Prefabricated Construction Blocks

Pre-Feasibility Study
Prefabricated Construction Blocks

((SSM
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Small and Medium Enterprise Development Authority

Government of Pakistan
www.smeda.org.pk
HEAD OFFICE
Waheed Trade Complex, 1st Floor , 36-Commercial Zone, Phase III, Sector XX, Khayaban-e-Iqbal, DHA Lahore
Tel: (042) 111-111-456, Fax: (042) 5896619, 5899756
[email protected]
REGIONAL OFFICE
PUNJAB
Waheed Trade Complex,
1st Floor, 36-Commercial Zone,
Phase III, Sector XX,
Khayaban-e-Iqbal, DHA Lahore.
Tel: (042) 111-111-456
Fax: (042) 5896619, 5899756
[email protected]
REGIONAL OFFICE
SINDH
REGIONAL OFFICE
NWFP
REGIONAL OFFICE
BALOCHISTAN
5TH Floor, Bahria

Complex II, M.T. Khan Road,
Karachi.
Tel: (021) 111-111-456
Fax: (021) 5610572
[email protected]
Ground Floor
State Life Building
The Mall, Peshawar.
Tel: (091) 9213046-47
Fax: (091) 286908
[email protected]
Bungalow No. 15-A

Chaman Housing Scheme
Airport Road, Quetta.
Tel: (081) 831623, 831702
Fax: (081) 831922
[email protected]
December, 2006
Pre-Feasibility Report
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
Prepared by
SMEDA-Sindh
Approved by
Provincial Chief - Sindh
Issue Date
December, 2006
Issued by
Library Officer
PREF-X/Dec, 2006/Rev1
PROJECT PROFILE
1. 1
OPPORTUNITY RATIONALE
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 consistent
need 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--vis investment opportunity in the PREFABRICATED
CONSTRUCTION BLOCKS business.
1. 2
PROJECT BRIEF
The proposed project envisages the setup of a prefabricated construction blocks

manufacturing 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
Economic Survey of Pakistan 2006
economic feasibility of the venture. Determination of level of demand for blocks in the
area (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.
1. 3
MARKET ENTRY TIMING
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.
1. 4
PROPOSED BUSINESS LEGAL STATUS
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.
1. 5
PROJECT CAPACITY AND RATIONALE
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.
1. 6
PROJECT INVESTMENT
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.
1. 7
PROPOSED PRODUCT MIX
For the purpose of this pre- feasibility, following products are assumed to be
manufactured:
S.
No.
1
Block Type
Size/
Dimension
Standard
Production
(as % of
Total)
Color
Selling
Price/ unit
(Rs.)
Masonry Block
Solid Block
4x8x12
600-800 psi*
10%
Natural Grey
15
Solid Block
5x8x12
600-800 psi
20%
Natural Grey
16
Solid Block
6x8x12
600-800 psi
10%
Natural Grey
17
Hollow Block
5x8x16
600-800 psi
10%
Natural Grey
23
90x190x390 mm
600-800 psi
15%
Natural Grey
28
300x300x40mm
4000 psi
5%
Natural Grey
40
6x12x12
5000 psi
30%
Natural Grey
90
Fair Face Blocks
2
3
Solid Block
Pavers
Kerb Stone/Block
* per square inch
1. 8
RECOMMENDED PROJECT PARAMETERS
Capacity
50% Capacity Utilisation
(based on 8 working hrs. daily
Human Resource
Technology/Machinery
17
Both Local and Imported
Location
Nooriabad,
Sindh
Financial Summary
1. 9
Project Cost
IRR
NPV
Payback Period
Rs. 43.04 million
26%
14,127,743
4 Years
Cost of
Capital
(WACC)
17.50%
PROPOSED LOCATION
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 Nooriabad
where 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 produce
environmental 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.
1. 10
KEY SUCCESS FACTORS/PRACTICAL TIPS FOR SUCCESS
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, retailers
and 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 industry
are 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 order
booking agents. Generally, construction and building material supplier is the part of the
whole chain, and brings together the customers and suppliers. Sometimes the supplier has
his 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 an
order / 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 delivery
of 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.
1. 11
PRODUCT MARKETING
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 sectors 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.
2.
SECTOR & INDUSTRY ANALYSIS
2. 1
SECTOR CHARACTERISTICS AND OVERVIEW
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 manufactured
with 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 6x8x12, 5x8x12 and 4x8x12. 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 6x8x12, 5x8x12 and 4x8x12. 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.
2. 2
ENVIRONMENTAL & PROTECTION ASPECTS
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
3.
MARKET INFORMATION
3. 1
MARKET POTENTIAL
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).
3. 2
EXPORTS AND IMPORTS OF PREFAB CONSTRUCTION BLOCKS
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.
3. 3
PROBLEM/THREATS TO THE PREFAB CONSTRUCTION BLOCKS SECTOR

Local customs and traditions, non-availability of infrastructure facilities like roads
and 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.
4.
PRODUCTION PROCESS
4. 1
PREFAB CONSTRUCTION BLOCKS - PRODUCTION PROCESS FLOW

Prefab construction blocks
Process Flow
Ordering &
Stockpiling
Material
Batching
Mixing
Molding
Curing
Storage &
Distribution
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.
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 lowpressure 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 60F per hour
(16C per hour). Standard weight blocks are usually cured at a temperature of 150165F (66-74C), while lightweight blocks are cured at 170-185F (77-85C). 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 300-375F (149-191C), 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 unstacked 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.
4. 2
RAW MATERIAL REQUIREMENT
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 said
production would be around 50 bags of 50kg each.
4. 3
MACHINERY REQUIREMENT
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:
1. 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 Africa
P. O. Box 262, Westville, 3630, South Africa
Tel +27 - 31 - 303 1397
Fax +27 - 31 - 312 0294
E-mail address: [email protected]
Website address: www.concretepumps.co.za
VEHICLES FOR TRANSPORTATION
4. 4
The proposed setup would require three to four vehicles (new machinery has been
considered for the proposed project) to carryout transportation of raw material and
finished products. Besides, dumping and loading vehicles for the transportation of
finished 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/Machine
Dumper/Truck
Fork Lifter
Other Tools & Equipment
Purpose of the
Machine
Material
Transportation
Finished goods
transportation
No. of Units
Required
Total Cost
4,000,000
1,000,000
Total
200,000
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.
4. 5
PLANT AND MACHINERY MAINTENANCE
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.
5.
LAND & BUILDING REQUIREMENT
5. 1
SITE DEVELOPMENT
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.
5. 2
LAND & BUILDING REQUIREMENTS
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 weeks 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 days 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 drying
blocks. 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:
Details
Size/Area
(Sq. Ft.)
Production & Stacking Area

Cement Store
Office & Staff facilities
Storage Area (Sand/Crush)
Water Tank
Other Services (water plant, tool shop etc.)
Total Covered Area
15,000
2500
400
Not limited
4000
500
18,400
Civil Works
/Construction
Cost/Sq. Ft.
Total
Construction
Cost
150
300
300
200
300
2,250,000
750,000
120,000
0
800,000
150,000
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.
6.
HUMAN RESOURCE REQUIREMENT
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 blocks
making 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
Owner (Business Unit Manager)
Production Staff (Quarry/Excavation Site)
2. Forklift Operator
3. Dumper/Truck Driver
4. Helper/Laborer
Production Staff (Crushing Factory)
5. Production Incharge / Plant Operator
6. Assistant Production Plant Operator
7. Production Laborers
Total Production Staff
General Administration/ Selling Staff
8. Office Assistant
9. Security Staff
Total G A /S Staff
TOTAL
6.1
No of Persons
Monthly
Salary
Annual
Salary
1
1
2
8,000
8,000
8,000
96,000
96,000
96,000
1
1
8
14
10,000
5,000
32,000
71,000
120,000
60,000
384,000
852,000
1
2
3
17
5,000
10,000
15,000
86,000
60,000
120,000
180,000
1,032,000
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.
7.
FINANCIAL ANALYSIS & KEY ASSUMPTIONS
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.
7. 1
LAND & BUILDING
Land for setting up the proposed prefab construction blocks unit would be purchased
which 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.
OVERALL FACTORY & OFFICE RENOVATION
7. 2
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.
FACTORY / OFFICE FURNITURE
7. 3
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
Table & Chair for Owner
Tables & Chairs for Admin. Staff
Waiting Chairs
Curtains & Interior Decoration for office
Chairs for Workers/Labor
Electrical Fittings & Lights
Others
Total
Number Total Cost

1
5,000
1
3,000
4
6,000
5,000
6
5000
30,000
6,000
60,000
DEPRECIATION TREATMENT
7. 4
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.
2.
3.
4.
7. 5
Plant & machinery

Land & Building Construction and Renovation
Vehicles
Furniture and Fixtures etc.
UTILITIES
Prefab construction blocks plant will be operated using electricity for production
purposes. 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 has
been given below:
Total Monthly
Cost (Rs.)
Utility
1.
Electricity
2.
Furnace Oil, Lubricants etc.
3.
Total Annual
Cost (Rs.)
Annual %age
Increase
58,000
696,000
5%
5,000
60,000
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%
166,700
2,000,400
Total
7. 6
WORKING CAPITAL REQUIREMENTS
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 have
been estimated based on the following assumptions for the proposed business.
Utilities - (Office & Factory)
1.
Electricity - 01 Month
2.
Oil, Lubricants & Other consumables - 01 Month
3.
Water - 07 days
4.
Telephone - 01 Month
87,140
58,240
5,000
18,900
5,000
Salaries - Three Months (Production Staff)
213,000
Raw Material Inventories (Cement & Sand/Crushed Stone)
238,380
Cement 01 Month
Sand and Crushed Stone 07 Days
Misc. Expenses - Three months (@ 5000 /month)
Total Working Capital
7. 7
325,000
31,500
15,000
910,020
PLANT & MACHINERY INSTALLATION
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.
7. 8
VEHICLE FOR SUPPORT AND MAINTENANCE SERVICES
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.
7. 9
PRELIMINARY EXPENSES AND CONTINGENCY PROVISION
A lump sum provision of Rs. 300,000 is assumed to cover all preliminary expenses which
will be amortized over the 5 year period.
7. 10
SELLING & DISTRIBUTION EXPENSES (ORDER BOOKING AGENTS)
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 as
booking 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.
7. 11
MISCELLANEOUS EXPENSES
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.
7. 12
FINISHED GOODS INVENTORY
The proposed setup is assumed to maintain a Finished Goods Inventory of 7 days of the
total annual production.
7. 13
REVENUE PROJECTIONS
For the revenue projections, prefab construction blocks are assumed to be produced as
follows:
S.
No
.
1
Block Type
Size/
Dimension
Standard
Productio
n (as % of
Total)
Color
Selling
Price/ unit
Masonry Block
Solid Block
4x8x12
600-800 psi
10%
Natural Grey
15
Solid Block
5x8x12
600-800 psi
20%
Natural Grey
16
Solid Block
6x8x12
600-800 psi
10%
Natural Grey
17
Hollow Block
5x8x16
600-800 psi
10%
Natural Grey
23
90x190x390 mm
600-800 psi
15%
Natural Grey
28
300x300x40mm
4000 psi
5%
Natural Grey
40
6x12x12
5000 psi
30%
Natural Grey
90
Fair Face Blocks
Solid Block
Pavers
Kerb Stone/Block
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 a
day. 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 of
prefab construction blocks has been estimated with 70% capacity utilization. Annual
increase of 3% in capacity utilization is assumed over the projection period. All
projections 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 during
the projected period.
7. 15
ACCOUNTS RECEIVABLES
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.
7. 16
FINANCIAL CHARGES
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 period
of five years.
7. 17
TAXATION
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.
7. 18
COST OF CAPITAL
The cost of capital is explained in the following table:

Particulars
Required return on equity
Cost of finance
Weighted Average Cost of Capital
Rate
20%
15%
17.5%
The weighted average cost of capital is based on the debt/equity ratio of 50:50.
7. 19
OWNERS WITHDRAWAL
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.
7. 20
ANNEXURES
7. 20. 1
7. 20. 2
7. 20. 3
7. 20. 4
7. 20. 5
SUMMARY OF KEY ASSUMPTIONS

COST AND REVENUE SHEET
PROJECTED INCOME STATEMENT
PROJECTED BALANCE SHEET
PROJECTED CASH FLOW STATEMENT

Summary of Key Assumptions
(in Pak. Rs.)
Sr.
No.
PARTICULARS
TOTAL COST/DETAILS
Fixed Capital
Land
Plant & machinery
2,000,000
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
Working Capital
Utilities - (Office & Factory)
87,140
1.
Electricity - 01 Month
58,240
2.
4.
Oil, Lubricants & Other consumables - 01 Month

Water - 07 days
18,900
5.
Telephone - 01 Month
5,000
66,000
Water Requirement (Quantity)
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%
PROJECT RETURNS AND OTHER FINANCIAL

IRR
26%
14,127,743
NPV
Payback Period (Years)
4 Years
Debt Equity Ratio
50:50'
20%
Required return on equity
15%
Cost of finance
17.50%
Weighted Average Cost of capital
OTHER ASSUMPTIONS
1
5
Depreciation
10%
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
7
8
Increase in Raw Material Price (Cement & Sand/Crushed Stone)
5%
Increase in other consumables price
3%
Factory & Office Renovation (in Year 5 & 10)
5%
Production Operations and Capacity Utilisation Assumptions

Capacity Utilisation at the beginning of the period
Increase in capacity utilisation (Annual)
Maximum Capacity Utilisation
Annual sales price increase
Operational Hrs./day
Operational Days / Month
Operational Months
Annual Operational Days
50%
5%
Running on single shift basis but double shift can
be initiated if demand increases
5%
8
26
12
312
Economy related assumptions

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

Sales on Credit - as %age of total
Sales on Cash - as %age of total
Accounts Receivable period (days) - only for 30% credit sales
Provision for bed debts (only on 30% credit sales)
Inventory (Raw Material)
Finished Goods Inventory
(Days)
PREF-X/Dec,
2006/Rev1
30%
70%
2
2%
7
7
PREFABRICATED CONSTRUCTION BLOCKS MANUFACTURING

COST AND REVENUE SHEET
1. REVENUE CALCULATION
Production
Rated capacity of the Block Making Plant
No. of Operating Hours - Single Shift Basis
Estimated Optimal Production
Expected Capacity Utilization (At the beginning of the project)
Annual Capacity Utilization Growth Rate
500 sq.ft. of concrete / hr.

8 Hrs / Day
4,000 sq.ft. of concrete / day
50%
5%
Expected Concrete Production at the beginning of the project

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

Blocks/day
Sales prices of differe categories of construction blocks

No. of Blocks Produced (Approximately)
Size
Masonry Block
4x8x12
Solid Block
5x8x12
Solid Block
6x8x12
Solid Block
5x8x16
Hollow Block
450
840
300
225
15
16
17
23
Rs.
Rs.
Rs.
Rs.
Fair Face Blocks

90x190x390 mm
300x300x40mm
Pavers
6x12x12
305
144
600
2,864
Solid Block
Kerb Stone/Block
Total Blocks Produced

Construction Block Category
28 Rs.
40 Rs.
90 Rs.
Production Assumptions
Masonry Block
Solid Block
15%
Solid Block
28%
Solid Block
10%
Hollow Block
10%
Fair Face Blocks
2%
Solid Block
5%
Pavers
30%
Kerb Stone/Block
Construction Block Category
Blocks Produced / Day
100%
Production in
Rupees
Masonry Block
Solid Block
Solid Block
Solid Block
Hollow Block
450
840
300
225
6,750
13,440
5,100
5,175
Rs.
Rs.
Rs.
Rs.
305
144
600
8,533 Rs.
5,760 Rs.
54,000 Rs.
Fair Face Blocks
Solid Block
Pavers
Kerb Stone/Block
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

Estimated Finished Goods Inventory at the end of the Year
7 Days
396,695 Rs
Total Realised Gross Annual Sales

Sales on Credit
30% of the total
Sales on Cash
70% of the total
30,812,600 Rs.
2. COST CALCULATION - for 4000 blocks

RAW MATERIAL
Description
Raw Material Required/Block
Water
16.5
Cement
0.6
Sand (Bajri)
1.18
Crushed stone
0.295
Total Raw Material Cost
5,900
Cost
2700
12500
4500
3500
23200
Quantity
66000
50 bags
4720
1180
sq.ft.
Rs.
Rs.
Rs.
Rs.
Rs./day
OTHER CONSUMABLES
Forklift approximate Fuel Consumption
Dumper/Truck approximate Fuel Consumption
Electricity Charges (including all taxex)
Block Making Plant approximate Electricity Comsumption
50
75
7.00
40
1 K.W.H*
APPROX. NUMBER OF OPERATIONAL HOURS FOR BLOCK MAKING MACHINERY/VEHICLES

Plant & Machinery
Vehicles
-
Electricity Consumption
Fuel & Other Consumables
Total Other Consumables
Total Cost / day
Total Cost / Month
TOTAL ANNUAL COST

Total Annual Sales
Total Annual Cost of Raw Material and other consumables
Liter/hr.
Liter/hr.
Rs. / KWH
KW / hr.
8 hr.
6 hr.
320
750
30,740
53,940
1,402,440
KW/day
Liter/day
Rs./day
Rs. / day
Rs. / month
16,829,280 Rs. / annum

30,812,600
16,829,280
Difference
13,983,320

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

Labor (Production Staff)
Other Utilities
16,829,280
852,000
120,000
18,554,281
937,200
126,000
20,456,095
1,030,920
132,300
22,552,845
1,134,012
138,915
24,864,511
1,247,413
145,861
27,413,124
1,372,155
153,154
30,222,969
1,509,370
160,811
33,320,823
1,660,307
168,852
36,736,208
1,826,338
177,295
40,501,669
2,008,971
186,159
Gross Profit
Gross Profit Margin
12,432,129
41%
14,312,797
42%
15,788,821
42%
17,416,704
42%
19,212,050
42%
21,192,067
42%
23,375,732
42%
25,783,969
42%
28,439,849
42%
31,368,817
42%
General Administrative & Selling Expenses

Salaries
Lease Charges of Land - Quarry / Excavation
Factory/Office Miscellaneous Expenses
Amortization of Preliminary Expenses
Depreciation Expense
Maintenance Expense
Selling & Distribution
180,000
31,500
60,000
60,000
3,983,000
1,059,000
604,668
198,000
32,445
66,000
60,000
3,584,700
1,059,000
678,606
217,800
33,418
72,600
60,000
3,226,230
1,059,000
748,163
239,580
34,421
79,860
60,000
2,903,607
1,059,000
824,850
263,538
35,454
87,846
60,000
2,613,246
1,059,000
909,397
289,892
36,517
96,631
2,372,272
1,059,000
1,002,610
318,881
37,613
106,294
2,135,045
1,059,000
1,105,378
350,769
38,741
116,923
1,921,540
1,059,000
1,218,679
385,846
39,903
128,615
1,729,386
1,059,000
1,343,594
424,431
41,100
141,477
1,556,447
1,059,000
1,481,312
Subtotal
Operating Income
5,978,168
6,453,961
5,678,751
8,634,046
5,417,211
10,371,610
5,201,317
12,215,386
5,028,481
14,183,569
4,856,921
16,335,146
4,762,209
18,613,523
4,705,652
21,078,316
4,686,344
23,753,505
4,703,768
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

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

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
2,671,640
238,380
0
0
3,286,008
701,220
396,695
1,520,795
6,603,692
773,095
437,309
1,696,514
9,710,622
852,337
482,080
1,870,407
12,678,042
939,702
531,436
2,062,124
14,897,694
1,036,021
585,844
2,273,492
22,622,121
1,142,213
645,824
2,506,525
30,777,191
1,259,290
711,944
2,763,444
38,022,249
1,388,368
784,833
3,046,698
45,031,816
1,530,675
865,185
3,358,984
49,254,776
1,687,570
953,764
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 Assets
Plant Machinery & Facility
Factory Construction
35,300,000
4,070,000
31,770,000
3,663,000
28,593,000
3,296,700
25,733,700
2,967,030
23,160,330
2,670,327
20,844,297
2,606,794
18,759,867
2,346,115
16,883,881
2,111,503
15,195,493
1,900,353
13,675,943
1,710,318
12,308,349
1,742,786
Furniture & Fixtures

Vehicle
Total Fixed Assets
60,000
400,000
39,830,000
54,000
360,000
35,847,000
48,600
324,000
32,262,300
43,740
291,600
29,036,070
39,366
262,440
26,132,463
35,429
236,196
23,722,717
31,886
212,576
21,350,445
28,698
191,319
19,215,401
25,828
172,187
17,293,860
23,245
154,968
15,564,474
20,921
139,471
14,211,527
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
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
Assets
Current Assets
Cash & Bank Balance
Fuel Inventoriy (Diesel)
Finished Goods Inventory
Accounts Receivable
Intangible Assets
Preliminary Expenses

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
0
0
0
-
2,576,244
3,983,000
60,000
(1,520,795)
(462,840)
(396,695)
4,238,914
4,588,022
3,584,700
60,000
(175,719)
(71,875)
(40,613)
7,944,515
6,328,467
3,226,230
60,000
(173,893)
(79,242)
(44,772)
9,316,790
8,218,865
2,903,607
60,000
(191,717)
(87,365)
(49,355)
10,854,035
10,284,161
2,613,246
60,000
(211,368)
(96,319)
(54,409)
12,595,311
12,251,360
2,372,272
(233,033)
(106,192)
(59,979)
14,224,427
13,960,142
2,135,045
(256,919)
(117,077)
(66,120)
15,655,071
15,808,737
1,921,540
(283,253)
(129,077)
(72,890)
17,245,057
17,815,129
1,729,386
(312,287)
(142,308)
(80,352)
19,009,568
17,459,782
1,556,447
(344,296)
(156,894)
(88,579)
18,426,460
Cash Flow From Operating Activities

Net Profit
Add: Depreciation Expense
Amortization Expense
(Increase) / decrease in Receivables
(Increase) / decrease in RM
(Increase) / decrease in FG Inventory
Net Cash Flow From Operations
Cash Flow From Financing Activities

Receipt of Long Term Debt
Repayment of Long Term Debt
Owner's Equity
21,520,010
21,520,010
(3,124,546)
(500,000)
(3,626,831)
(1,000,000)
(4,209,860)
(2,000,000)
(4,886,614)
(3,000,000)
(5,672,159)
(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
Factory/Office Furniture
Preliminary Operating Expenses
Raw Material Inventory (15 Days)
(39,770,000)
(60,000)
(300,000)
(238,380)
Net Cash Flow From Investing Activities
(40,368,380)
(203,500)
(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

Cash at the End of the Period
0
2,671,640
2,671,640
3,286,008
3,286,008
6,603,692
6,603,692
9,710,622
9,710,622
12,678,042
12,678,042
14,897,694
14,897,694
22,622,121
22,622,121
30,777,191
30,777,191
38,022,249
38,022,249
45,031,816
45,031,816
49,254,776
(203,500)
(203,500)

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