Muhammad Tariq

Pre-Feasibility Report (ASPHALT PLANT) January 2021 Pre-Feasibility Report Asphalt Plant Table of Contents 1 EXECUTIVE SUMMARY............................................................................................................................. 1 2 BACKGROUND…………………. .................................................................................................................... 2 3 PROJECT PROFILE...................................................................................................................................- 4 OPPORTUNITY RATIONALE ....................................................................................................................... PROJECT BRIEF.......................................................................................................................................... PROPOSED BUSINESS LEGAL STATUS........................................................................................................ PROJECT CAPACITY AND RATIONALE........................................................................................................ 3.4 3.4.1 Raw Material Sourcing 2 3 3 3 3 PRODUCTION PROCESS …….................................................................................................................. The Manufacturing Process …............................................................................................................... 4.1 4.1.1 Plant Diagram RAW MATERIAL REQUIREMENT……………............................................................................................. 4.2.1 BITUMEN 4.2 4.2.2 AGGREGATE 4.2.3 DIESEL/ FUEL 3 - 5.2 - 9 PLANT & MACHINARY REQUIREMENT................................................................................................ 6 PLANT & BMACHNERY MAINTENANCE ……………………………..…………… ................................................ 7 VEHICLE FOR SUPPORT AND MAINTENANCE SERIVES………………………………………………………..…………. 7 LAND & BUILDING REQUIRMENT......................................................................................................... 7 5.1 8 4 5 5 5 5 SITE DEVLOPMENT………………………………………………………………………………………………………………………… 7 LAND & BUILDING REQUIREMENT...................................................................................................... 7 5.2.1 SELECTING A SITE 7 5.2.2 ESTABLISHING THE SITE 7 5.2.2.1 AGGREGATE STORAGE 7 5.2.2 .2 BITUMEN STORAGE 8 5.2.2.3 PRODUCDTION AREA 8 5.2.2.4 CONSTRUCTION OF FOUNDATION 8 HUMAN RESOURCE REQUIREMENT.................................................................................................... 8 FINANCIAL ANALYSIS & KEY ASSUMPTINS……………………………………………………………………………………. 9 LAND AND BUILDING ………………………………………………………………………………………………………………….. 9 FURNITURE AND FIXTURE……………………………………………………………………………………………………………. 9 DEPRICEIATION TREATMENT………………………………………………………………………………………………... 10 PROJECT INVESTMENT DETAILS………………………………………………………………………………………….. 10 PROJECT OVERHEAD DETAILS…………………………………………………………………………………………….. 10 SELLING & DISTRIBUTION EXPENSES……………………………………………………………………………………………. 10 MISCELLANEOUS EXPENSES…………………………………………………………………………………………………………. 10 REVENUE PROJECTION ………………………………………………………………………………………………………………. 11 11 ACCOUNT RECEIVABLES………………….……………………………………………………………………………….. SOURCE OF CAPITAL…………………………………………………………………………………………………………………… 11 OWNER’S WITHDRAWAL…………………………………………………………………………………………………………….. 11 ESTIMATED PLANT PRODUCTION……................................................................................................ 11 ESTIMATED REVNUE …...................................................................................................................... 12 ESTIMATED COST OF SLAES, RAW MATERIAL PROCUREMENT & RAW MATERIAL INVENTORY…... 12 10 CREDIT FACILITY…………………………………………………………………………………………………………………………. 14 11 BREAK EVEN ANALYSES ……………………………………………………………………………………………………………… 15 12 INCOME STATEMENT…………………………………………………………………………………………………………………. 16 12 BALANCE SHEET…………………………………………………………………………………………………………………………. 17 13 CASH FLOW STATEMENT……………………………………………………………………………………………………………. 18 Pre-Feasibility Asphalt Plant 1 EXECUTIVE SUMMARY An asphalt mixture plant is an assembly of mechanical and electronic equipment where aggregates, recycled materials or other additives are blended, heated, dried and mixed with binder to produce asphalt mixture meeting specified requirements. The plant may be stationary (located at a permanent location) or portable (moved from contract to contract). There are numerous types of plants, including batch plants, continuous mix plants, parallelflow drum plants, counter flow drum plants, and double barrel drum plants to name a few. In general, however, the majority of plants may be categorized as either a batch plant or a drum mix plant. In the batch-type mixing plant, hot aggregate, recycled materials and binder are added in designated amounts to make up one batch. After mixing, the asphalt mixture is discharged from the hot bin in one batch. In the drum-type mixing plant, the aggregate and other materials are dried, heated, and mixed with the binder in the drum in a continuous process. Regardless of the type of mixing plant, the basic purpose is the same. That purpose is to produce an asphalt mixture containing proportions of binder and aggregate that meets all of the specification requirements. Certain plant operations are common to both the batch plant and drum mix plants. These operations include: 1. Cold aggregate storage and feeding. 2. Dust control and collection) Mix storage. 3. Recycled materials storage and feeding. Also common to all plants is the importance of uniformity and balance, both in materials used and in plant operations. Uniformity encompasses uniformity of materials, uniformity of material proportioning, and continuous, uniform operation of all plant components. Changes in material characteristics, proportions, and intermittent stops and starts in plant operations make producing an asphalt mixture meeting Specifications extremely difficult. Balance requires careful coordination of all elements of production. Balancing material quantities to plant production, and balancing plant production and pavement placing operations guarantee a continuous, uniform production and placement effort. Uniformity and balance are best ensured by careful preparation. Materials are required to be sampled and tested and plant components carefully inspected and calibrated before production begins. Three used plant is considered which have following cost from dismantling to installation and commissioning. DESCRIPTION Plant -1 Plant -2 Plant -2 Capital Cost for used Plant. 50,735,980 50,735,980 33,235,980 NPV 298,182,200 298,182,200 315,682,200 63% 63% 69% 8.75 Months 8.75 Months 5.73 Months IRR Payback Period 1 Pre-Feasibility Asphalt Plant 2 BACKGROUND While asphalt can still be found in its natural state, today’s asphalt is typically processed from petroleum. Oil wells supply petroleum to oil refineries, where it is separated into various factions, one of which – from the heaviest part of petroleum– is asphalt. Asphalt may then be modified in a variety of ways, including “cutting back” (adding a cutting agent) to make it malleable enough for use, or emulsified or pulverized to gain the right consistency. Asphalt for paving goes through a mixing process in either a drum mix plant, which is a large-output and continuously operating facility, or a batch plant, which is a smaller-output plant that mixes in batches. There are a few different ways to mix asphalt, the most popular of which are hot and cold. Hot-mix asphalt is made by heating aggregates to decrease the viscosity of the binding agents and make the whole more fluid, then drying it to remove any remaining moisture. It is mixed hot at 200-350 degrees Fahrenheit. It is called hot-mix because not only because it is mixed hot, it must also remain hot for the paving and compaction for repair or installation. This need for the asphalt to remain warm while paving and compaction is performed is one of the reasons so much paving is done in the summer. Completed asphalt is evaluated for its quality in terms of consistency or viscosity, and purity. These are important for the asphalt to be properly controlled, transported and used in paving projects. Cold-mix asphalt is made of quarter inch chip and proprietary oil. This specific make-up keeps the asphalt soft and helps it repel water. As its name suggests, cold-mix asphalt does not need to be warm to be used in asphalt repair. Additives in the oil keep the mixture soft all year long to allow for pothole patching in different types of weather. Even in cold or wet weather, cold-mix asphalt stays soft and repels water, making it perfect for pothole repair in winter and early spring. It will drive water out of the pothole, adhere to the surface underneath and remain flexible, keeping a pothole patched all year long. 3 PROJECT PROFILE 3.1 OPPORTUNITY RATIONALE Construction sector is growing each year due to development and infrastructure is needed in government and private sector. This sub-sector (Road Construction) is in rapid growth as enormous project is underway due to priority of government, metropolitan development bodies and CPEC project. Execution of work on various projects which increased the demand of asphalt plant in country to cope the supply and demand difference. 3.2 PROJECT BRIEF The asphalt plants or asphalt mixing plant is one plant that is used for mixing the dry warm aggregate, padding and Asphalt for homogeneous mixture at the required temperature. And it is widely used to the construction of highway, city road and parking lot. Then comes the cost estimation based on various methods of production and output. Factors which influence unit cost include: 2 Pre-Feasibility Asphalt Plant • • • • • • Cost of Plant Acquisition and Installation Cost of Site Acquisition Cost of Site Development Cost of Raw Material Cost of Furniture and Fixture for Plant Labor Cost 3.3 PROPOSED BUSINESS LEGAL STATUS The legal status of business will be part of Construction Company and will be declare a fixed asset of company. 3.4 PROJECT CAPACITY AND RATIONALE Production capacity of the plant will be depend on project in progress and future project. Further, also the plant could be outsourced and order can be take from other builder or construction contractor. Total production capacity is 16 hours in two shifts @ 70 tons per hours productivity. It is estimated that daily eight hours for 20 days per month which has 34% capacity will be operated for 1st year and then 10% production increment will be assumed for subsequent year. 3.4.1 RAW MATERIAL SOURCING Raw material for this project is available locally from Pakistan. A number of suppliers are available for bitumen, stone power, sand and aggregate crush in each region of Pakistan and could easily be contacted, whereas, bitumen could be procured from any well-known supplier or direct from oil refinery. 4 PRODUCTION PROCESS Bitumen plant, also called asphalt mixer plant, is a factory type complete set of equipment, which can mix heating aggregates with different sizes, filler and bitumen in a proper proportion at designed temperature. Bitumen mixing plant mainly consists of mechanical part, electrical part, fuel piping part, which are cold aggregates system, drying and heating system, lifting screening system, finished products storage system, dust removal system, asphalt heating system, control room and other systems in details. And there are many types of asphalt plant, such stationary asphalt mixing plant for sale, mobile asphalt plant, and plant. With many systems, operation process of asphalt batch mix plant is a little difficult. 4.1 The Manufacturing Process The operation process can divide into three periods, pre-work, when- work and after-work. And users need to know the operation maters and rules well of each period.. 3 Pre-Feasibility Asphalt Plant 4.1.1 PLANT DIAGRAM Asphalt - with Batching Plant 4 Pre-Feasibility Asphalt Plant Asphalt - with Drum 4.2 RAW MATERIAL REQUIREMENT 4.2.1 BITUMEN Asphalt is a sticky, black, and highly viscous liquid or semi-solid form of petroleum. It is commonly found in deep natural deposits or can be obtained after fractional distillation of crude oil when boiling at 525 °C (997 °F). The primary use of bitumen (70%) is for road surfaces where it is primarily used as a binder combined with aggregates. The utilization of the remaining bitumen (30%) is for a number of vital applications such as in building construction, industry as a primary constituent of products. Generally, bitumen is composed of hydrocarbon compounds and is effectively used as a waterproofing agent in paving and roofing applications. The optimal binder percentage was 7% and the 60/70 grade of bitumen is used for asphalt. Normally 40 kg of Bitumen is required for one ton ready mix. Less than 40 KG Bitumen will be considered quality compromised work and more than 40 KG Bitumen in one ton ready mix will be considered qualitative work with more strength for long lasting result. The bitumen should be heated about 15-160 C temperature when it is mixed with aggregate. Batch cycle of raw material mixing with bitumen should be for 40 second but it can be fluctuate from 35 second to 45 second to keep in view the quality, cost and time. 4.2.2 AGGREGATES The aggregate / crush stone requirement is based on asphalt demand. For multiple asphalt layer, the first layer upon bed is required mix of 38mm, 20mm and 10mm crush and a reduced quantity of stone dust or sand. In 2nd layer a combination of 20mm and 10mm crush pane and stone powder. 4.2.3 Diesel / Fuel Diesel / Crude oil is used for heating the bitumen as per requirement of Plant and also diesel will require for the operation of Electric Generator. Diesel also will be need for Bitumen Heating on daily basis. 5 Pre-Feasibility Asphalt Plant 4.3 PLANT & ACHINERY REQUIREMENT Asphalt ready mix are available from already installed plant in every city. Although it has huge cost for installation and operation yet it is cost effective for mega road project to reduce the procurement cost of ready mix and later it can be used for multiple rod project. Used Machinery with the following specification are available in Punjab. Technical Specifications Specification Plant-1 Specification Plant-2 Specification Plant-2 Make: Tanaka Asphalt Plant, Make: Nikko Asphalt Plant , Make: Parker Asphalt Plant. Model: TAP 1000, with Big Size Mixer Model:NAP 1000 Capacity: 1 Ton per batch. 60 - 80 Drum of 1500 Kg per Batch, Capacity: 80 TPH, TPH, Capacity: 80 Ton P/Hour Type : Stationary or Mobile / Stationery Type : Drum / Stationery Type: Stationary or Mobile ? Stationery Made: Japan Made: England Made: Japan Year of Manufacturer: 1998 Year of Manufacturer: 1993 Year of Manufacturer: 1997 Rebuilt in Hoppers: 4 Nos Generators: 2 Nos. 1 x 150KVA and 1 2001 Conveyors : Belt Type x 350KVA Hoppers: 4 Nos Dryer : 1 Hoppers: 4 Nos Conveyors: Belt Type Screen: Vibrating Dryer : 1 dryer: 1 Bin : 1 Screen : 1 x Vibrating Screen: Vibrating Mixer Drum : 1 LDU Tank: 1 Bin: Hot 4 Frame condition: Good Computerized cabin: 1 Scale: Scale Cyclone :Fixed in Dust Collector Frame condition: Good Mixer Drum : 1 Filler Bag Filler Yes Burner : 1 Frame Good Bitumen Tanks : 1 No. of 50 Ton Bitumen Drum: 2 No. 50 Ton Each Cyclone: Yes Crude / LDO Oil Tank : 1 No. of 30000 Mixer Drum : 1 Filler: Bag Filler Yes Liters Frame condition: Good Bitumen Tanks : 2 Nos. 30 Ton and 40 Ton Plant Weight: 80 Ton Crude Oil Tank : 1 No. of 15000 Liters Plant Location: Sheikhupura. Available with complete accessories. Diesel Oil Tank : 1 No. of 10000 Liters Plant Location: Sialkot Plant Location: Sheikhupura Status: Operational Status: Operational Status: Operational Test Run: Will be done Test Run: Will be done Test Run: Will be done Plant and Machinery Plant -1 Amount Price of Plant-1 Tanaka 35,000,000/Japan (1997) Dismantling of plant 100,000/Transportation of Plant 100,000/Foundation 500,000/Installation 100,000/Misc. Cost 100,000/Misc. Tools and Equipment 200,000/Total Plant Cost 36,100,000/- Plant -2 Amount Price of Plant-2 Nikko 35,000,000/Japan (1998) Dismantling of plant 100,000/Transportation of Plant 100,000/Foundation 500,000/Installation 100,000/Misc. Cost 100,000/Misc. Tools and 200,000/Equipment Total Plant Cost 36,100,000/- Plant -3 Amount Price of Plant-3 Parker 22,500,000/England (1993) Dismantling of plant 100,000/Transportation of Plant 100,000/Foundation 500,000/Installation 100,000/Misc. Cost 100,000/Misc. Tools and 200,000/Equipment Total Plant Cost 23,600,000 Diesel Generator Description Diesel Generator 300kva Electric & Mechanics Supplies Total Vehicle Costs Quantity 1 1 Amount 4,500,000 500,000 5,000,000 6 Pre-Feasibility Asphalt Plant 4.4 PLANT AND MACHINERY MAINTENANCE A used plant will be installed which is expected to be serviced on time to time on a monthly basis. During the operation, maintenance expenses are estimated to be around 5% of the total cost of machine. 4.5 VEHICLE FOR SUPPORT AND MAINTENANCE SERVICES Loader / Shawal is needed on rent or need to purchase for loading aggregate into plant cold material bin. A bike may be required for delivering and plant routine operation requirement. Proposed Vehicles Costs Description Used Shawal Loader Motorcycle tools & Parts Quantity 1 1 1 Amount 8,000,000 50,000 50,000 8,100,000 5 LAND & BUILDING REQUIREMENT 5.1 SITE DEVELOPMENT The Asphalt Plant Project is estimated to require a total area of 8-10 Kanal which will be used for installation plant, storage of raw material, Crush aggregates, Bitumen and diesel or crude oil in tanks. Subsequently 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 vehicle parking and different services necessary for the project. 5.2 LAND & BUILDING REQUIREMENTS Land is supposed to hire on lease / rent for the period of project completion date. Because it may be possible that next project is different place and transportation cost will be increased significantly. Then the current location will ne be profitable and need to shift the plant near to the project work in progress. 5.2.1 Selecting a site Selecting a site to be considered on following grounds. The location of plant would be considered which should be balanced in distance approach towards raw material and road project to serve. Also security of area should be good. The site must be accessible for truck and dumper for transportation of raw material and finished goods and ground level should be plain so that there is no difficulty in operation and vehicle movement. 5.2.2 Establishing the site The site should have enough provision for installation of plant and machinery, storing of raw material, camp office and movement of vehicles. The following are the main requirement for development of plant site. 5.2.2.1 Aggregate storage 7 Pre-Feasibility Asphalt Plant The aggregate / crush stone should be stored on a possibly concrete made flour with rain water drainage slope but for temporary project it not recommended so only compacted bed should be made. The developed stockyard level should be higher than the normal flour level of plant site so that rain water should be drained easily to avoid any contamination in raw material. Also it is needed to avoid contamination by soil, leaves, etc. The layer of aggregates in contact with the soil should not be used for production. Partitions should be erected between different types of aggregate / Crush Stones. 5.2.2.2 Bitumen Storage The Bitumen would be stored in Bitumen Tank and the tank location should be near to plant so that there is no difficulty for taking the bitumen in ready mix manufacturing process. Bitumen will need to be stored warm. 5.2.2.3 Production area Production area is depend on plant covered area. One ton asphalt plant normally covered 19 meter (W) x 31 meter (L) installation area (6340 sft). It required some modification for operation requirement as some component need to install near and some require distance which may take slightly broader area. For this purpose the required area should be increased 30% more for better productivity, labor and vehicle movement. 5.2.2.4 Construction of a foundation Foundation should be design and build according to proposed plant machines and equipment with concrete base to avoid any vibration which lead to less productivity and frequent failure and increasing maintenance cost of plant. Site Development Cost Description Plant Installation/Foundation Area Unit 8242 Sft Rate Total Cost Included in Plant Cost Stockyard space (Compacted Bed) 10880 Sft 50 544,000 Plant Office Staff Room Remaining Site and Misc. Development Cost Total 200 sft 400 sft 23,798 sft 1,000 1,000 10 200,000 400,000 237,980 43,520 sft 1,381,980 6 HUMAN RESOURCE REQUIREMENT Construction and allied industry is a labor intensive industry; therefore, a total 21 persons will be required to handle the production operations of Asphalt Plant. The business unit will work on two shift basis (16 hours daily). Technical staff with relevant experience will be required for operating plant. Total approximate manpower required for the business operations along with the respective salaries are given in the table below: 8 Pre-Feasibility Asphalt Plant Salaries & Wages. Staff Title No. of Staff Monthly Salary Yearly Salary Yearly Salary (PKR) (PKR) Plant Incharge 1 80000 80000 960000 Plant Supervisor 1 40,000 40000 480000 Account Officer 1 40,000 40000 480000 Operators 2 35,000 70000 840000 Electrician 1 25,000 25000 300000 Mechanic 1 35,000 35000 420000 Welder 1 35,000 35000 420000 Labor 6 20,000 240000 - Security Guards 2 18,000 36000 432000 Total Salary 22 5,722,000 7 FINANCIAL ANALYSIS & KEY ASSUMPTIONS The project cost estimates for the proposed “Asphalt Plant” have been formulated on the basis of discussions with different persons in market. The projections cover the cost of land rent, Plant cost, installation and development cost 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 Asphalt Plant would be hired on rent @ Rs. 100,000 which will incur a cost of approximately Rs. 1.2 million. Construction and development of site will cost around Rs. 1.26 million which has been assumed to depreciate at 10% per annum using straight line method. if there is a vacant place available nearby a project or allowed to install a plant on vacant place for the period of that specific project completion than the rental cost can be avoided. 7.2 FURNITURE & FIXTURE A provision of Rs. 154,000 for procurement of site furniture and fixture is assumed. This would include table, desk, chairs, staff charpai and electric and sanitary work. The breakup of site Furniture & Fixtures is as follows: Cost of Furniture and Fixture Description Tables and Chairs Waiting Chairs Charpai for Labor Electric and Sanitary Work & Misc. Work Misc. Supplies Total Cost Quantity 1 No. 4 Nos. 2 Nos. 1 Nos. 1 No. 9 Cost per Unit 12,000 2,000 3,500 100,000 20,000 Total Cost 12,000 8,000 14,000 100,000 20,000 154,000 Pre-Feasibility Asphalt Plant 7.3 DEPRECIATION TREATMENT The treatment of depreciation would be on a straight line method perr annum on the following assets. • Plant & machinery (10%) • Building Construction and Renovation (10%) • Furniture and Fixtures etc. (10%) 7.4 PROJECT INVESTMENT DETAILS Cost of Plant Acquisition to commissioning Stage. Plant -1 Reference DESCRIPTION Page No. (PKR) Plant cost 6 (4.3) 36,100,000 Vehicles Cost 7 (4.5) 8,100,000 Used Gen Set Cost 6 (4.3) 5,000,000 Site Development Cost 8 (5.2.2.4) 1,381,980 Furniture and Fixture 9 (7.2) 154,000 Total Capital Cost 50,735,980 Working Capital Cash 500,000 Raw Material 500,000 Inventory 12 (9) 51,735,980 Plant -2 (PKR) 36,100,000 8,100,000 5,000,000 1,381,980 154,000 50,735,980 Plant -3 (PKR) 23,600,000 8,100,000 1,381,980 154,000 33,235,980 500,000 500,000 500,000 500,000 51,735,980 34,235,980 7.5 POJECT OVERHEAD DETAILS. Operating Expenses These below expenditure is plant operating costs which will be incurred though out the year once plant is installed at site. Reference Plant -1 & 2 Plant -3 DESCRIPTION Page No (PKR) (PKR) Site Hiring Cost 9 (7.1) 1,200,000 1,200,000 Staff Salary 9 (6) 5,772,000 5,772,000 Depreciation Expenses 10 (7.3) 5,073,598 3,323,598 Maintenance Exp. 5% of P. 7 (4.4) 1,805,000 1,180,000 Cost Admin and Misc. Cost 11(7.7) 2,738,198 2,738,198 Total Operating Cost 16,588,796 14,213,796 7.6 SELLING & DISTRIBUTION EXPENSES For the purpose of this plant installation, it has been assumed that the asphalt ready mix would be used for own project(s) and also for the sale of ready mix to other contractor who have road projects but not have plant installed. 10 Pre-Feasibility Asphalt Plant 7.7 ADMIN & MISCELLANEOUS EXPENSES Miscellaneous expenses of running the plant are assumed to be 0.5% per anum and are expected to increase at a nominal rate of 10% per annum. 7.8 REVENUE PROJECTIONS The Asphalt plant is expected to operate eight hours and 20 days per month on 50% capacity per day in first year and 34% monthly capcity and will be increased 10% subsequently years. 7.9 ACCOUNTS RECEIVABLES Considering the industry norm, the finished good material would be mainly used in owned project. For idol time plant will be run for other contractor at agreed ready mix rate. It is assumed that 90% of the sales will be on cash. Whereas, remaining 10% sales will be on credit to the builders and construction contractors. A collection period of 60 days is assumed for the credit sales. 7.10 Source of Capital The source of capital is presented in the following table: Debts 0% Equity 100% 7.11 OWNER’S WITHDRAWAL It is assumed that the owner will draw funds from the business once the desired profitability is reached from the start of operations. 8. ESTIMATED PLANT PRODUCTION Plant is expected to operate on daily 8 hours capacity. So production would be produced on 50% capacity on daily and 34% capacity on monthly basis which is as follow; Plant Production DESCRIPTION (PKR) Plant Production capacity per hour in tons (TPH) Per day operational hour (Single Shifts) 70 8 Per day Production Capacity in tons (TPD) 560 Monthly Operational Days 20 Expected Production. Per month in ton 11,200 1st Year Production in tons 134,400 2nd Year Production in tons 147,840 11 Pre-Feasibility Asphalt Plant 3rd Year Production in tons 162,624 4th Year Production in tons 178,886 5th Year Production in tons 196,775 9. ESTIMATED REVENUE The ready mix (Finished Goods) will be used at own project(s) and also would be sold to different clients (construction contractors and builders). Further, price of ready mix would be increased 10% annually. Based on 8 hours & 20 days operational Capacity with 10% Increment of every each year Annual Production Average Rate Annual Revenue Year 1st Year Production 134,400 5,000 672,000,000 2nd Year Production 147,840 5,500 813,120,000 3rd Year Production 162,624 6,050 983,875,200 4th Year Production 178,886 6,655 1,190,488,992 5th Year Production 196,775 7,321 1,440,491,680 ESTIMATED COST OF SALES, RAW MATERIAL PROCUREMENT and RAW MATERIAL INVENTORY Component of Direct Cost is Bitumen, Aggregate High Speed Diesel and Low Speed Diesel which expected to increase 10% each year. The diagram also suggest the cost of sales, each year procurement and raw material inventory in units quantity and in currency as well. Below are the details for five years. Year-0 Aggregate (CFT) 22 22% Description Per ton Material Require Cost of Sale Ratio Material Consumed (COS) Material in Units Procured Raw Material Inventory C/F 40 74% 2 4% LS Diesel (Liters) 0.3 1% 107,983 368,125 20,983 2,908 500,000 2,700 2,700 4,908 4,908 184 184 37 37 500,000 Year-1 Description Raw Material Inventory B/F Procurement in Units Total Procurement in Units Consumed in Production Raw Material Inventory C/F Cost of Raw Material Cost of Raw Material B/F Per unit cost of Raw Material (PKR) Procurement Cost Total Procurement Cost of Sales Aggregate (CFT) Bitumen (KG) HS. Diesel (Liters) Annual Production HS. Diesel Bitumen (KG) (Liters) 134,400 Tons LS Diesel Amount (Liters) (PKR) 2,700 3,000,000 4,908 5,390,000 184 210,000 37 45,000 3,002,700 2,956,800 5,394,908 5,376,000 210,184 201,600 45,037 40,320 45,900 18,908 8,584 4,717 PKR PKR PKR Amount (PKR) 500,000 100% PKR 107,983 368,125 20,983 2,908 500,000 40 120,000,000 120,107,983 118,272,000 75 404,250,000 404,618,125 403,200,000 114 23,940,000 23,960,983 22,982,400 79 3,555,000 3,557,908 3,185,280 551,745,000 552,245,000 547,639,680 12 Pre-Feasibility Asphalt Plant Raw Material Inventory C/F 1,835,983 Year-2 Description R. Material Inventory B/F Procurement in Units Total Procurement in Units Consumed in Production R. Material Inventory C/F Cost of Raw Material Cost of Raw Material B/F Per unit cost of R. Material Procurement Cost Total Procurement Cost of Sales R. M. Inventory C/F Year-3 Description Raw Material Inventory B/F Procurement in Units Total Procurement in Units Consumed in Production Raw Material Inventory C/F Cost of Raw Material Cost of Raw Material B/F Per unit cost of R. Material Procurement Cost Total Procurement Cost of Sales R. M. Inventory C/F Aggregate (CFT) 45,900 3,250,000 1,418,125 Annual Production HS. Diesel Bitumen (KG) (Liters) 18,908 8,584 5,915,000 225,000 3,295,900 3,252,480 43,420 PKR 5,933,908 5,913,600 20,308 PKR 372,628 147,840 Tons LS Diesel Amount (Liters) (PKR) 4,717 45,000 233,584 221,760 11,824 PKR 49,717 44,352 5,365 PKR 1,418,125 978,583 372,628 4,605,320 44 143,000,000 144,835,983 143,109,120 1,726,863 83 487,987,500 489,405,625 487,872,000 1,533,625 125 28,215,000 29,193,583 27,808,704 1,384,879 87 3,910,500 4,283,128 3,854,189 428,939 663,113,000 667,718,320 662,644,013 5,074,307 Annual Proudction 162,624 Tons Aggregate HS. Diesel LS Diesel Amount Bitumen (KG) (CFT) (Liters) (Liters) (PKR) 43,420 20,308 11,824 5,365 3,600,000 6,505,000 240,000 50,000 3,643,420 6,525,308 251,824 55,365 3,577,728 6,504,960 243,936 48,787 65,692 20,348 7,888 6,578 PKR PKR PKR PKR 1,726,863 1,533,625 1,384,879 428,939 5,074,-,240,000 590,328,750 33,105,600 4,779,500 802,453,850 175,966,863 591,862,375 34,490,479 5,208,439 807,528,157 173,162,035 590,325,120 33,648,532 4,663,568 801,799,255 2,804,828 1,537,255 841,947 544,871 5,728,902 Annual Production Aggregate (CFT) R. Material Inventory B/F Bitumen (KG) HS. Diesel (Liters) 178,886 Tons LS Diesel (Liters) 65,692 20,348 7,888 6,578 Procurement in Units Total Procurement in Units 4,000,000 7,156,000 270,000 55,000 4,065,692 7,176,348 277,888 61,578 Consumed in Production 3,935,501 7,155,456 268,330 53,666 R. Material Inventory C/F 130,191 20,892 9,558 7,912 Cost of Raw Material Cost of Raw Material B/F Per unit cost of R. Material 4,605,320 1,835,983 Year-4 Description 978,583 PKR PKR PKR Amount (PKR) PKR 2,804,828 1,537,255 841,947 544,871 53 100 152 105 Procurement Cost 212,960,000 714,347,700 40,968,180 5,783,195 974,059,075 Total Procurement 215,764,828 715,884,955 41,810,127 6,328,066 979,787,977 13 5,728,902 Pre-Feasibility Asphalt Plant Cost of Sales 209,526,063 714,293,395 40,714,724 5,642,918 970,177,099 6,238,766 1,591,560 1,095,404 685,148 9,610,878 R. M. Inventory C/F Year-5 Aggregate (CFT) Description R. Material Inventory B/F Procurement in Units Total Procurement in Units Consumed in Production R. Material Inventory C/F Cost of Raw Material Cost of Raw Material B/F Per unit cost of R. Material Procurement Cost Total Procurement Cost of Sales R. M. Inventory C/F Annual Proudction HS. Diesel Bitumen (KG) (Liters) 196,775 Tons LS Diesel Amount (Liters) (PKR) 130,191 4,350,000 20,892 7,875,000 9,558 295,000 7,912 60,000 4,480,191 4,329,051 7,895,892 7,871,002 304,558 295,163 67,912 59,033 151,140 24,891 9,396 8,879 PKR PKR PKR PKR 6,238,766 1,591,560 1,095,404 59 254,753,400 260,992,166 253,526,536 7,465,630 110 864,734,063 866,325,623 864,295,008 2,030,614 167 49,237,683 50,333,087 49,264,815 1,068,271 685,148 9,610,878 116 6,939,834 1,175,664,980 7,624,982 1,185,275,857 6,827,931 1,173,914,290 797,052 11,361,567 10. CREDIT FACILITY: Consideration a business norm. It is expected that 10% of sale (to other contractors) would be on credit for 30 days terms. On the other hand, procurement from different suppliers or manufacturer is expected to be sourced on credit of 20% for 30 days term. The details are as under. Account Receivable. Years Annual Sales Credit Sales % Credit Sales Value Debtor's Age in Days Account Receivable C/F Year - 1 672,000,000 10% 67,200,000 30 5,523,288 Year - 2 813,120,000 10% 81,312,000 30 6,683,178 Year - 3 983,875,200 10% 98,387,520 30 8,086,645 Year - 4 1,190,488,992 10% 119,048,899 30 9,784,841 Year - 5 1,440,491,680 10% 144,049,168 30 11,839,658 Account Payable Years Annual Procurement Credit Purchase Value Credit Purchase % Debtor's Age in Days Account Payable C/F Year - 1 551,745,000 20% 110,349,000 30 9,069,781 Year - 2 663,113,000 20% 132,622,600 30 10,900,488 Year - 3 802,453,850 20% 160,490,770 30 13,191,022 Year - 4 974,059,075 20% 194,811,815 30 16,011,930 14 Pre-Feasibility Asphalt Plant Year - 5 1,175,664,980 20% 235,132,996 11. BREAK EVEN ANALYSES Annual Costs & Revenue Sale Value Cost Contribution Fixed Cost Operating Profit 672,000,000 547,639,680 124,360,320 16,588,796 107,771,524 PV Ratio 19% Break Even Point Sale 89,640,097 Break Even Point Sales & Costs Sale (BEP) Value Cost Contribution Fixed Costs Profit 89,640,097 73,051,301 16,588,796 16,588,796 - BEP In Units Sales Unit to be Sold Revenue Less Cost of Sales Aggregate Bitumen HS. Diesel LS. Diesel Cost of Sales Gross Profit Operating Cost Profit / Loss / BEP 17,928 89,640,097 15,776,657 53,784,058 3,065,691 424,894 73,051,301 16,588,796 16,588,796 - 15 30 19,326,000 Pre-Feasibility Asphalt Plant 12. INCOME STATEMENT Description Revenue Less Cost of Sales Aggregate Costs Bitumen Cost High Speed Diesel Cost Low Speed Diesel Cost Cost of sales Gross Profit Operating Cost Site Hiring Cost Staff Salary Depreciation Expenses Maintenance Exp. Admin & Misc. Exp. Subtotal Operating Income Tax 35% NET PROFIT/(LOSS) AFTER TAX Balance brought forward Total profit available for appropriation Balance carried forward Year 1 672,000,000 Year 2 813,120,000 Year 3 Year 4 Year 5 983,875,200 1,190,488,992 1,440,491,680 118,272,000 403,200,000 143,109,120 487,872,000 173,162,035 590,325,120 209,526,063 714,293,395 253,526,536 864,295,008 22,982,400 27,808,704 33,648,532 40,714,724 49,264,815 3,185,280 3,854,189 4,663,568 5,642,918 6,827,931 547,639,680 124,360,320 662,644,013 150,475,987 801,799,255 182,075,945 1,200,000 5,772,000 1,200,000 6,349,200 1,200,000 6,984,120 1,200,000 7,682,532 1,200,000 8,450,785 5,073,598 5,073,598 5,073,598 5,073,598 5,073,598 2,536,799 2,536,799 2,536,799 2,536,799 2,536,799 2,738,198 3,012,018 3,313,220 3,644,542 4,008,996 17,320,595 107,039,725 37,463,904 18,171,615 132,304,372 46,306,530 19,107,737 162,968,207 57,038,873 20,137,471 200,174,422 70,061,048 21,270,178 245,307,212 85,857,524 69,575,821 85,997,842 105,929,335 130,113,374 159,449,688 69,575,821 85,997,842 105,929,335 130,113,374 69,575,821 85,997,842 105,929,335 130,113,374 159,449,688 69,575,821 85,997,842 105,929,335 130,113,374 159,449,688 970,177,099 1,173,914,290 220,311,893 266,577,390 Note: • • • Depreciation charged 10% using straight line method, no residual value / scrap value is accounted as plant is expected to run for subsequent years. Maintenance Cost is 5% of plant value including plant, vehicles, generators and buildings and furniture’s & fixtures which serve direct production activities. Admin and Misc. Expenses are expected to incur0.5% of cost of sale on activity procurement, operation, transportation will start and also carriage, entertainment, insurance, office and staff fuel etc will require. 16 Pre-Feasibility Asphalt Plant 13. BALANCE SHEET Description Year 0 Year 1 500,000 77,892,395 Year 2 Year 3 Year 4 Year 5 Current Assets Cash & Bank Accounts receivable Raw material inventory Total Current Assets 500,000 1,000,000 99,589,843 124,827,407 151,325,780 185,244,256 5,523,288 6,683,178 8,086,645 9,784,841 11,839,658 4,605,320 5,074,307 5,728,902 9,610,878 11,361,567 88,021,003 111,347,328 138,642,954 170,721,499 208,445,480 Fixed Assets Plant cost 36,100,000 32,490,000 28,880,000 25,270,000 21,660,000 18,050,000 8,100,000 7,290,000 6,480,000 5,670,000 4,860,000 4,050,000 5,000,000 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 1,381,980 1,243,782 1,105,584 967,386 829,188 690,990 154,000 138,600 123,200 107,800 92,400 77,000 Total Fixed Assets 50,735,980 45,662,382 40,588,784 35,515,186 30,441,588 25,367,990 Total Assets 51,735,980 133,683,385 151,936,112 174,158,140 201,163,087 233,813,470 Vehicles Cost Used Gen Set Cost Site Development Cost Furniture and Fixture Liabilities & Shareholders' Equity Accounts payable Total Liabilities 9,069,781 10,900,488 13,191,022 16,011,930 19,326,000 - 9,069,781 10,900,488 13,191,022 16,011,930 19,326,000 51,735,980 55,037,783 55,037,783 55,037,783 55,037,783 55,037,783 69,575,821 85,997,842 105,929,335 130,113,374 159,449,688 Shareholders' equity Capital Retained earnings Total Equity 51,735,980 124,613,604 141,035,625 160,967,118 185,151,157 214,487,471 Total Capital & Liabilities. 51,735,980 133,683,385 151,936,112 174,158,140 201,163,087 233,813,470 17 Pre-Feasibility Asphalt Plant 14. CASH FLOW STATEMENT Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Net profit 69,575,821 85,997,842 105,929,335 130,113,374 159,449,688 Add: depreciation expense 5,073,598 5,073,598 5,073,598 5,073,598 5,073,598 9,069,781 10,900,488 13,191,022 16,011,930 19,326,000 83,719,200 101,971,927 124,193,955 151,198,902 183,849,285 5,523,288 6,683,178 8,086,645 9,784,841 11,839,658 500,000 4,605,320 5,074,307 5,728,902 9,610,878 11,361,567 -500,000 73,590,592 90,214,442 110,378,408 131,803,184 160,648,061 51,735,980 - - - - - 52,235,980 - - - - - 51,735,980 - - - - - 51,735,980 - - - - - 500,000 73,590,592 90,214,442 110,378,408 49,401,804 67,897,844 500,000 74,090,592 164,305,034 274,683,442 324,085,246 500,000 74,090,592 164,305,034 274,683,442 324,085,246 391,983,090 500,000 74,090,592 164,305,034 274,683,442 324,085,246 391,983,090 Operating activities Account Payable Total Accounts receivable Raw material inventory Cash provided by operations 0 Financing activities Issuance of Funds Cash provided by / (used for) financing activities Investing activities Capital expenditure Cash (used for) / provided by investing activities NET CASH Cash balance brought forward Cash available for appropriation Cash carried forward 18