Muhammad Tariq

PRE-FEASIBILITY REPORT (BATCHING PLANT) FOR READY MIX CONCRETE (RMC) PRODUCTION February 2021 Pre-Feasibility Batching Plant for (Ready Mix Concrete) 1 EXECUTIVE SUMMARY The proposed project envisages the setup of a Batching Plant to supply the ready mix concrete (RMC). Batching plant is an essential for construction sector. Batching plant produced the ready mix concrete for construction project from small scale to Large Scale. It has registered a continues growth as numerous construction project is underway. In this subsector is due to rapid execution of work on various projects, increased investment in small scale construction and rapid implementation of development schemes and other projects of federal and provincial governments. Proposed location for setting up a batching plant for ready mix concrete (RMC is largely depends on the availability of raw material and its transportation to the plant with low cost. Further it should be close to the different construction project in the proposed area. This project is proposed for ready mix concrete to supply at different projects and to different contractor. For this purpose, a batching plant to be installed at nearest location with negotiation of low cost raw material delivery and projects to supply. Proposed Product Mix include: Ready Mix Concrete (RMC) PSI 3000, Ready Mix Concrete (RMC) PSI 3500, Ready Mix Concrete (RMC) PSI 4000, and Ready Mix Concrete (RMC) PSI 4500. These ready mix product is generally required for buildings construction for foundations, Pillars, beams, Water Tanks, Sheds and roof RCC. Installed capacity is of batching plant is one cubic meter per mix and it will mix 50 cubic meter per hour but capacity utilization is 8 operational hours per day and 15 operational days per month with 10% production increase in subsequent years up to the maximum capacity as require. The financial indicator outlook of this project is as follow; DESCRIPTION YEAR -0 Project Capital Budgeting 72,633,500 NPV 36,864,416 IRR (%) Payback Period Year -1 Year -2 Year -3 Year -4 Year -5 PKR PKR PKR PKR PKR 35% 2.98 Year Sales Revenue 523,800,000 633,798,000 766,895,580 927,943,652 1,122,811,819 Direct Variable Cost 466,737,619 566,185,715 682,862,348 823,738,355 Contribution Operating Costs Gain of Vehicle Sales 67,612,285 84,033,232 104,205,297 27,430,242 29,145,358 31,279,008 33,830,723 129,245,459 36,940,655 1,399,600 Net Profit Cash Generated Working Capital during Operation 57,062,381 993,566,360 29,632,139 38,466,927 52,754,224 70,374,574 93,704,403 1,000,000 15,870,550 30,143,539 45,418,546 81,097,308 130,722,793 1,000,000 15,959,407 21,087,802 27,331,391 34,908,176 44,079,674 1 Pre-Feasibility Batching Plant for (Ready Mix Concrete) 2 BACKGROUND Concrete is made by mixing cement, sand (fine aggregate) and crush (course aggregate) with a certain ratio of water. Concrete mixing is a very sensitive process for all grades of concrete and the strength of concrete depends upon the workmanship and professionalism during mixing process. Best recommended method for mixing of concrete is by using a batching plant. Concrete mixed in a batching plant is often termed as READY MIX CONCRETE. This type of concrete is ready to be poured at construction site once it is out of batching plant. A batching plant is a computer guided plant that uses automation process to make sure concrete is mixed perfectly in whatever grade/ratio is required. Batching plants requires a decent enough space (approximately 10 – 12 Kanal) to be assembled and made operational. It requires staff who has to manage daily based operations. Due to its high capital and operational cost, end product i-e ready mix concrete is expensive as compared to conventional on site concrete mixing. This study will explain and calculate in detail all possible aspect component of capital and operational costs and proceeds from operation. Ready mix concrete is specially manufactured and be delivered to the construction site in a state that’s mixed and unhardened. This kind of concrete—popularly called RMC—is made in a batching plant under specially controlled conditions and formula. RMC is often preferred to on-site concrete mixes or at fixed plant because the ready mix variety can mixed using specialized equipment to get just the right mixture. It uses a set design ratio and mixed by bathing plant then is delivered to a work site by trucks with in-transit mixers. Specialty mixtures can be sent right where they’re needed. Ready mix concrete is bought and sold by volume, usually by the cubic meter. Where on-site mixtures are used instead, it’s because the job or supply chain demands more flexibility. So what’s in ready mix concrete? RMC is a mixture of cement, water, and aggregates. Cement, the most important element of the mix, is the ingredient that lends concrete its resistance. Water is the vital fluid of the mix. It sets off a chemical reaction when it comes in contact with the cement. Most abundant part of the mix—roughly 70 to 80 percent of the volume—are sand, gravel, and crushed stones. Lastly, solid or liquid additives are introduced to ready mix concrete before or during preparation. These increase concrete’s durability or shorten its setting time. All of these ingredients are procured individually, then mixed in specific proportions as dictated by the needs of the job. During the mixing phase, the components are brought together into a uniform concrete mass. Care is taken to precisely measure the mixing time, which begins the moment the water and other material are poured into the cement mixer and the mixer begins rotating. While it’s on the way to a site through transit mixer truck. Because of its ability to be mixed precisely off-site to exact specifications by specialized equipment, ready mix concrete remains the most popular form of concrete. Time of Delivering (Life of wet RMC). Ready mix concrete have life 1.5 hour to 2 hours. So when it is manufactured, it should be delivered to construction site within this time span and if there is more time to take to deliver the RMC then there is solution to add some chemicals and admixtures to expand its life and workability. 2 Pre-Feasibility Batching Plant for (Ready Mix Concrete) 3 PROJECT PROFILE 3.1 OPPORTUNITY RATIONALE Construction sector is in progress because houses, commercial building are always in need to build as population is increasing day by day and there vast requirement of houses and commercial buildings for residence, offices, and commercial business. Private and government construction projects are the major drivers of growth in more for the building of house, plazas, malls, parks, roads, flyovers, bypasses and dams, there is a mass and consistent need of ready mix concrete to do quality construction with required strength and PSI. Large size project install their own batching plant for ready mix but small and medium size project does not encrouge the contractors or owners to installed their own batching plant because it require a huge investment which their project may not have profitability to cope the cost of plant. So there are number of ready mix plant operators who sell the ready mix concrete (RMC) to different contractor and builder on an agreed rate. They provide the ready mix concrete on site through their transit mixer truck. The concrete pump would be manage by the client itself. In Islamabad, there are following supplier of ready mix concrete (RMC). H2 Ready Mix (RAWAT) Layyah Brothers (IJP Road) SMC Islamabad C-MIX Concrete Mixing Plant MAC Concrete Plant IJM Strong Concrete (DHA) Build Fast Ready Mix Supplier (F-10 Office) MAC Concrete Plant (Humak) 3.2 PROJECT BRIEF The study is based on installation of batching plant to sale and supply the ready mix concrete to different clients (i.e. contractors & households) at construction site. For this project, the followings are needed to run this business. Land about 10 – 12 Kanal Complete Set of Plant Personnel for (Production Staff for plant operation & Office Staff for Administration) Raw Material (i.e. Cements, Aggregates and Sand) Generators Transit Mixer Trucks Building etc. Then comes to the plant estimation which will incur before and during the plant operation. Cost factors which includes the capital, operational and cost of sales: Capital Cost. • Cost of Plant Acquisition and Installation • Cost of Site Acquisition • Cost of Site Development 3 Pre-Feasibility Batching Plant for (Ready Mix Concrete) • Cost of Raw Material • Cost of Furniture and Fixture for Plant • Labor Cost • Intangible Cost / preliminary Cost Operational Cost. • Salary & Wages • Office Admin Expenses • Utility Expenses • Travelling and Communication Expenses • Office Vehicle Running Expenses • Marketing and Promotional Expenses. • Depreciation • Leased Vehicles Expenses • Bad Debts • Professional Expense etc. • Insurance Premium Variable Costs (Cost of Sales) • Raw Material Procurement • Direct Plant Labor Cost • Machinery Maintenance • Power (Diesel Genset Fuel + Electricity) • Plant Vehicle Fuel and Water Cost • Plant Consumables &Equipment’s. 3.3 PROPOSED BUSINESS LEGAL STATUS The legal status of business is proposed private limited ready mix concrete (RMC) Manufacturer Company. 3.4 PROJECT CAPACITY AND RATIONALE Operational Production capacity of the plant will be depend on orders in hand and future portfolio of ready mix booking for project in progress. The plant concrete mixing capacity is 1 cubic meter per batch. One cubic meter plant will produce 50 cubic meter RMC per hour. If plant is expected to run average 8 hour per day then 400 cubic meter per day ready mix to be produced. Further if 15 working days is expected to be operational per month, then total 6000 cubic meter ready mix concrete to be produced per month and 72000 cubic meter ready mix concrete to be produced per year. Further 10% increased would be expected in production each year. 3.4.1 RAW MATERIAL SOURCING Raw material for this project is available locally from Pakistan. A number of suppliers are available of cements, sand and aggregate crush, admixtures and chemicals in each region of Pakistan and could easily be contacted, whereas, chemicals and admixture would need to be procured from well-known supplier or direct from the manufacturer. 4 PRODUCTION PROCESS 4 Pre-Feasibility Batching Plant for (Ready Mix Concrete) 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 of ready mix concrete The operation process can divide into three phases, P • Pre-production work • Batching Plant Operation • Ready Mix Delivering and • After-production work. Details are below: Pre-production work. Before the ready mix concrete production job is being started then it is to be make sure that all required raw material are available in stock. If there is need, raw material should be procured on time before production start. Raw material need to be hold close to bins and silos. Sufficient quantity of dry / wet fluid Cement and admixture should be loaded on time before production start. The storage bin should also be filled with Sand, aggregate so that the production process should continue smoothly. Batching Plant Operation. The concrete batch plants can be categorized into following main parts; • Aggregate feeding (Storage Bin) • Powder feeding (Silos) (fly ash, cement and expanding agent) • Water Boring or water tank for water mixing • Mixer • Weighing Hopper • Conveyer Belts • Control Room • Cement Storage Pump • Conveyer Motors • Generator • Electric Scales for aggregate and cement 5 Pre-Feasibility Batching Plant for (Ready Mix Concrete) The process of production is depend on following steps. Material storage in Bin Cements, Fly ash and admixtures in Silos. Before production start filled bins and silos with required material according to ready mix design formula Design Formula. Design formula according to customers need or required psi for the project undertake. There are different formula for multiple stages of project construction. Such as 1:2:4, 1:3:3 1:2:3, 1:2:2. Weighing Before weighing, the raw material start to shift in weighing hopper through conveyer belt such as sand, aggregate and through pipes such as cements (dry / fluid), fly ash and admixtures. According to set ready mix formula designed in control panel which pass the command bathing plant electric controller which act accordingly and start to transport the material in weighing hoppers to weight for mixing. Shift Material to Mixer After material is weighted accurately then it released the weighted raw material into mixing drum. 6 Pre-Feasibility Batching Plant for (Ready Mix Concrete) Mixing the ready mix. After weighing, the mixer drum receive the dry raw material such as aggregates, sands, cements, fly ash and wet material such water, fluid cements and admixtures as required. Mixer circulate on a set speed and keep mixing the material with water upto 72 second as mentioned in one cubic meter plant. Filled out the transit pump truck and. After mixing, the mixer discharge the ready mix concrete down into transit mixer. Delivering The transit mixer pump is used to transport the ready mix concrete. After mixing, the transit mixer truck take ready mix concrete to construction site and where it will pour on site through concrete pump. One transit mixer truck may carry the 14-16 Cubic Meter. After-Production. After production the staff should make sure that the hoppers, pipes, conveyers and mixer should be cleaned and washed by water so that no slurry, debris and concrete residual should not be remain otherwise it will convert into solid form and will hard to remove which make hurdles in production and operation. 4.1.1 PLANT DIAGRAM 7 Pre-Feasibility Batching Plant for (Ready Mix Concrete) 4.2 RAW MATERIAL REQUIREMENT 4.2.1 CEMENT Cement is the standard binder used with aggregates to make concrete products. The quality of cement, particularly with regard to the rate of strength gain hould be considered in choosing cement. Cement may be stored in paper bags but protected from any deterioration or in silos. In this project the dry cement will be stored in cement silos. The cement will be delivered through cement bulker truck direct from the factories. In this project fluid cement is needed for ready mix that also be transported through cement bulker. 4.2.2 AGGREGATES The aggregate / gravel / crush stone requirement is based on formula designed and strength needed. There are number of aggregate sizes required for different ready mix of 38mm, 20mm and 10mm, crush pane etc. Aggregates are available easily as there are number of aggregate crush mining are operating around Islamabad. The cost of aggregate in Islamabad is relatively low as compare to other main cities of Pakistan. 4.2.3 Sands Sand are require for ready mix according to formula of RMC. The sand also available at an economical price in Islamabad. Mainly sand is supplied from lawrencepur mines which have better quality and famous brand. 4.2.4 Fly Ash Fly Ash is required for ready mix but it is not a regular material as it needed on government project such as bridges, flyovers, dams and other high strength beams and columns. It also available in each cities of Pakistan on economical price. 4.2.5 Admixture / Chemical Some admixture and chemical is needed based on designed formula. Admixture are needed some times when required early strength gain, remove wet particals, water proofing, change of colors, to enhance cement and fly ash workability and strength and to increase the wet ready mix concrete life for delivering. 4.2.6 Diesel / Fuel Diesel oil is used for operating the diesel generator and vehicle in production and supplying. 4.2.7 Water Water is needed for ready mix concrete. Water help the material to mixed up and for a bonding and pouring shapes. Water allow the cement and other admixture to do chemical reaction with all material and form a concrete shape. About 150 liter of water is needed for one cubic meter concrete. The water will be available through water boring pump. 4.3 PLANT & ACHINERY REQUIREMENT 8 Pre-Feasibility Batching Plant for (Ready Mix Concrete) Technical Specifications Model AJ-50 Theoretical Productivity (m3/h) 50 Mixer Model (Mixer Output L) JS1000 Mixer Power (kW) 2×18.5 Mixing Cycle Period (s) 72 Rated Input Volume (Model of Batching Machine L) 1600 Standard Aggregate Bin Capacity (m3) 3×8 Category of Aggregate 3/4 Overall Weight (ton) ≈23 Installation Power (kW) ≈100 Supplier AIMIX Concrete Batching Plant ALI AKBAR, Manager Sales Street 6, F-8/3, Islamabad 5 PROJECT INVESTMENT DETAILS Sr. NO- 1 2 3 4 AMOUNT PKR DESCRIPTION Capital Cost Plant, Machinery & Equipment Land Building / Infrastructure Furniture & Fixtures Office Vehicles Office Equipment Pre-operating Costs Training Costs Total Capital Cost Working Capital Equipment Spare Part Inventory Raw Material Inventory Upfront Insurance Payment Cash Total Working Capital TOTAL PROJECT COST (in PKR) 57,550,000 10,000,000 2,968,000 258,000 742,500 215,000 800,000 100,000 72,633,500 450,000 2,270,000 1,833,150 1,000,000 5,553,150 78,186,650 9 Pre-Feasibility Batching Plant for (Ready Mix Concrete) 5.1 PLANT & MACHINERY COST. For ready mix concrete (RMC), following plant and machinery would be needed. Transit mixer would be needed for the transportation of RMC. They should be sufficient that they can cope the continues supplying demand of site and plant production. So four new transit mixer is proposed one should be available on plant, one on site and two vehicle should in delivering travel to/from site. Jcb loader is needed for loading the raw material at storage bin. Sr. No. 1 2 3 4 5 Description Quantity Cost/unit 1 4 1 1 1 12,700,000 8,500,000 6,500,000 850,000 3,500,000 Batching Plant AJ-50 (JS1000 Mixer) Transit Mixers (Used) JCB Excavator Loader (Used) Electricity Transfer for Factor Gen Set 150 KVA with Installation Total Amount 12,700,000 34,000,000 6,500,000 850,000 3,500,000 57,550,000 5.2 BUILDING DEVELOPMENT Building development would be needed for the preparation of plant foundation, leveling the site, office building, staff rooms, kitchen and dining, washrooms and water storage tank etc. about 10-12 Kanal would be sufficient for this plant operation. Because in this project the only raw material would be needed to store at stockpile and no finished goods are needed to store as it needs to be consume at a time once it get manufactured. The Building cost is calculated below. 11.17 Kanal Proposed Sr. Details Unit Rate / SFT Total No. Area 1 Site Office 600 Sft 1,000 600,000 2 Production & Plant Installation 10,880 Sft 100 1,088,000 3 Stackyard area 21,760 Sft 10 217,600 4 Cafeteria & Staff Facilities 500 Sft 1,000 500,000 5 Earth Work 21,600 Sft 5 108,000 6 Vehicles Parking Space 5,440 Sft 10 54,400 7 Water Tank, Water Bore and Connection Total Construction Cost 1 60,780 No. 400,000 400,000 2,968,000 5.3 FURNITURE & FIXTURE Furniture and fixture would be needed for day to day business operation at plant. Office tables, chairs will be needed for staff and visitors. Sanitary and Electric fittings will also be needed . Unit Cost Total Cost Sr. Description Quantity No. (Rs.) (Rs.) 1 Office Tables & Chairs 4 15,000 60,000 2 Waiting Area Chairs 8 3,000 24,000 3 Chairs for Workers/Labor 12 2,000 24,000 4 Electric wiring & lighting 1 60,000 60,000 5 Air conditioners (1.5 ton) 1 90,000 90,000 TOTAL 258,000 10 Pre-Feasibility Batching Plant for (Ready Mix Concrete) 5.4 LEASED OFFICE VEHICLE COST Vehicle would be needed for the office/plant staff and manager. Marketing manager is proposed to have a 100cc motor car and Suzuki Bolan would be needed at plant for any plant work such as to visit for raw material and other procurement. Any tools and equipment need to be brought from market and other necessary work to be done. A motorbike also be needed for the dispatch rider or other miscellaneous work. Down Registration Sr. Description Status Total No. Payment Charges 1 2 3 Motorcycle for staff Motor Car for Manager Marketing Bolan Suzuki 800CC Total Vehicle Cost On 16,000 Leased On 426,000 Leased On 226,000 Leased 668,000 4,500 20,500 35,000 461,000 35,000 74,500 261,000 742,500 5.5 OFFICE EQUIPMENT Office equipment such laptops printer and mobile is proposed for the plant. Laptops and mobile will be needed for the marketing manager and operation manager. Unit Cost Total Sr. Description Quantity No. (Rs.) Cost (Rs.) 1 Laptops 3 45,000 135,000 2 Printer 1 30,000 30,000 3 Mobile Phone Handsets 2 25,000 50,000 TOTAL 215,000 5.6 PRE-OPERATING COST The following cost is needed when undertake this plant to be installed. As utility connection may require a contingent expenses other than scheduled, some consultants or manager would also be require to hire before plant installation. Initial marketing and promotion would be needed in construction sector to introduce the plant. Sr. Description Amount No. 6 Utility Connection Contingent Fee 250,000 7 Pre-Operation Staff Salary 250,000 9 10 Initial Marketing, Promotion & Refreshment Other Misc. Cost Total Costs 200,000 100,000 800,000 5.7 TRAINING COST Training for some staff may be require to make the staff competent and productive. A technical training may be undertake about the technical knowledge, practice and for concrete design ratio. Sr. Description Quantity Price Amount No. 1 Production Staff 2 25,000 50,000 3 Operation Staff 2 25,000 50,000 Total Cost 100,000 11 Pre-Feasibility Batching Plant for (Ready Mix Concrete) 6 POJECT OVERHEAD DETAILS. 6.1 Operating Expenses These below expenditure is plant operating costs which will be incurred though out the life of plant once plant is installed at site. YEAR -1 (RS) YEAR -2 (RS) YEAR -3 (RS) YEAR -4 (RS) YEAR -5 (RS) Office Salary expense 3,468,000 3,814,800 4,196,280 4,615,908 5,077,499 Office Admin expense 173,400 190,740 230,795 230,795 253,875 Electricity expense 273,412 300,753 330,828 363,911 400,302 Travelling expense 173,400 190,740 209,814 230,795 253,875 173,400 190,740 209,814 230,795 253,875 1,166,140 1,282,754 1,411,029 1,552,132 1,707,346 173,400 190,740 209,814 230,795 253,875 Marketing & Promotional Exp. 2,619,000 3,168,990 3,834,478 4,639,718 5,614,059 Insurance expense 1,833,150 1,558,178 1,324,451 1,125,783 956,916 Audit and Lega Fee 523,800 633,798 766,896 927,944 1,122,812 Off. Vehicle Principal Installment 542,933 542,933 542,933 542,933 542,933 12,346,700 12,346,700 12,346,700 12,346,700 12,346,700 180,000 180,000 180,000 180,000 180,000 Bad debt expense 1,047,600 1,267,596 1,533,791 1,855,887 2,245,624 Miscellaneous expense 2,619,000 3,168,990 3,834,478 4,639,718 5,614,059 116,907 116,907 116,907 116,907 116,907 DESCRIPTION Communications Expenses Office vehicles running expense Office expenses Depreciation expense Amortization Interest on Vehicle finance Total Capital Cost 27,430,242 29,145,358 31,279,008 33,830,723 36,940,655 12 Pre-Feasibility Batching Plant for (Ready Mix Concrete) 6.2 OFFICE SALARIES EXPENSES The following staff would need to be hire for the running of ready mix concrete business. These staff are proposed to hire at office and production staff would need to hire for plant. The details of the staff salaries are here as under. No of Monthly Yearly Staff Title Amount Persons Salary Salary Manager Operation 1 80,000 80,000 960,000 Manager Marketing 1 75,000 75,000 900,000 Assistant Manager Finance 1 60,000 60,000 720,000 Driver 1 20,000 20,000 240,000 Peon 1 18,000 18,000 216,000 Guards 2 18,000 36,000 432,000 TOTAL 7 289,000 3,468,000 Amount to Income Years Increased % Statement Year - 1 3,468,000 Year - 2 10% 3,814,800 Year - 3 10% 4,196,280 Year - 4 10% 4,615,908 Year - 5 10% 5,077,499 6.3 ADMINISTRATION EXPENSES Office admin expenses are expected to rise because administration activities at office and plant. Such as procurements, staff welfare expenditure at plant. Description Administration Salaries Administration Benefit Exp. Administration Benefit Exp. Description Year - 1 (5% on Admin Salaries) Year - 2 with 10% Increament Year - 3 with 10% Increament Year - 4 with 10% Increament Year - 5 with 10% Increament Amount 3,468,000 5% 173,400 Charge to I & S 173,400 190,740 209,814 230,795 253,875 6.4 OFFICE ELECTRICITY CHARGES Office electricity will be used either office maintain away from plant or at plant site. The office electricity is separately treated under operating expenditure. Monthly Description Units Price / Unit Yearly Cost Cost Units 1,-,-,360.00 GST 17% 3.19 3,192.60 Electricity Duty 1.5%- Finance Costing Surcharge- Neelum Jehlum Surcharge- Total Electricity Charges 22.78 22,-,411.60 Years Increased % 13 Amount to Income Statement Pre-Feasibility Batching Plant for (Ready Mix Concrete) Year - 1 Year - 2 Year - 3 Year - 4 Year - 5 10% 10% 10% 10% 273,412 300,753 330,828 363,911 400,302 6.5 TRAVELLING & CONVEYANCE EXPENSES Travelling and Conveyance are expected 5% of Salary Description Amount 173,400 Year - 1 (5% on Admin Salaries) 190,740 Year - 2 (5% on Admin Salaries) 209,814 Year - 3 (5% on Admin Salaries) 230,795 Year - 4 (5% on Admin Salaries) 253,875 Year - 5 (5% on Admin Salaries) 6.6 COMMUNICATION EXPENSES Communication such as staff mobile and internet expenses, telephone, fax and courier charges are expected to rise 5% on salaries, Description Salary 173,400 Year - 1 (5% on Admin Salaries) 190,740 Year - 2 (5% on Admin Salaries) 209,814 Year - 3 (5% on Admin Salaries) 230,795 Year - 4 (5% on Admin Salaries) 253,875 Year - 5 (5% on Admin Salaries) 6.7 OFFICE VEHICLES RUNNING EXPENSES Office vehicles will produce the following office expense in form of oil change & services and misc. maintenance cost of vehicles. Monthly Yearly Description Quantity Unit Price Amount Amount Petrol-,283 987,390 Proposed Running Cost Mobil Oil Change & Services 1 4,500 4,500 54,000 Motorcycle Oil Changes & Service 2 550 1,100 13,200 Car Misc. Maintenance 1 5,000 5,000 60,000 Motorcycle Misc. Maintenance 2 1,000 2,000 51,550 Total Office Vehicle Running Exp. 1,166,140 Amount to Income Years Increased % Statement Year - 1 1,166,140 Year - 2 15% 1,282,754 Year - 3 15% 1,411,029 Year - 4 15% 1,552,132 Year - 5 15% 1,707,346 14 Pre-Feasibility Batching Plant for (Ready Mix Concrete) 6.8 OFFICE EXPENSES Office expenses are expected to incur 5% of salary. Expenses is proposed in form of stationary, cleaning and entertainment. Yearly Description Salary 173,400 Year - 1 (5% on Admin Salaries) 190,740 Year - 2 (5% on Admin Salaries) 209,814 Year - 3 (5% on Admin Salaries) 230,795 Year - 4 (5% on Admin Salaries) 253,875 Year - 5 (5% on Admin Salaries) 6.9 MARKETING & PROMOTIONAL EXPENSES Once the plant will installed and in working condition. The sales team would need to be promote the project. A significant marketing and promotional strategy would need to be opt because there are number of batching plant are in operation in Islamabad which also selling ready mix at competitive price. To make succefull a comprehensive marketing plant would need to be follow which incur a material expenditure. Amount to I Years Annual Sales Increased % &S Year - 1 Year - 2 Year - 3 Year - 4 Year - 5 523,800,000 633,798,000 766,895,580 927,943,652 1,122,811,819 0.5% 0.5% 0.5% 0.5% 0.5% 2,619,000 3,168,990 3,834,478 4,639,718 5,614,059 6.10 INSURANCE CHARGES Insurance would be needed for plant and vehicles so that all plant, machinery and vehicle get insured to avoid any future loss and damages. The insurance cost is expected a 3% on plant, machinery and vehicle cost and will be decreased subsequently. Particular Price 57,550,000 Plant, Machinery & Equipment 3,340,000 Office Vehicles 215,000 Office Equipment Total 61,105,000 Cost in % on Total Assets 3% Total Prepaid Insurance year-0 1,833,150 Year - 1 with 15% Decrease Year - 2 with 15% Decrease Year - 3 with 15% Decrease Year - 4 with 15% Decrease Year - 5 with 15% Decrease 1,558,178 1,324,451 1,125,783 956,916 813,378 15 Pre-Feasibility Batching Plant for (Ready Mix Concrete) 6.11 PROFESSIONAL CHARGES During business course of time, it may necessary to hire some professional for audit, legal and technical consultancy which result a minor cost in operation, say .10% of revenue. Amount to Years Annual Sales Increased % Income Statement Year – 1 Year – 2 Year – 3 Year – 4 Year – 5 523,800,000 633,798,000 766,895,580 927,943,652 1,122,811,819 0.10% 0.10% 0.10% 0.10% 0.10% 523,800 633,798 766,896 927,944 1,122,812 6.12 LEASED OFFICE VEHICLE CHARGES Vehicle for office staff and plant staff use is proposed to hire on lease from bank. One motorcycle, one motor car 100cc and one Bolan Suzuki 800cc is proposed for the operation. The down payment is charged to balance sheet of the project and installment break up with principal and interest amount is charged to income statement accordingly. Description Motorcycle Motor Car Bolan Suzuki Total Vehicle Cost Registration Charges Total Office Vehicle Down Payment Cost Description Motorcycle for staff Motor Car for Manager Marketing Bolan Suzuki 800CC Total Vehicle Cost Description Vehicle Principal - Yearly Interest Expenses - yearly Total Installment Charges Depreciation 20% - yearly Amount Charge to I / S Description Office Vehicle Cost Depreciation Year -1 Residual Value Year - 2 Residual Value Year - 3 Residual Value Year - 4 Residual Value Year - 5 Residual Value Receipts from Scrape of Vehicles 80,000 4,500 84,500 2,130,000 35,000 2,165,000 Down Registration Payment Charges 16,000 4,500 426,000 226,000 668,000 35,000 35,000 74,500 Income Statement Motorcycle Motor Car 21,333 340,800 38,667 51,120 60,000 391,920 4,100 92,200 64,100 484,120 Balance Sheet Motorcycle Motor Car 20,500 461,000 4,100 92,200 16,400 368,800 12,300 276,600 8,200 184,400 4,100 92,-,000 16 852,000 1,130,000 35,000 1,165,000 3,340,000 74,500 3,414,500 Total 20,500 461,000 261,000 742,500 Bolan Suzuki 180,800 27,120 207,920 52,200 260,120 Total 542,933 116,907 659,840 148,500 808,340 Bolan Suzuki 261,000 52,200 208,800 156,600 104,400 52,200 0 Total 742,500 148,500 594,000 445,500 297,000 148,500 0 452,000 1,336,000 Pre-Feasibility Batching Plant for (Ready Mix Concrete) Long Term Liabilities Leasing Finance payable year-0 Each Year Installment Year - 1 Finance Lease Payable Year - 2 Finance Lease Payable 180,000 60,000 120,000 60,000 1,959,600 391,920 1,567,680 1,175,760 1,039,600 207,920 831,680 623,760 3,179,200 659,840 2,519,360 1,859,520 Year - 3 Finance Lease Payable - 783,840 415,840 1,199,680 Year - 4 Finance Lease Payable - 391,920 207,920 599,840 Year - 5 Finance Lease Payable - - - Break Up of Installment of Vehicle Lease Description Motorcycle Vehicle Price 80,000 Vehicle Down Payment 20% 16,000 Finance Amount 64,000 Finance Plan (Installments) 36 Monthly Installment 5,000 Yearly Installment 60,000 Monthly Principal Installment 1,778 Yearly Principal Installment 21,333 Monthly Interest Installment 3,222 Yearly Interest Installment 38,667 Motor Car 2,130,000 426,000 1,704,-,660 391,920 28,400 340,800 4,260 51,120 Bolan Suzuki 1,130,000 226,000 904,-,327 207,920 15,067 180,800 2,260 27,120 - Total 3,340,000 668,000 2,672,000 54,987 659,840 45,244 542,933 9,742 116,907 6.13 DEPRECIATION TREATMENT Depreciation is charged to project assets @ 10% per anum at straight line method Machinery Building & Furniture Office Office Depreciation Description & Infrastructure & fixture Vehicle Equipment Charges Equipment Depreciation rate 20% 20% 20% 20% 20% Straight Straight Straight Straight Depreciation Method Straight Line Line Line Line Line Book Value 2,968,000 57,550,000 258,000 742,500 215,000 Year 1 Depreciation Charges 593,600 11,510,000 51,600 148,500 43,000 12,346,700 Year 1 Residual Value 2,374,400 46,040,000 206,400 594,000 172,000 Year 2 Depreciation Charges 593,600 11,510,000 51,600 148,500 43,000 12,346,700 Year 2 Residual Value 1,780,800 34,530,000 154,800 445,500 129,000 Year 3 Depreciation 593,600 11,510,000 51,600 148,500 43,000 12,346,700 Year 3 Residual Value 1,187,200 23,020,000 103,200 297,000 86,000 Year 4 Depreciation 593,600 11,510,000 51,600 148,500 43,000 12,346,700 Year 4 Residual Value 593,600 11,510,000 51,600 148,500 43,000 Year 5 Depreciation 593,600 11,510,000 51,600 148,500 43,000 12,346,700 Year 5 Residual Value 0 0 0 0 0 Scrape Value 593,600 23,020,000 103,200 1,365,800 86,000 25,168,600 17 Pre-Feasibility Batching Plant for (Ready Mix Concrete) 6.14 AMORTIZATION TREATMENT Intangible expenses such as training and pre-operation would need to be amortized at 20% per anum. PreTraining Description Operating Total Costs Costs Amortization rate 20% 20% Straight Line Straight Line Assumption Base (5 Years) (5 Years) Book Value 800,000 100,000 Year 1 Depreciation Charges 160,000 20,000 180,000 Year 1 Residual Value 640,000 80,000 Year 2 Depreciation Charges 160,000 20,000 180,000 Year 2 Residual Value 480,000 60,000 Year 3 Depreciation 160,000 20,000 180,000 Year 3 Residual Value 320,000 40,000 Year 4 Depreciation 160,000 20,000 180,000 Year 4 Residual Value 160,000 20,000 Year 5 Depreciation 160,000 20,000 180,000 Year 5 Residual Value 0 0 6.15 BAD DEBTS EXPENSES 20% of sale is proposed on credit, out of which 1% would be bad bebts due to some confliction is expected. Bad debts also expected that client may not make full payment and may keep a minor balance. Credit Bad Debts Years Annual Sales Credit Sales Bad Debts Sales % Year - 1 523,800,000 20% 104,760,000 1% 1,047,600 Year - 2 633,798,000 20% 126,759,600 1% 1,267,596 Year - 3 766,895,580 20% 153,379,116 1% 1,533,791 Year - 4 927,943,652 20% 185,588,730 1% 1,855,887 Year – 5 1,122,811,819 20% 224,562,364 1% 2,245,624 6.16 MISCELLANOUS EXPENSES 0.5% business miscellaneous expenses are proposes during course of business activities. Amount to Years Annual Sales Increased % Income Statement Year – 1 Year – 2 Year – 3 Year – 4 Year – 5 523,800,000 633,798,000 766,895,580 927,943,652 1,122,811,819 18 0.50% 0.50% 0.50% 0.50% 0.50% 2,619,000 3,168,990 3,834,478 4,639,718 5,614,059 Pre-Feasibility Batching Plant for (Ready Mix Concrete) 7 ESTIMATED COST OF SALES, RAW MATERIAL INVENTORIES. 7.1 DIRECT VARIABLE COST (COST OF SALES) Variable cost or cost of sales are comprised on following variable costs head and will affect the business production cost as below. Description RAW MATERIAL COST Year-1 Year-2 Year-3 Year-4 Year-5 439,633,602 531,956,658 643,667,556 778,837,743 942,393,669 DIRECT LABOUR AT PLANT 3,504,000 3,854,400 4,239,840 4,663,824 5,130,206 MACHINERY MAINTENANCE 2,835,000 3,118,500 3,430,350 3,773,385 4,150,724 POWER COST (Electricity + Genset Fuel) 7,038,845 8,129,866 9,389,996 10,845,445 12,526,489 12,916,172 18,154,291 20,968,206 24,218,278 27,685,656 810,000 972,000 1,166,400 1,399,680 1,679,616 Vehicles Fuel & Water Costs Consumable Tools & Equipment Total Cost of Sales 466,737,619 566,185,715 682,862,348 823,738,355 993,566,360 7.2 READY MIX CONCRETE (RMC) PRODUCTION IN CUBIC METER Description RM 3000 PSI Mixing Cycle in second Per Hour mixing cycle Per hour Ready Mix in Cubic Meter (Cu.M) Per day Proposed Operational Hours Per day (10 hours) Ready Mix in Cu.M Per Month(26 days) Ready Mix in Cu.M Operational Days Proposed Per Month Ready Mix in Cu.M Production mix ratio % Monthly Ready Mix Production in Cu.M Yearly Ready Mix Production Year-1 Production in units Year-2 Production in units Year-3 Production in units Year-4 Production in units Year-5 Production in units RM 3500 PSI RM 4000 PSI RM 4500 PSI 72 50 72 50 72 50 72 50 50 50 50 50 8 8 8 8 400 400 400 400 10,400 15 10,400 15 10,400 15 10,400 15 6,000 25% 6,000 25% 6,000 30% 6,000 20% 1,500 18,000 1,500 18,000 1,800 21,600 1,200 14,400 18,000 19,800 21,780 23,958 26,354 18,000 19,800 21,780 23,958 26,354 21,600 23,760 26,136 28,750 31,625 14,400 15,840 17,424 19,166 21,083 7.3 RAW MATERIAL CONSUMPTION 19 Total 72,000 79,200 87,120 95,832 105,415 Pre-Feasibility Batching Plant for (Ready Mix Concrete) Raw Material (Cement + Stone + Sand) Ready Mix Design 1 Cubic Meter Ready Mix Weight in KG Yearly Ready Mix Production in CuM Yearly Ready Mix Weight in KG Cement Aggregate Sand Raw Material Composites Raw Material Applied Unit Scale Year -1 Material Consumption in Units Year -2 Material Consumption in Units Year -3 Material Consumption in Units Year -4 Material Consumption in Units Year -5 Material Consumption in Units CE+ST+SA CE+ST+SA CE+ST+SA CE+ST+SA 1:3:3 1:3:2.5 1:3:2 1:2:2 2,400 2,400 2,400 Total 2,400 18,000 18,000 21,600 14,400 43,200,000 43,200,000 51,840,000 34,560,000 6,171,429 6,646,154 8,640,000 6,912,000 18,514,286 19,938,462 25,920,000 13,824,000 18,514,286 16,615,385 17,280,000 13,824,000 Cement 50 KG Bag Aggregate CFT Sand CFT 567,392 1,797,626 1,488,397 284 624,131 1,977,389 1,637,237 312 686,544 2,175,128 1,800,960 343 755,198 2,392,641 1,981,057 378 830,718 2,631,905 2,179,162 415 28,369,582 78,196,747 66,233,670 Admixture 20 KG Bag 7.4 COST OF RAW MATERIAL & INVENTORY Description Cements Sand Crush Units Bags CFT CFT -,000 290,000 24 20,000 480,000 480,000 Rate per unit Quantity Purchased Material Purchased Cpsts Raw Material Inventory C/F 45 30,000 1,350,000 1,350,000 Admixture Bags 1,-,000 150,000 Amount (PKR) 2,270,000 2,270,000 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 R. Material Procurement Cost Total Procurement Cost of Sales Raw Material Inventory C/F Cements 500 570,229 570,729 567,392 3,337 PKR 290,-,732,592 331,022,592 329,087,156 1,935,436 Sand Crush PigmenT Amount (PKR) 20,000 30,-,806,615 1,495,-,826,615 1,525,-,797,626 1,488,-,988 37,442 106 PKR PKR PKR 480,000 1,350,000 150,000 2,270,-,500 43,358,748 67,312,758 434,055 441,838,153 43,838,748 68,662,758 584,055 444,108,153 43,143,033 66,977,869 425,544 439,633,602 695,715 1,684,889 158,511 4,474,551 Year-2 Description Cements Sand 20 Crush PigmenT Amount (PKR) Pre-Feasibility Batching Plant for (Ready Mix Concrete) 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 Raw Material Inventory C/F 3,337 627,251 630,588 624,131 6,458 PKR 1,935,-,186,436 402,121,872 398,195,459 3,926,413 28,988 37,-,987,276 1,645,-,016,264 1,682,-,977,389 1,637,-,875 45,628 109 PKR PKR PKR 695,715 1,684,889 158,511 4,474,-,650 52,464,085 81,448,437 520,057 534,619,016 53,159,800 83,133,327 678,568 539,093,567 52,203,070 81,043,221 514,908 531,956,658 956,731 2,090,105 163,660 7,136,909 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 Raw Material Inventory C/F Cements 6,458 689,977 696,434 686,544 9,890 PKR 3,926,-,225,588 488,152,001 481,816,505 6,335,496 Sand Crush PigmenT Amount (PKR) 38,875 45,-,186,004 1,809,-,224,879 1,855,-,175,128 1,800,-,751 54,633 111 PKR PKR PKR 956,731 2,090,105 163,660 7,136,-,815 63,481,543 98,552,609 626,154 646,885,894 64,438,274 100,642,715 789,814 654,022,803 63,165,715 98,062,298 623,039 643,667,556 1,272,559 2,580,417 166,775 10,355,247 Year-4 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 Raw Material Inventory C/F Cements 9,890 758,974 768,865 755,198 13,666 Sand PKR 6,335,-,912,961 592,248,457 582,997,971 9,250,485 49,751 2,404,604 2,454,355 2,392,641 61,714 PKR 1,272,-,812,667 78,085,226 76,430,515 1,654,712 Cements Sand Crush PigmenT Amount (PKR) 54,-,990,-,045,-,981,-,538 112 PKR PKR 2,580,417 166,775 10,355,247 60 1,997 119,248,657 757,646 782,731,932 121,829,074 924,421 793,087,178 118,655,380 753,877 778,837,743 3,173,694 170,545 14,249,435 Year-5 Description Raw Material Inventory B/F Procurement in Units Total Procurement in Units Consumed in Production Raw Material Inventory C/F 13,666 834,872 848,538 830,718 17,820 61,714 2,645,064 2,706,778 2,631,905 74,873 21 Crush 64,538 2,190,058 2,254,596 2,179,162 75,434 PigmenT- Amount (PKR) Pre-Feasibility Batching Plant for (Ready Mix Concrete) Cost of Raw Material Cost of Raw Material B/F Per unit cost of R. Material Procurement Cost Total Procurement Cost of Sales Raw Material Inventory C/F PKR 9,250,-,954,683 718,205,168 705,427,545 12,777,623 PKR 1,654,-,943,327 94,598,039 92,480,923 2,117,116 PKR PKR 3,173,694 170,545 14,249,435 66 2,196 144,290,875 916,752 947,105,637 147,464,569 1,087,296 961,355,073 143,573,010 912,191 942,393,669 3,891,559 175,105 18,961,404 7.5 DIRECT LABOUR COST Description Foreman Plant Operator Electrician Mechanics Batching Plant Labour Output Labour Loader Driver Total Quantity Salary - 40,000 45,000 20,000 35,000 18,000 18,000 35,000 Monthly Salary 40,000 90,000 20,000 35,000 54,000 18,000 35,000 292,000 Cost Increased % Years Lists Year - 1 Direct Labour Cost Year - 2 Direct Labour Cost Year - 3 Direct Labour Cost Year - 4 Direct Labour Cost Year - 5 Direct Labour Cost Annually Salary 480,000 1,080,000 240,000 420,000 648,000 216,000 420,000 3,504,000 Amount 3,504,000 3,854,400 4,239,840 4,663,824 5,130,206 10% 10% 10% 10% 7.6 MACHINERY MAINTENANCE Particular Plant Cost Generator cost 100 KVA Transit Mixer Trucks Electricity Transfer for Factor Total Machinery Cost Maintenance % on Machinery Total Machinery Maintenance Year - 1 (5% on Machinery Value) Year - 2 with 10% Increament Year - 3 with 10% Increament Year - 4 with 10% Increament Year - 5 with 10% Increament Price 12,700,000 3,500,000 34,000,000 6,500,000 56,700,000 5% 2,835,000 2,835,000 3,118,500 3,430,350 3,773,385 4,150,724 7.7 POWER (GENSET DIESEL & ELECTRICTY) COST Description Quantity Year -1 Diesel Per day Consumption 200 Electricity Consumption 720 Total Year - 1 Genset Diesel and Electricity Cost Unit Liter Units Price 114 23 Per day Cost 22,700 16,405 Monthly Cost 340,500 246,070 Yearly Cost 4,086,000 2,952,845 7,038,845 22 Pre-Feasibility Batching Plant for (Ready Mix Concrete) Description Quantity Unit Price Year -2 Diesel Per day Consumption 210 Liter 125 Electricity Consumption 756 Units 25 Total Year - 2 Genset Diesel and Electricity Cost Description Quantity Unit Price Year - 3 Diesel Per day Consumption 221 Liter 137 Electricity Consumption 794 Units 28 Total Year - 3 Genset Diesel and Electricity Cost Description Quantity Unit Price Year - 4 Diesel Per day Consumption 232 Liter 151 Electricity Consumption 833 Units 30 Total Year - 4 Genset Diesel and Electricity Cost Description Quantity Unit Price Year -5 Diesel Per day Consumption 243 Liter 166 Electricity Consumption 875 Units 33 Total Year - 5 Genset Diesel and Electricity Cost Per day Cost 26,219 18,947 Per day Cost 30,282 21,884 Per day Cost 34,976 25,276 Per day Cost 40,397 29,194 Monthly Cost 393,278 284,211 Monthly Cost 454,236 328,264 Monthly Cost 524,642 379,145 Monthly Cost 605,962 437,913 Yearly Cost 4,719,330 3,410,536 8,129,866 Yearly Cost 5,450,826 3,939,169 9,389,996 Yearly Cost 6,295,704 4,549,741 10,845,445 Yearly Cost 7,271,538 5,254,950 12,526,489 7.8 DIRECT FUEL AND WATER CONSUMPTION Description Year -1 Fuel Consumption Transit Mixer Fuel Consumption (Loader) Water Consumption Description Year -2 Fuel Consumption Transit Mixer Fuel Consumption (Loader) Water Consumption Description Year - 3 Fuel Consumption Transit Mixer Fuel Consumption (Loader) Water Consumption Description Year - 4 Quantity Unit 343 Liter 100 Liter 5 Units Total Year - 1 Quantity Unit 360 Liter 105 Liter 5 Units Total Year - 2 Quantity Unit 378 Liter 110 Liter 6 Units Total Year - 3 Quantity Unit 23 Price- Price- Price- Price Per day Cost 38,914 11,350 114 Per day Cost 44,946 13,109 132 Per day Cost 51,913 15,141 152 Per day Cost Monthly Cost 778,286 295,100 2,962 Monthly Cost 1,168,596 340,841 3,421 Monthly Cost 1,349,728 393,671 3,951 Monthly Cost Yearly Cost 9,339,429 3,541,200 35,544 12,916,172 Yearly Cost 14,023,152 4,090,086 41,053 18,154,291 Yearly Cost 16,196,741 4,724,049 47,416 20,968,206 Yearly Cost Pre-Feasibility Batching Plant for (Ready Mix Concrete) Fuel Consumption Transit Mixer Fuel Consumption (Loader) Water Consumption 397 Liter 116 Liter 6 Units Total Year - 4 Description Year -5 Fuel Consumption Transit Mixer Fuel Consumption (Loader) Water Consumption Quantity Unit 417 Liter 122 Liter 6 Units Total Year - 5 - Price- 59,959 17,488 176 Per day Cost 69,253 19,281 203 1,558,936 454,690 4,564 Monthly Cost 1,800,571 501,295 5,271 18,707,235 5,456,277 54,765 24,218,278 Yearly Cost 21,606,857 6,015,545 63,254 27,685,656 7.9 TRANSIT MIXER TRUCK FUEL CONSUMPTION Description Proposed Per day Year 1 consumption Ready Mix Production Cu.m per T. Mixer T.Mixer Trip per year Avr. Trip Round Distance Avr. Daily Distance Per liter T. Mixer avrg. Daily Fuel Consumption Unit -,- Cu.M Cu.M Trip KM KM Liter Liter 7.10 FUEL INVENTORY Year -01 Description Per day Fuel Consumption (Liters) Per Month Fuel Consumption (Liters) Yearly Fuel Consumption (Liters) Procurement Cost Fuel Inventory in Liters C/F Cost of Fuel Cost of Diesel B/F Per unit cost of R. Material Procurement Cost Total Procurement Cost of Sales Fuel Cost C/F Genset T.Mixer Loader-,000 5,143 1,500 36,000 61,714 18,000 37,800 64,800 18,900 1,800 3,086 900 PKR PKR PKR-,290,300 7,354,800 2,145,150 4,290,300 7,354,800 2,145,150 4,086,000 7,004,571 2,043,000 204,300 350,229 102,150 T. Liters 9,643 115,714 121,500 5,786 Amount 13,790,250 13,790,250 13,133,571 656,679 Year -02 Description Genset 24 T.Mixer Loader T. Liters Pre-Feasibility Batching Plant for (Ready Mix Concrete) Fuel Inventory in Liters B/F Per day Fuel Consumption (Liters) Per Month Fuel Consumption (Liters) Yearly Fuel Consumption (Liters) Procurement Cost Total Procurement Fuel Inventory in Liters C/F Cost of Fuel Cost of Diesel B/F Per unit cost of R. Material Procurement Cost Total Procurement Cost of Sales Fuel Cost C/F Year -03 Description Fuel Inventory in Liters B/F Per day Fuel Consumption (Liters) Per Month Fuel Consumption (Liters) Yearly Fuel Consumption (Liters) Procurement Cost Total Procurement Fuel Inventory in Liters C/F Cost of Fuel Cost of Diesel B/F Per unit cost of R. Material Procurement Cost Total Procurement Cost of Sales Fuel Cost C/F Year -04 Description Fuel Inventory in Liters B/F Per day Fuel Consumption (Liters) Per Month Fuel Consumption (Liters) Yearly Fuel Consumption (Liters) Procurement Cost Total Procurement Fuel Inventory in Liters C/F Cost of Fuel Cost of Diesel B/F Per unit cost of R. Material Procurement Cost Total Procurement Cost of Sales Fuel Cost C/F Year -05 Description 1,-,150 37,800 39,690 41,490 3,690 3,-,400 64,800 68,040 71,126 6,326 204,-,955,297 5,159,597 4,719,330 440,267 PKR 350,-,494,794 8,845,023 8,090,280 754,743 PKR -,575 18,900 19,845 20,745 1,845 10,125 121,500 127,575 133,361 11,861 PKR Amount 102,150 656,-,477,648 15,927,739 2,579,798 16,584,417 2,359,665 15,169,275 220,133 1,415,142 Genset T.Mixer Loader 3,690 6,326 1,-,308 5,670 1,654 39,690 68,040 19,845 41,675 71,442 20,837 45,365 77,768 22,682 5,675 9,728 2,837 PKR PKR PKR 440,267 754,743 220,-,723,367 9,811,487 2,861,684 6,163,634 10,566,230 3,081,817 5,450,826 9,344,273 2,725,413 712,808 1,221,956 356,404 Genset 5,-,473 41,675 43,758 49,433 7,758 PKR 712,-,610,489 7,323,297 6,295,704 1,027,593 Genset 25 T.Mixer Loader 9,728 2,-,954 1,736 71,442 20,837 75,014 21,879 84,742 24,716 13,300 3,879 PKR PKR 1,221,956 356,-,332,268 3,305,245 12,554,224 3,661,649 10,792,636 3,147,852 1,761,588 513,797 T.Mixer Loader T. Liters 10,631 127,575 133,954 145,814 18,239 Amount 1,415,142 18,396,538 19,811,681 17,520,513 2,291,168 T. Liters 11,163 133,954 140,651 158,891 24,937 Amount 2,291,168 21,248,002 23,539,170 20,236,192 3,302,978 T. Liters Pre-Feasibility Batching Plant for (Ready Mix Concrete) Fuel Inventory in Liters B/F Per day Fuel Consumption (Liters) Per Month Fuel Consumption (Liters) Yearly Fuel Consumption (Liters) Procurement Cost Total Procurement Fuel Inventory in Liters C/F Cost of Fuel Cost of Diesel B/F Per unit cost of R. Material Procurement Cost Total Procurement Cost of Sales Fuel Cost C/F 7,758 13,-,647 6,251 43,758 75,014 45,946 78,765 53,704 92,065 9,946 17,051 PKR PKR 1,027,593 1,761,-,635,115 13,088,769 8,662,708 14,850,357 7,271,538 12,465,494 1,391,170 2,384,863 3,-,823 11,721 21,879 140,651 22,973 147,684 26,852 172,621 4,973 31,970 PKR Amount 513,797 3,302,-,817,558 24,541,442 4,331,354 27,844,420 3,635,769 23,372,802 695,585 4,471,618 7.11 CONSUMABLE TOOLS & EQUIPMENTS Description Mechanical tools/equipment in Year0 Amount Years Lists Year-1 Equipment & Tools Inventory B/F Year-1 Purchased Total Inventory Consumption (COS) Year -1 Inventory C/F Year-2 Equipment & Tools Inventory B/F Year-2 Purchased Total Inventory Consumption (COS) Year -2 Inventory C/F Year-3 Equipment & Tools Inventory B/F Year-3 Purchased Total Inventory Consumption (COS) Year -3 Inventory C/F Year-4 Equipment & Tools Inventory B/F Year-4 Purchased Total Inventory Consumption (COS) Year -4 Inventory C/F Year-5 Equipment & Tools Inventory B/F Year-5 Purchased Total Inventory Consumption (COS) Year -5 Inventory C/F Increased % 450,000 900,000 1,350,000 810,000 540,000 540,000 1,080,000 1,620,000 972,000 648,000 648,000 1,296,000 1,944,000 1,166,400 777,600 777,600 1,555,200 2,332,800 1,399,680 933,120 933,120 1,866,240 2,799,360 1,679,616 1,119,744 8 450,000 ANNUAL SALES REVENUE Description RM 3000 RM 3500 26 RM 4000 RM 4500 Total Pre-Feasibility Batching Plant for (Ready Mix Concrete) Year-1 Year-2 Year-3 Year-4 Year-5 PSI PSI PSI PSI 120,600,000 145,926,000 176,570,460 213,650,257 258,516,810 126,000,000 152,460,000 184,476,600 223,216,686 270,092,190 162,000,000 196,020,000 237,184,200 286,992,882 347,261,387 115,200,000 523,800,000 139,392,000 633,798,000 168,664,320 766,895,580 204,083,827 927,943,652 246,941,431 1,122,811,819 RM 3500 PSI RM 4000 PSI RM 4500 PSI 8.1 ANNUAL SALES CALCULATION Description RM 3000 PSI Year-1 Production in units Product Price per unit Year-1 Revenue Product Price per unit Product Price per unit Product Price per unit 6,700 7,000 7,500 8,000 19,800 19,800 23,760 15,840 7,370 7,700 8,250 8,800 21,780 21,780 26,136 17,424 8,107 8,470 9,075 9,680 23,958 23,958 28,750 19,166 8,918 9,317 9,983 10,648 213,650,257 223,216,686 286,992,882 204,083,827 Year-5 Production in units Product Price per unit Year-5 Revenue 14,400 176,570,460 184,476,600 237,184,200 168,664,320 Year-4 Production in units Year-4 Revenue 21,600 145,926,000 152,460,000 196,020,000 139,392,000 Year-3 Production in units Year-2 Revenue 18,000 120,600,000 126,000,000 162,000,000 115,200,000 Year-2 Production in units Year-2 Revenue 18,000 26,354 26,354 31,625 21,083 9,809 10,249 10,981 11,713 Total 523,800,000 633,798,000 766,895,580 927,943,652 258,516,810 270,092,190 347,261,387 246,941,431 1,122,811,819 8.2 ACCOUNTS RECEIVABLES 27 Pre-Feasibility Batching Plant for (Ready Mix Concrete) Years Year - 1 Year - 2 Year - 3 Year - 4 Year - 5 9 Annual Sales Credit Sales 523,800,000 633,798,000 766,895,580 927,943,652 1,122,811,819 20% 20% 20% 20% 20% Credit Sale Debtor's Age in months Account Receivable C/F Cash Sales % 104,760,000 126,759,600 153,379,116 185,588,730 224,562,364 1 1 1 1 1 8,730,000 10,563,300 12,781,593 15,465,728 18,713,530 80% 80% 80% 80% 80% Cash Sales 419,040,000 507,038,400 613,516,464 742,354,921 898,249,455 COST OF PER CUBIC METER READY MIX CONCRETE (RMC) Description Units Production in (Cu.M) Year-1 Year-2 Year-3 Year-4 Year-5 72,000 79,200 87,120 95,832 105,415 Per Cu.M Average Sales Price 7,275 8,003 8,803 9,683 10,651 Per Cu.M Average Variable Cost 6,482 7,149 7,838 8,596 9,425 793 854 965 1,087 1,226 Pr Cu.M Average Operating Cost 381 368 359 353 350 Per Cu.M Profit Before Taxation 412 486 606 734 876 Per Cu.M Cost (Variable & Fixed Cost) 6,863 7,517 8,197 8,949 9,776 Per Cu.M Average Contribution 10 INCOME STATEMENT 28 Pre-Feasibility Batching Plant for (Ready Mix Concrete) Description Revenue Year 1 Year 2 Year 3 Year 4 Year 5 523,800,000 633,798,000 766,895,580 927,943,652 1,122,811,819 439,633,602 531,956,658 643,667,556 778,837,743 942,393,669 Cost of sales RAW MATERIAL COST DIRECT LABOUR AT PLANT 3,504,000 3,854,400 4,239,840 4,663,824 5,130,206 MACHINERY MAINTENANCE POWER COST (Electricity+Genset Fuel) Vehicles Fuel & Water Costs Consumable Tools & Equipment 2,835,000 3,118,500 3,430,350 3,773,385 4,150,724 7,038,845 8,129,866 9,389,996 10,845,445 12,526,489 12,916,172 18,154,291 20,968,206 24,218,278 27,685,656 810,000 972,000 1,166,400 1,399,680 1,679,616 466,737,619 566,185,715 682,862,348 823,738,355 993,566,360 Total cost of sales Gross Profit 57,062,381 67,612,285 84,033,232 104,205,297 129,245,459 3,468,000 3,814,800 4,196,280 4,615,908 5,077,499 Administration Benift expense 173,400 190,740 230,795 230,795 253,875 Electricity expense 273,412 300,753 330,828 363,911 400,302 Travelling expense 173,400 190,740 209,814 230,795 253,875 Communications Expenses Office vehicles running expense Office expenses 173,400 190,740 209,814 230,795 253,875 1,166,140 1,282,754 1,411,029 1,552,132 1,707,346 173,400 190,740 209,814 230,795 253,875 Marketing & Promotional Exp. 2,619,000 3,168,990 3,834,478 4,639,718 5,614,059 Insurance expense 1,833,150 1,558,178 1,324,451 1,125,783 956,916 Professional Expenses 523,800 633,798 766,896 927,944 1,122,812 Off. Vehicle Installment 542,933 542,933 542,933 542,933 542,933 12,346,700 12,346,700 12,346,700 12,346,700 12,346,700 180,000 180,000 180,000 180,000 180,000 Bad debt expense 1,047,600 1,267,596 1,533,791 1,855,887 2,245,624 Miscellaneous expense 2,619,000 3,168,990 3,834,478 4,639,718 5,614,059 Subtotal 27,313,335 29,028,452 31,162,102 33,713,817 36,823,749 Operating Income 29,749,046 38,583,833 52,871,131 70,491,480 92,421,710 - - - - 1,399,600 29,749,046 38,583,833 52,871,131 70,491,480 93,821,310 116,907 116,907 116,907 116,907 116,907 Earnings Before Tax 29,632,139 38,466,927 52,754,224 70,374,574 93,704,403 Taxation Cost 10,371,249 13,463,424 18,463,978 24,631,101 32,796,541 NET PROFIT/(LOSS) AFTER TAX 19,260,891 25,003,502 34,290,246 45,743,473 60,907,862 Operating Expenses Office Salary expense Depreciation expense Amortization Gain / (loss) on sale of office vehicles Earnings Before Interest & Taxes Interest 29 Pre-Feasibility Batching Plant for (Ready Mix Concrete) Dividend (30%) Profit After Dividend 5,778,267 7,501,051 10,287,074 13,723,042 18,272,359 13,482,623 13,482,623 24,003,172 32,020,431 42,635,504 13,482,623 26,965,247 50,968,419 82,988,850 26,965,247 50,968,419 82,988,850 125,624,353 Retained Earnings B/F Retained Earnings C/F 10. 13,482,623 BALANCE SHEET Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 1,000,000 15,870,550 30,143,539 45,418,546 81,097,308 130,722,793 8,730,000 10,563,300 12,781,593 15,465,728 18,713,530 Assets - Current Cash & Bank Accounts receivable Equipment spare part inventory Raw material inventory 450,000 540,000 648,000 777,600 933,120 1,119,744 2,270,000 4,474,551 7,136,909 10,355,247 14,249,435 18,961,404 656,679 1,415,142 2,291,168 3,302,978 4,471,618 1,558,178 1,324,451 1,125,783 956,916 813,378 5,553,150 31,829,957 51,231,342 72,749,937 116,005,484 174,802,468 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 1,780,800 1,187,200 593,600 0 57,550,000 46,040,000 34,530,000 23,020,000 11,510,000 0 Fuel Inventory Dividend Payable Pre-paid insurance Total Current Assets 1,833,150 Fixed assets Land Building/Infrastruct ure Machinery & equipment 2,968,000 2,374,400 Furniture & fixtures 258,000 206,400 154,800 103,200 51,600 0 Office vehicles 742,500 594,000 445,500 297,000 148,500 0 Office equipment 215,000 172,000 129,000 86,000 43,000 0 71,733,500 59,386,800 47,040,100 34,693,400 22,346,700 10,000,000 Total Fixed Assets Intangible assets Pre-operation costs 800,000 640,000 480,000 320,000 160,000 0 Training costs 100,000 80,000 60,000 40,000 20,000 0 900,000 720,000 540,000 360,000 180,000 - Total Intangible Assets TOTAL ASSETS 11 78,186,650 91,936,757 98,811,442 107,803,337 138,532,184 184,802,468 CASH FLOW STATEMENT 30 Pre-Feasibility Batching Plant for (Ready Mix Concrete) Description Year 0 Operating activities Net profit Add: depreciation expense amortiz ation Exp. Bad Debts Accounts receivable Equipment (450,000) inventory Raw material (2,270,000) inventory Advance insurance (1,833,150) premium Accounts payable Cash provided (4,553,150) by operations Financing activities Issuance of shares Cash provided by / (used for) 0 financing activities Investing activities Capital 78,186,650 expenditure Cash (used for) / provided by (77,186,650) investing activities NET CASH Cash balance brought forward Cash available for appropriation Dividend Cash balance Cash carried forward 12 Year 1 Year 2 Year 3 Year 4 Year 5 19,260,891 25,003,502 34,290,246 45,743,473 60,907,862 12,346,700 12,346,700 12,346,700 12,346,700 12,346,700 180,000 180,000 180,000 180,000 180,000 1,047,600 1,267,596 1,533,791 1,855,887 2,245,624 (8,730,000) (10,563,300) (12,781,593) (15,465,728) (18,713,530) (540,000) (4,474,551) (648,000) (777,600) (933,120) (1,119,744) (7,136,909) (10,355,247) (14,249,435) (18,961,404) 1,558,178 1,324,451 1,125,783 956,916 813,378 20,648,817 21,774,040 25,562,080 30,434,693 37,698,886 - - - - - - - - - - - - - - - - - - 20,648,817 21,774,040 25,562,080 49,401,804 67,897,844 1,000,000 15,870,550 30,143,539 45,418,546 81,097,308 1,000,000 21,648,817 37,644,590 55,705,620 94,820,350 148,995,152 1,000,000 5,778,267 15,870,550 7,501,051 30,143,539 10,287,074 45,418,546 13,723,042 81,097,308 18,272,359 130,722,793 1,000,000 15,870,550 30,143,539 45,418,546 81,097,308 130,722,793 1,000,000 NPV, IRR, PAYBACK PERIOD 31 Pre-Feasibility Batching Plant for (Ready Mix Concrete) Cash inflow Proceeds Gain & Loss Cash Flows Year-0 Year-1 Year-2 Year-3 Year-4 Year-5 523,800,000 633,798,000 766,895,580 927,943,652 1,122,811,819 1,399,600 523,800,000 633,798,000 766,895,580 927,943,652 1,124,211,419 Cash outflow Intial Investment Cost of Sale Operational & Administration Cost Finished Goods Inventory Tax Total Cash Outflow Net Cash Flows DCF 15% Present Value Net Present Value Year-0 Year-1 IRR For (-) NPV 50% Year-2 466,737,619 566,185,715 993,566,360 31,162,102 33,713,817 36,823,749 10,371,249 13,463,424 18,463,978 24,631,101 32,796,541 (78,186,650) 504,422,203 608,677,591 (78,186,650) 1 (78,186,650) 682,862,348 823,738,355 29,028,452 19,377,-,858,684 732,488,428 882,083,272 1,063,186,650 25,120,-,991,029 34,407,-,639,906 45,860,-,232,137 61,024,-,329,310 0.444 11,153,462 0.296 10,184,517 0.198 9,080,355 0.132 8,055,269 36,864,416 35 % 0.667 12,924,991 + Positive NPV X (+) NPV - (-) NPV 1,290,254,574 63,652,472 20 15 35 13 Year-5 27,313,335 lower Discount Rate Time in Year Payback Period Year-4 -78,186,650 (78,186,650) -26,788,056 Payback Period Year-3 15 2.98 Year (78,186,650) 19,377,797 78,186,650 58,808,853 1 + 25,120,409 33,688,444 1 2.98 BREA EVEN POINT 32 34,407,152 33,688,- X 45,860,380 33,688,444 Diff. in Disc. Rate 35 35 61,024,769 Pre-Feasibility Batching Plant for (Ready Mix Concrete) Annual Costs & Revenue Sale 523,800,000 Value Cost 466,737,619 Contribution 57,062,381 Fixed Cost 27,313,335 Operating Profit 29,749,046 PV Ratio Break Even Point Sale 0.11 250,720,783 Break Even Point Sales & Costs Sale (BEP) Value Cost Contribution Fixed Costs Profit 250,720,783 223,407,448 27,313,335 27,313,335 0 33