PROJECT ON HOLLOW BRICKS
PROJECT REPORT 1.0 Introduction: Introduction: This proposal evaluates the technical feasibility and financial viability in setting up of a small-scale enterprise to do the activity on manufacturing and sale of Hollow bricks in Kottayam district and all over Kerala. Unit has been filed memorandum Part-1 with the district Industries center, Kottayam and also applied for permission from Local body for the construction of building and for the installation of plant and machinery.
2.0 Promoter and Management: The ownership of the unit is as a propetoership concern by Smt. Rajalekshmi A.R, Indeevaram, M.L.A Road, Puthiyakavu, Pin-682301. She has been associated with this business and trade related activities for the past 5 years. The experience and the market contact that she received will help her in establishing the proposed activity of manufacturing and marketing of hollow bricks in a successful manner.
3.0 Scope and Market Potential: Hollow block industry is one of the fastest growing segments of Industry in Kerala. The growth of the tile industry has shown steep fluctuations. The increase in number of households and the over the country created a great demand for hollow bricks. Hollow concrete blocks are substitutes for conventional bricks and stones in building construction. They are lighter than bricks, easier to place place and also confer economies economies in foundation cost and and consumption of cement. In comparison to conventional bricks, they offer the advantages of uniform quality, faster speed of construction, lower labor involvement and longer durability. In view of these advantages, advantages,
hollow concrete blocks are being
increasingly used in construction activities.
4.0 Manufacturing process: The ratio of cement, sand and stone stone chips (metal) in the raw material mix determines the properties of hollow concrete blocks. A ratio of 1:3:6 (cement : sand : metal) confers higher strength, while a ratio of 1:5:6 can be employed for normal load bearing bearing construction. The water to cement cement ratio is usually 0:4:1.
5.0 Location, Land and Building: The unit is proposed to be located at at Manjoor Village in Vaikom Taluk. An extent of 23 cents of land available and is leased by the promoter for establishing the unit. Building required for establishing the unit unit has to be constructed. The amount invested for civil work on construction of building for office, common amenity, well etc is Rs 200000/-. The survey number number assigned to the land is 125/23..
6.0 Machinery & equipment: equipment: Details are shown in the annexure. The plant and machinery proposed to be installed in the unit are Indigenous. . Total cost of machinery and equipment to be purchased is evaluated as Rs 372000/-
7.0 Installed capacity of production The unit is proposed to be operated in 300 days per annum ( 25 days in a month of single shift operation of 8 hours duration in a day). As per the capacity of machinery to be installed and by considering production wastage the monthly production is worked out in the followi ng table. It is proposed to utilize 70% of the installed capacity in the first year of operation and 75%, 80%, 85%, 90% in the consecutive years of operation. The sales realization for first month of operation is shown below.
CAPACITY UTILISATION PER MONTH ( for 70 % capacity utilis ation) Sale Sl.No. Item Q t y Unit Rate Amount 1
H ollow bri cks
52500
Nos
11.00
577500
8.0 Raw material Requirement: All the raw materials required by the unit are available throughout the year. The raw material can also be procured from the nearby districts and from other states. The stock and procurement period proposed in this scheme is for a period of 10 days. The details of requirement for 100% capacity utilisation in the unit are tabulated as below. The raw material required by the unit is proposed to be arranged through local distributors. The requirements of the unit for the targeted production are as below. Sl No
Raw material
Quantity per month
Price per load/sack
Total amount required per month
1
Rock powder
2
Cement
3
Chips (metal powder)
25 loads 750 sacks 25
7000 300 10000
4
Total raw material required for 100% capacity utilization Raw material required for 70% capacity utilization
175000 225000 250000 650000
5
455000
9.0 Man power requirement and other expenses: Total manpower of the unit including the Workers is 10 numbers and the details of manpower requirement, salary and other expenses per month are as follows. Designation / Monthly Amount Sl.No. Category No salary Rs 1 workers 5 7000 35000
2 3
helpers 4 Office assistant 1 Total 10 OTHER EXPENSES PER MONTH Sl.No. Item Amount 1 Power 3500 Postage & 2 Telephone 500 Printing & 3 Stationery 1000 Travelling 4 expenses 10000 5 Miscellaneous 5000 Total 20000
5000 3500
20000 3500 58500
10.0 Working capital requirement: Total requirement of working capital for the first Month (phase) of operation is 3 lakhs . Perio Sl.N d in o. particulars Days 1 year 2 year 3 year 4 year 5 year Capacity utilisation(%) 300 70 75 80 85 90 69240 74185 79131 84077 89022 Sales 300 00 71 43 14 86 55200 59142 63085 67028 70971 Cost of raw materials 300 00 86 71 57 43 63228 67654 72085 76520 80959 Cost of production 300 00 49 50 61 40 A Current Assets Stock of raw materials ( day's 22080 23657 25234 26811 28388 1 consumption) 12 0 1 3 4 6 Stock in process ( day's cost of 2 production) 2 42152 45103 48057 51014 53973 Stock of finished goods ( day's cost of 3 production) 2 42152 45103 48057 51014 53973 Receivables( day's 4 cost of sales) 2 46160 49457 52754 56051 59349 Total(A) 35126 37623 40121 42619 45118
4
5
1
3
0
11.0 Total Cost of the Project: Sl.No. 1 0
3
Particulars Building ( advances) Building and ther civil construction Machinery & Equipment(proposed ) Equipment(sales)
4
Amount RS
0
0
0
200000
200000
70000
372000
372000
130200
Existing Proposed
0 200000
Total
Margin money @35%
0
372000
0
0
0
0
0
50000 6000
0
50000 6000
50000 6000
17500 2100
2000
2000
700
margin@5%
Electrification and machinery installation cost 5 6 7 8
Office Furniture Brochure, advt and web site Prelim & Preoperative expenses
2000 20000
0
20000
20000
7000
350000
0
350000
350000
122500
1000000
0
1000000
1000000
350000
Working Capital 9 Total
50000
12. Means of finance: Sl.No. O
2
3
Particulars Term loan for building (interior decoration ) Term loan for machinery&equipment, office furniture etc Loan for prelim&preoperative including electrification ,brochure etc Woking capital loan
5
Amount RS
MAGIN FROM kvic MARGIN OF THE PROMOTER
6
1000000 350000
50000
13.0 Profitability analysis: Detailed statement is given in annexure. Assumptions made for the calculation are as follows:
(a) Unit will function for 200 days per annum in single shift basis of 5 hours per day. (b) Proposed to utilise 70% of the installed capacity in the first year of operation ,75%, 80% ,85% and 90% are in the consecutive years of operation. (c) Interest on term loan and working capital loan is assumed @ 12 % and repairing and maintenance as 5% of cost of fixed assets. (d) Depreciation @ 5% of cost of building and 10% of the cost of machinery. (e) Selling expense is considered as 5 % of total sales turn over. This includes the adve rtisement and publicity charges (f) Insurance expenses of building and machinery is calculated @ 1% of cost (g) The cost of raw material and finished product is based on the present market rate.
Depreciation: Depreciation on Building, Machinery and Equipment are evaluated on WDV basis and is tabulated as below
sl No 1
Particulars
I year
Building
43year
4 year
5 year
300000
270750
257213
244352
232134
15000
13538
12861
12218
11607
WDV on Building
285000
257213
244352
232134
220528
Machinery and equipment
437500
354375
318938
287044
258339
Depreciation (A) 2
2 year
Depreciation(B) WDV on Machinery and equipment
43750
35438
31894
28704
25834
393750
318938
287044
258339
232505
Total depreciation(A+B)
58750
48975
44754
40922
37441
58750
48975
44754
40922
37441
SHEDULE OF IMPLIMENTATION
Acquisition of land
Agreement on lease
Construction of Building
Completed after availing the loan Expected to be completed by September 2010 Expected to be completed by September 2010 October 2010
Installation of plant and Machinery Trial run Commercial Production
14.0 Conclusion: The net profits after taxation in the first year of operation is estimated as RS 600917 /. The break-even point is 35 % of installed capacity. The return on investment is nd obtained as 42 % in the 2 year of operation. The cost of production and profitability statement for the first 5 years, break-even analysis, repayment schedule for term loan, cash flow statement and the projected balance sheet are given in Annexure. Based on the analysis made above it is found that the scheme is technically feasible and economically viable.
Submitted by: ASHA XAVIER KARUKULATHEL MANJOOR P.O KURUPPANTHURA KOTTAYAM
ANNEXURE 1 (as per quotation) PLANT & MACHINERY
Sl.No. 1 2
Item Egg laying type Concrete block machine with die Trolley for brick and mix handling
Nos
Rate Rs Amount Rs
01
130000
130000
04
7500
30000
3
Solid die set 4”,6”
02
14000
28000
4
Hollow die set 4”,6”
Concrete mixer Vat total @4%+ cess 1%
18000 130000 17700
36000
5 6
02 01 01
Total
130000 17700 372000
ANNEXURE 2 Pr ofi tabil ity statement for 5 years of operation Particulars No. of working days No. of shifts
1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 300 300 300 300 300 1 1 1 1 1
Installed capacity Capacity utilization Production
9900000 70 6930000
9900000 9900000 80 85 7920000 8415000
9900000 9900000 90 90 8910000 8910000
A
Sales
6930000
7920000 8415000
8910000 8910000
B
Cost of Production Raw materials Wages Power, and Fuel charges Repair & maintenance Insurance Depreciation Total
5460000 264000
6240000 6630000 301714 320571
7020000 7020000 339429 339429
C D
E
F G H I J K L
Gross operating profit Admn. & Selling expenses 1. Administrative expenses 2. Selling expenses Financial expenses 1. Interest on term loan 2. Interest on WC loan 3. Interest on MM loan Total of D&E Net operating profit Income tax Net profit Withdrawls Depreciation Cash surplus
120000
137143
145714
154286
154286
5000 5000 58750 5912750
5000 5000 5000 5000 48975 44754 6737832 7151040
5000 5313 5000 1063 40922 37441 7564636 7557530
1017250
1182168 1263960
1345364 1352470
204000 69300
233143 79200
247714 84150
262286 89100
262286 89100
82834
47014
29104
11194
4478
36000
36000
36000
36000
36000
9038 401171 616079 73911 542167
9038 404394 777774 93315 684459
9038 406006 857954 102937 755018
9038 407617 937747 112512 825235
6778 398641 953829 114441 839387
58750 600917
48975 733434
44754 799772
40922 866157
37441 876828
ANNEXURE-3 BREAK EVEN ANALYSIS Particulars
1 YEAR
2 YEAR
3 YEAR
4 YEAR
5 YEAR
264000
301714
320571
339429
339429
5000 5000
5000 5000
5000 5000
5000 5000
5313 1063
204000 58750 9038
233143 48975 9038
247714 44754 9038
262286 40922 9038
262286 37441 6778
82834 628621
47014 649883
29104 661181
11194 672868
4478 656786
546000 0 120000 69300 36000 568530 0
624000 0 137143 79200 36000 649234 3
663000 0 145714 84150 36000 689586 4
702000 0 154286 89100 36000 729938 6
702000 0 154286 89100 36000 729938 6
35.35
36.42
36.99
37.60
36.70
50.50
45.52
43.52
41.78
40.78
42.11
53.16
58.64
64.10
65.20
FIXED COST Salaries Repair & Maintenance Insurance Administrative expenses Depreciation Interest on MM loan Interest on Term loan Total VARIABL E COST Raw Materials Power Charges Selling expenses Interest on WC loan Total BEP in % of installed capacity BEP in % of capacity utilization Return on Investment
ANNEXURE-4 DEBT SERVICE COVERAGE RATIO (DSCR) Particulars A Cash generated 1 Net Profit 2 Depreciation
1 Year 616079 58750
2 Year 777774 48975
3 Year 857954 44754
4 Year 937747 40922
5 Year 953829 37441
3 Interest on term loan 4 Interest on mm loan 5 Interest on wc loan Total (A) B Debt Service Requirement 1 Repayment of term loan Repayment of interest on 2 term loan Repayment of interest on 3 mm loan Repayment of interest on wc loan Total (B) Debt service coverage C ratio Average DSCR
82834 9038 36000 802700
47014 9038 36000 918800
29104 9038 36000 976850
11194 4478 9038 6778 36000 36000 1034900 1038525
80000
80000
80000
80000
80000
82834
47014
29104
11194
4478
9038
9038
9038
9038
6778
36000 207871
36000 172051
36000 154141
36000 136231
36000 127256
3.86 7.03
5.34
6.34
7.60
8.16
ANNEXURE-5 REPAYMENT OF TERM LOAN Year Instalment Number Principal Interest Balance 1 1 746250 22388 708938 2 708938 21268 671625 3 671625 20149 634313 4 634313 19029 597000 82834 2 5 597000 17910 559688 6 559688 16791 522375 7 522375 15671 485063 8 485063 14552 447750 64924 3 9 447750 13433 410438 10 410438 12313 373125 11 373125 11194 335813 12 335813 10074 298500 47014 4 13 298500 8955 261188 14 261188 7836 223875 15 223875 6716 186563 16 186563 5597 149250 29104
repayment per month 19900 19527 19154 18781 54278 18408 18034 17661 17288 48308 16915 16542 16169 15796 42338 15423 15049 14676 14303 36368
5
17 18 19 20
149250 111938 74625 37313
4478 3358 2239 1119
111938 74625 37313 0
13930 13557 13184 12811
REPAYMENT OF MARGIN MONEY LOAN Year
Principal 150625 150625 150625 150625 150625 112969 75313 37656
1 2 3 4 5 6 7 8
Interest Balance 9038 150625 9038 150625 9038 150625 9038 150625 9038 112969 6778 75313 4519 37656 2259 0
REPAYMENT OF WORKING CAPITAL LOAN
1 Year Total Working capital required Loan Amount Interest @12%
300000 300000 36000
2 Year
3 Year
300000 300000 36000
4 Year
300000 300000 36000
5 Year
300000 300000 36000
300000 300000 36000
ANNEXURE- 6 CASH FLOW STATEMENT A 1 2 3 4 5 6 7 8 9 1
Source of Funds Cash accruals(profit before income tax) Increase in capital equity Depreciation Investment allowance Increase in long term loan Increase in MM loan Increase in unsecured loans Increase in WC loan Sales of fixed assets/invests Others( investment
Constructio n period 0
2 year
3 year
4 year
5 year
807125
869825
932096
993978
53625
48975
44754
40922
0
-300000
300000
0
0
0 0
0 0
0 0
0 0
0 0
150625
746250 150625
0
subsidy) Total
B
Disposition of Funds Prelim & Pre-op expenses Increase in capital expenditure Increase in current assets Decrease in long term loans Decrease in unsecured loans Decrease in MM loan Decrease in WC loan Interest on term loan to bank Interest on WC loan Interest on MM loan Taxation Divident on equity Other expenses Total
1047500
560750
121880 0
125000
0
0
0
0
862500
0
0
0
0
21797
21804
21809
21815
80000
80000
80000
80000
0 0
0 0
0 0
37656 0
64924 0 9038 87962 0
47014 36000 9038 93315 0
29104 36000 9038 102937 0
11194 36000 9038 112512 0
263720
287170
278887
308214
870910 931630 180254 1
180254 1 697963 250050 3
250050 3 726686 322719 0
987500
C D
Opening balance Net surplus
0 60000
573881 297030
E
Closing balance
60000
870910
ANNEXURE-7 PROJECTED BALANCE SHEET
976850
103490 0
A
Liabilities Equity share capital Reserve & Surplus Term loan Margin Money loan Working capital loan Other liabilities(towards subsidy) Total Liabilities
B
Assets Gross block Depreciation Net block InvestmenT(Prilim. Expences) Current assets Reserved Stock accumulated to be added to current assets Cash and bank balance
Constructio n period 2 year 3 year 4 year 5 year 150625 150625 150625 150625 150625 187182 262684 345208 0 1187369 8 6 1 746250 586250 506250 426250 346250 150625 150625 150625 150625 112969 0 300000 300000 300000
0
0
1047500
2074869
0 297932 8
0 365434 6
0 436192 5
Constructio n period 2 year 3 year 4 year 5 year 862500 803750 750125 701150 656396 0 53625 48975 44754 40922 862500 750125 701150 656396 615474 125000
125000 328834
125000 350638
125000 372447
125000 394262
