three months (@ 5000 /month) 15,000

Total Working Capital 910,020

77..77 PPLLAANNTT && MMAACCHHIINNEERRYY IINNSSTTAALLLLAATTIIOONN

Plant and machinery installation and trial run expenses has been assumed to be around Rs. 100,000/-. It has been included in the plant and machinery cost.



77..88 VVEEHHIICCLLEE FFOORR SSUUPPPPOORRTT AANNDD MMAAIINNTTEENNAANNCCEE SSEERRVVIICCEESS

An additional light loading vehicle would be required for providing services for the maintenance, communication of machinery spare parts, labor etc. For this purpose, a transportation vehicle has been proposed and an amount of Rs. 400,000 is assumed to be required to purchase the vehicle.

77..99 PPRREELLIIMMIINNAARRYY EEXXPPEENNSSEESS AANNDD CCOONNTTIINNGGEENNCCYY PPRROOVVIISSIIOONN

A lump sum provision of Rs. 300,000 is assumed to cover all preliminary expenses which will be amortized over the 5 year period.

77..1100 SSEELLLLIINNGG && DDIISSTTRRIIBBUUTTIIOONN EEXXPPEENNSSEESS ((OORRDDEERR BBOOOOKKIINNGG AAGGEENNTTSS))

For the purpose of this pre-feasibility, it has been assumed that the block maker would work in association with building material suppliers and will appoint 5 to 6 suppliers asbooking agents. These arrangements would raise the selling costs for the business for which an amount equivalent to 2% of the annual sales has been assumed which also covers the distribution cost of bulk supplies, entertained directly by the owner.

77..1111 MMIISSCCEELLLLAANNEEOOUUSS EEXXPPEENNSSEESS

Miscellaneous expenses of running the business are assumed to be Rs. 5,000 per month. These expenses include various items like office stationery, daily consumables, traveling allowances etc. and are assumed to increase at a nominal rate of 10% per annum.

77..1122 FFIINNIISSHHEEDD GGOOOODDSS IINNVVEENNTTOORRYY

The proposed setup is assumed to maintain a Finished Goods Inventory of 7 days of the total annual production.



77..1133 RREEVVEENNUUEE PPRROOJJEECCTTIIOONNSS

For the revenue projections, prefab construction blocks are assumed to be produced as follows:

S. No.

Block TypeSize/

Dimension StandardProduction (as % of

Total)Color

Selling Price/ unit

1 Masonry Block




Hollow Block 5”x8”x16” 600-800 psi 10% Natural Grey 23

Fair Face Blocks

Solid Block 90x190x390 mm 600-800 psi 15% Natural Grey 28

2 Pavers 300x300x40mm 4000 psi 5% Natural Grey 40

3 Kerb Stone/Block 6”x12”x12” 5000 psi 30% Natural Grey 90

Working with the proposed plant and machinery, the project will be capable of producing 4,000 sq.ft. of concrete blocks at 100% capacity utilization with single shift of 8 hours aday. It has been assumed that it will take some time for the business to reach the optimal capacity utilization point for the projected period. Therefore, the first year production ofprefab construction blocks has been estimated with 70% capacity utilization. Annual increase of 3% in capacity utilization is assumed over the projection period. Allprojections are based on 8 working hrs a day with 26 days a month.

Based on our discussions with the industry experts and entrepreneurs it is assumed that the sales price will increase with a nominal rate of 5% on all product categories duringthe projected period.

77..1155 AACCCCOOUUNNTTSS RREECCEEIIVVAABBLLEESS

Considering the industry norm, particular to the construction sector and all of its allied industries, it has been assumed that 70% of the sales will be on cash. Whereas, remaining 30% sales will be on credit to the builders and construction contractors. A collection period of 60 days is assumed for the credit sales.

All of the above assumptions are based on our findings during the discussions with the industry experts and stakeholders. A provision for bad debts has been assumed equivalent to 2% of the annual credit sales.



77..1166 FFIINNAANNCCIIAALL CCHHAARRGGEESS

It is assumed that long-term financing for 5 years will be obtained in order to finance the project investment cost. This leasing facility would be required at a rate of 15% (including 1% insurance premium) per annum with 60 monthly installments over a periodof five years.

77..1177 TTAAXXAATTIIOONN

The business is assumed to be run as a sole proprietorship; therefore, tax rates applicable on the income of an individual tax payer are used for income tax calculation of the business.

77..1188 CCOOSSTT OOFF CCAAPPIITTAALL

The cost of capital is explained in the following table:

Particulars RateRequired return on equity 20%Cost of finance 15%Weighted Average Cost of Capital 17.5%

The weighted average cost of capital is based on the debt/equity ratio of 50:50.

77..1199 OOWWNNEERR’’SS WWIITTHHDDRRAAWWAALL

It is assumed that the owner will draw funds from the business once the desired profitability is reached from the start of operations. The amount would depend on business sustainability and availability of funds for future growth.

77..2200 AANNNNEEXXUURREESS

77.. 2200..11 SSUUMMMMAARRYY OOFF KKEEYY AASSSSUUMMPPTTIIOONNSS

77.. 2200..22 CCOOSSTT AANNDD RREEVVEENNUUEE SSHHEEEETT

77.. 2200..33 PPRROOJJEECCTTEEDD IINNCCOOMMEE SSTTAATTEEMMEENNTT

77.. 2200..44 PPRROOJJEECCTTEEDD BBAALLAANNCCEE SSHHEEEETT

77.. 2200..55 PPRROOJJEECCTTEEDD CCAASSHH FFLLOOWW SSTTAATTEEMMEENNTT



(in Pak. Rs.)

Sr. No.

PARTICULARS TOTAL COST/DETAILS

Land 2,000,000

Plant & machinery 35,300,000

Concrete Blocks Making Plant (Imported) 30,000,000

Transportation Machinery/Vehicles 5,200,000

Plant & machinery Installation & trial run expenses 100,000

Vehicle for support and maintenance services - One light vehicle 400,000

Site/Office Renovation & Contruction 4,070,000

Factory / Office Furniture 60,000

Preliminary Expenses 300,000

Total Fixed Capital 42,130,000

Utilities - (Office & Factory) 87,140

1. Electricity - 01 Month 58,240

2. Oil, Lubricants & Other consumables - 01 Month 5,000

4. Water - 07 days 18,900

Water Requirement (Quantity) 66,000

5. Telephone - 01 Month 5,000

Salaries - Three Months (Production Staff) 213,000

Raw Material Inventories (Cement & Sand/Crushed Stone) - 07 Days 238,380

Cement - 26 Days 325,000

Sand and Crushed Stone - 07 Days 31,500

Misc. Expenses - Three months (@ 5000 /month) 15,000

Total Working Capital 910,020

TOTAL PROJECT COST 43,040,020

Loan Finance 21,520,010

Equity Financing 21,520,010

Debt:Equity Ratio (50:50) 50.00%

IRR 26%

NPV 14,127,743

Payback Period (Years) 4 Years

Debt Equity Ratio 50:50'

Required return on equity 20%

Cost of finance15%

Weighted Average Cost of capital 17.50%

1 Depreciation 10%

5 Plant and Machinery Annual Repair & Maintenance (as %age of total cost of plant) 3.00%

Selling & Distribution Expenses 2.00%

INCREASE IN PRICE AND GROWTH

6 Increase in Raw Material Price (Cement & Sand/Crushed Stone) 5%

7 Increase in other consumables price 3%

8 Factory & Office Renovation (in Year 5 & 10) 5%

Capacity Utilisation at the beginning of the period 50%

Increase in capacity utilisation (Annual) 5%

Maximum Capacity UtilisationRunning on single shift basis but double shift can be initiated if demand increases

Annual sales price increase 5%

Operational Hrs./day 8Operational Days / Month 26Operational Months 12Annual Operational Days 312

Electricity charges growth rate 5%Increase in Salaries 10%Oil/Diesel and other consumables price growth rates 10%Increase in Misc. Expenses 10%

Sales on Credit - as %age of total 30%Sales on Cash - as %age of total 70%

Accounts Receivable period (days) - only for 30% credit sales 2

Provision for bed debts (only on 30% credit sales) 2%

Inventory (Raw Material) 7

Finished Goods Inventory (Days) 7

Economy related assumptions

Cash Flow Assumptions

Summary of Key Assumptions

Production Operations and Capacity Utilisation Assumptions

Fixed Capital

Working Capital

PROJECT RETURNS AND OTHER FINANCIAL

OTHER ASSUMPTIONS



1. REVENUE CALCULATIONProduction

Rated capacity of the Block Making Plant 500 sq.ft. of concrete / hr.No. of Operating Hours - Single Shift Basis 8 Hrs / DayEstimated Optimal Production 4,000 sq.ft. of concrete / dayExpected Capacity Utilization (At the beginning of the project) 50%Annual Capacity Utilization Growth Rate 5%

Expected Concrete Production at the beginning of the project 2,000 sq.ft. of concrete / dayExpected Blocks Production at the beginning of the project Blocks/day

Sales prices of differe categories of construction blocks

No. of Blocks Produced (Approximately)Size Masonry Block

4”x8”x12” Solid Block 450 15 Rs. 5”x8”x12” Solid Block 840 16 Rs. 6”x8”x12” Solid Block 300 17 Rs. 5”x8”x16” Hollow Block 225 23 Rs.

Fair Face Blocks

90x190x390 mm Solid Block 305 28 Rs. 300x300x40mm Pavers 144 40 Rs.

6”x12”x12” Kerb Stone/Block 600 90 Rs. Total Blocks Produced 2,864

Construction Block Category Production Assumptions

Masonry Block

Solid Block 15%

Solid Block 28%

Solid Block 10%

Hollow Block 10%

Fair Face Blocks

Solid Block 2%

Pavers 5%

Kerb Stone/Block 30%

100%

Construction Block Category Blocks Produced / DayProduction in

RupeesMasonry Block

Solid Block 450 6,750 Rs. Solid Block 840 13,440 Rs. Solid Block 300 5,100 Rs. Hollow Block 225 5,175 Rs. Fair Face Blocks

Solid Block 305 8,533 Rs. Pavers 144 5,760 Rs. Kerb Stone/Block 600 54,000 Rs.

Total Value of Blocks Produced per Day 2864 98,758 Rs.

Total Value of Blocks Produced per Month 2,567,717 Rs.

Gross Annual Sales 30,812,600 Rs.

Provision for Finished Goods Inventory 7 DaysEstimated Finished Goods Inventory at the end of the Year 396,695 Rs

Total Realised Gross Annual Sales 30,812,600 Rs.Sales on Credit 30% of the totalSales on Cash 70% of the total

2. COST CALCULATION - for 4000 blocks

RAW MATERIAL5,900 sq.ft.

Description Raw Material Required/Block Quantity CostWater 16.5 66000 2700 Rs.Cement 0.6 50 bags 12500 Rs.Sand (Bajri) 1.18 4720 4500 Rs.Crushed stone 0.295 1180 3500 Rs.Total Raw Material Cost 23200 Rs./day

OTHER CONSUMABLES

Forklift approximate Fuel Consumption 50 Liter/hr.Dumper/Truck approximate Fuel Consumption 75 Liter/hr.Electricity Charges (including all taxex) 1 K.W.H* 7.00 Rs. / KWHBlock Making Plant approximate Electricity Comsumption 40 KW / hr.

APPROX. NUMBER OF OPERATIONAL HOURS FOR BLOCK MAKING MACHINERY/VEHICLESPlant & Machinery 8 hr.Vehicles - 6 hr.

Electricity Consumption 320 KW/dayFuel & Other Consumables 750 Liter/dayTotal Other Consumables 30,740 Rs./day

Total Cost / day 53,940 Rs. / day

Total Cost / Month 1,402,440 Rs. / month

TOTAL ANNUAL COST 16,829,280 Rs. / annum

Total Annual Sales 30,812,600 DifferenceTotal Annual Cost of Raw Material and other consumables 16,829,280 13,983,320

PREFABRICATED CONSTRUCTION BLOCKS MANUFACTURING

COST AND REVENUE SHEET



Projected Income Statement (Rs.) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Net (Adjusted Sales) 30,233,409 33,930,278 37,408,136 41,242,476 45,469,835 50,130,499 55,268,883 60,933,951 67,179,689 74,065,617

Cost of Sales 17,801,280 19,617,481 21,619,315 23,825,772 26,257,785 28,938,432 31,893,150 35,149,982 38,739,840 42,696,800

Fuel & Electricity Consumed During Production 16,829,280 18,554,281 20,456,095 22,552,845 24,864,511 27,413,124 30,222,969 33,320,823 36,736,208 40,501,669 Labor (Production Staff) 852,000 937,200 1,030,920 1,134,012 1,247,413 1,372,155 1,509,370 1,660,307 1,826,338 2,008,971 Other Utilities 120,000 126,000 132,300 138,915 145,861 153,154 160,811 168,852 177,295 186,159

Gross Profit 12,432,129 14,312,797 15,788,821 17,416,704 19,212,050 21,192,067 23,375,732 25,783,969 28,439,849 31,368,817 Gross Profit Margin 41% 42% 42% 42% 42% 42% 42% 42% 42% 42%

General Administrative & Selling ExpensesSalaries 180,000 198,000 217,800 239,580 263,538 289,892 318,881 350,769 385,846 424,431 Lease Charges of Land - Quarry / Excavation 31,500 32,445 33,418 34,421 35,454 36,517 37,613 38,741 39,903 41,100 Factory/Office Miscellaneous Expenses 60,000 66,000 72,600 79,860 87,846 96,631 106,294 116,923 128,615 141,477

Amortization of Preliminary Expenses 60,000 60,000 60,000 60,000 60,000 - - - - - Depreciation Expense 3,983,000 3,584,700 3,226,230 2,903,607 2,613,246 2,372,272 2,135,045 1,921,540 1,729,386 1,556,447 Maintenance Expense 1,059,000 1,059,000 1,059,000 1,059,000 1,059,000 1,059,000 1,059,000 1,059,000 1,059,000 1,059,000 Selling & Distribution 604,668 678,606 748,163 824,850 909,397 1,002,610 1,105,378 1,218,679 1,343,594 1,481,312

Subtotal 5,978,168 5,678,751 5,417,211 5,201,317 5,028,481 4,856,921 4,762,209 4,705,652 4,686,344 4,703,768 Operating Income 6,453,961 8,634,046 10,371,610 12,215,386 14,183,569 16,335,146 18,613,523 21,078,316 23,753,505 26,665,049

Financial Charges (15% Per Annum) 3,018,969 2,516,684 1,933,654 1,256,900 471,355 - - - - -

Earnings Before Taxes 3,434,992 6,117,363 8,437,956 10,958,486 13,712,214 16,335,146 18,613,523 21,078,316 23,753,505 26,665,049 Tax 858,748 1,529,341 2,109,489 2,739,622 3,428,054 4,083,787 4,653,381 5,269,579 5,938,376 9,205,267 Net Profit 2,576,244 4,588,022 6,328,467 8,218,865 10,284,161 12,251,360 13,960,142 15,808,737 17,815,129 17,459,782

Monthly Profit After Tax 214,687 382,335 527,372 684,905 857,013 1,020,947 1,163,345 1,317,395 1,484,594 1,454,982




Projected Balance Sheet (Rs.) Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

AssetsCurrent Assets

Cash & Bank Balance 2,671,640 3,286,008 6,603,692 9,710,622 12,678,042 14,897,694 22,622,121 30,777,191 38,022,249 45,031,816 49,254,776Fuel Inventoriy (Diesel) 238,380 701,220 773,095 852,337 939,702 1,036,021 1,142,213 1,259,290 1,388,368 1,530,675 1,687,570Finished Goods Inventory 0 396,695 437,309 482,080 531,436 585,844 645,824 711,944 784,833 865,185 953,764Accounts Receivable 0 1,520,795 1,696,514 1,870,407 2,062,124 2,273,492 2,506,525 2,763,444 3,046,698 3,358,984 3,703,281

Total Current Assets 2,910,020 5,904,719 9,510,610 12,915,447 16,211,304 18,793,052 26,916,683 35,511,870 43,242,147 50,786,662 55,599,391

Fixed AssetsPlant Machinery & Facility 35,300,000 31,770,000 28,593,000 25,733,700 23,160,330 20,844,297 18,759,867 16,883,881 15,195,493 13,675,943 12,308,349Factory Construction 4,070,000 3,663,000 3,296,700 2,967,030 2,670,327 2,606,794 2,346,115 2,111,503 1,900,353 1,710,318 1,742,786

Furniture & Fixtures 60,000 54,000 48,600 43,740 39,366 35,429 31,886 28,698 25,828 23,245 20,921Vehicle 400,000 360,000 324,000 291,600 262,440 236,196 212,576 191,319 172,187 154,968 139,471

Total Fixed Assets 39,830,000 35,847,000 32,262,300 29,036,070 26,132,463 23,722,717 21,350,445 19,215,401 17,293,860 15,564,474 14,211,527

Intangible AssetsPreliminary Expenses 300,000 240,000 180,000 120,000 60,000 - - - - - -

Total Assets 43,040,020 41,991,719 41,952,910 42,071,517 42,403,767 42,515,768 48,267,128 54,727,270 60,536,007 66,351,136 69,810,918

Owner's Equity 21,520,010 23,596,254 27,184,276 31,512,743 36,731,608 42,515,768 48,267,128 54,727,270 60,536,007 66,351,136 69,810,918

Long Term Liability 21,520,010 18,395,464 14,768,634 10,558,773 5,672,159 0 0 0 0 0 0

Total Equity & Liabilities 43,040,020 41,991,719 41,952,910 42,071,517 42,403,767 42,515,768 48,267,128 54,727,270 60,536,007 66,351,136 69,810,918




Projected Statement of Cash Flows (Rs.) Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Cash Flow From Operating Activities

Net Profit 0 2,576,244 4,588,022 6,328,467 8,218,865 10,284,161 12,251,360 13,960,142 15,808,737 17,815,129 17,459,782Add: Depreciation Expense 0 3,983,000 3,584,700 3,226,230 2,903,607 2,613,246 2,372,272 2,135,045 1,921,540 1,729,386 1,556,447

Amortization Expense 0 60,000 60,000 60,000 60,000 60,000 - - - - -(Increase) / decrease in Receivables - (1,520,795) (175,719) (173,893) (191,717) (211,368) (233,033) (256,919) (283,253) (312,287) (344,296)(Increase) / decrease in RM - (462,840) (71,875) (79,242) (87,365) (96,319) (106,192) (117,077) (129,077) (142,308) (156,894)(Increase) / decrease in FG Inventory (396,695) (40,613) (44,772) (49,355) (54,409) (59,979) (66,120) (72,890) (80,352) (88,579)

Net Cash Flow From Operations 0 4,238,914 7,944,515 9,316,790 10,854,035 12,595,311 14,224,427 15,655,071 17,245,057 19,009,568 18,426,460

Cash Flow From Financing Activities

Receipt of Long Term Debt 21,520,010Repayment of Long Term Debt (3,124,546) (3,626,831) (4,209,860) (4,886,614) (5,672,159) - - - - -Owner's Equity 21,520,010 (500,000) (1,000,000) (2,000,000) (3,000,000) (4,500,000) (6,500,000) (7,500,000) (10,000,000) (12,000,000) (14,000,000)

Net Cash Flow From Financing Activities 43,040,020 (3,624,546) (4,626,831) (6,209,860) (7,886,614) (10,172,159) (6,500,000) (7,500,000) (10,000,000) (12,000,000) (14,000,000)

Cash Flow From Investing Activities

Capital Expenditure (39,770,000) (203,500) (203,500)Factory/Office Furniture (60,000)Preliminary Operating Expenses (300,000)Raw Material Inventory (15 Days) (238,380)

Net Cash Flow From Investing Activities (40,368,380) 0 0 0 0 (203,500) 0 0 0 0 (203,500)

NET CASH FLOW 2,671,640 614,368 3,317,684 3,106,930 2,967,420 2,219,652 7,724,427 8,155,071 7,245,057 7,009,568 4,222,960

Cash at the Beginning of the Period 0 2,671,640 3,286,008 6,603,692 9,710,622 12,678,042 14,897,694 22,622,121 30,777,191 38,022,249 45,031,816Cash at the End of the Period 2,671,640 3,286,008 6,603,692 9,710,622 12,678,042 14,897,694 22,622,121 30,777,191 38,022,249 45,031,816 49,254,776


Documents

Pre-Feasibility Study - SeekPartfile.seekpart.com/keywordpdf/2010/12/18/201012184123062.pdfPre-Feasibility Study Prefabricated Construction Blocks ((SSMMEEDDAA DDOOCCUUMMEENNTT)) Small