PROJECT ON HOLLOW BRICKS

PROJECT REPORT
1.0 Introduction:
This proposal evaluates the technical feasibility and financial viability in setting
up of a small-scale enterprise to do the activity on manufacturing and sale of Hollow bricks in
Kottayam district and all over Kerala. Unit has been filed memorandum Part-1 with the district
Industries center, Kottayam and also applied for permission from Local body for the construction of
building and for the installation of plant and machinery.

2.0 Promoter and Management:

The ownership of the unit is as a propetoership
concern by Smt. Rajalekshmi A.R, Indeevaram, M.L.A Road, Puthiyakavu, Pin682301. She has been associated with this business and trade related activities for
the past 5 years. The experience and the market contact that she received will help
her in establishing the proposed activity of manufacturing and marketing of hollow
bricks in a successful manner.

3.0 Scope and Market Potential:

Hollow block industry is one of the fastest growing segments of Industry in
Kerala. The growth of the tile industry has shown steep fluctuations. The increase in number of
households and the over the country created a great demand for hollow bricks.
Hollow concrete blocks are substitutes for conventional bricks and stones in building
construction. They are lighter than bricks, easier to place and also confer economies in foundation
cost and consumption of cement. In comparison to conventional bricks, they offer the advantages of
uniform quality, faster speed of construction, lower labor involvement and longer durability. In view of
these advantages, hollow concrete blocks are being increasingly used in construction activities.

4.0 Manufacturing process:

The ratio of cement, sand and stone chips (metal) in the raw material mix determines the properties
of hollow concrete blocks. A ratio of 1:3:6 (cement : sand : metal) confers higher strength, while a
ratio of 1:5:6 can be employed for normal load bearing construction. The water to cement ratio is
usually 0:4:1.

5.0 Location, Land and Building:

The unit is proposed to be located at Manjoor Village in Vaikom Taluk. An
extent of 23 cents of land available and is leased by the promoter for establishing the unit. Building
required for establishing the unit has to be constructed. The amount invested for civil work on
construction of building for office, common amenity, well etc is Rs 200000/-. The survey number
assigned to the land is 125/23..

6.0 Machinery & equipment:

Details are shown in the annexure. The plant and machinery
proposed to be installed in the unit are Indigenous. . Total cost of machinery and
equipment to be purchased is evaluated as Rs 372000/-

7.0 Installed capacity of production

The unit is proposed to be operated in 300 days per annum ( 25 days in a
month of single shift operation of 8 hours duration in a day). As per the capacity of machinery to be
installed and by considering production wastage the monthly production is worked out in the following
table.
It is proposed to utilize 70% of the installed capacity in the first year of operation and 75%,
80%, 85%, 90% in the consecutive years of operation. The sales realization for first month of
operation is shown below.

CAPACITY UTILISATION PER MONTH ( for 70 % capacity utilisation)

Sale
Sl.No.
Item
Qty
Unit
Rate
Amount
Hollow
1
bricks
52500
Nos
11.00
577500

8.0 Raw material Requirement:

All the raw materials required by the unit are available
throughout the year. The raw material can also be procured from the nearby districts
and from other states. The stock and procurement period proposed in this scheme is
for a period of 10 days. The details of requirement for 100% capacity utilisation in the
unit are tabulated as below. The raw material required by the unit is proposed to be
arranged through local distributors. The requirements of the unit for the targeted
production are as below.
Sl
No

Raw material

Quantity
per
month

1
2

Rock powder
Cement

3
4

Chips (metal powder)

Total
raw
material
required
for
100%
capacity utilization
Raw material required for
70% capacity utilization

25 loads
750
sacks
25

Price per Total

load/sack required
month

amount
per

7000
300

175000
225000

10000

250000
650000

9.0 Man power requirement and other expenses:

455000

Total manpower of the unit including the Workers is 10 numbers and the
details of manpower requirement, salary and other expenses per month are as
follows.
Designation /
Category
No
workers
5
helpers
4
Office assistant
1
Total
10
OTHER EXPENSES PER MONTH
Sl.No. Item
Amount
Power
1
3500
2
Postage & Telephone
500
Printing & Stationery
3
1000
4
Travelling expenses
10000
5
Miscellaneous
5000
Total
20000
Sl.No.
1
2
3

Monthly
salary
7000
5000
3500

Amount
Rs
35000
20000
3500
58500

10.0 Working capital requirement:

Total requirement of working capital for the first Month (phase) of operation is 3 lakhs
.
Sl.No
.

particulars
Capacity utilisation(%)
Sales

300

Cost of raw materials

300

Cost of production
Current Assets
Stock of raw
materials
( day's consumption)

300

1 year
70
692400
0
552000
0
632280
0

12

220800

236571

252343

268114

283886

42152

45103

48057

51014

53973

42152

45103

48057

51014

53973

46160
351264

49457
376235

52754
401211

56051
426193

59349
451180

Stock in
process
( day's cost of
production)
Stock of finished
goods
(
day's cost of production)

3
4

Period
in Days
300

Receivables( day's cost of

sales)
Total(A)

2 year
75
741857
1
591428
6
676544
9

3 year
80
791314
3
630857
1
720855
0

4 year
85
840771
4
670285
7
765206
1

5 year
90
8902286
7097143
8095940

11.0 Total Cost of the Project:

Sl.No.
1
0

Particulars
Building ( advances)
Building and ther
civil construction
Machinery &
Equipment(proposed
)
Equipment(sales)

Total

Margin
money
@35%

200000

200000

70000

372000

372000

130200

Amount
RS
Existing Proposed
0
200000

372000

50000
6000

50000
6000

50000
6000

17500
2100

2000

2000

700

margin@5%

Electrification and
machinery
installation cost
5
6
7
8

Office Furniture
Brochure, advt and
web site
Prelim & Preoperative expenses

2000
20000

20000

20000

7000

350000

350000

350000

122500

1000000

1000000

1000000

350000

Working Capital
9
Total

50000

12. Means of finance:

Sl.No.
O

Particulars
Term loan for building
(interior decoration )
Term loan for
machinery&equipment,
office furniture etc
Loan for prelim&preoperative including
electrification ,brochure
etc
Woking capital loan

Amount
RS

MAGIN FROM kvic

MARGIN OF THE
PROMOTER

1000000
350000

50000

13.0 Profitability analysis:

Detailed statement is given in annexure. Assumptions made for the calculation are as follows:

(a) Unit will function for 200 days per annum in single shift basis of 5 hours per day.
(b) Proposed to utilise 70% of the installed capacity in the first year of operation ,75%,
80% ,85% and 90% are in the consecutive years of operation.
(c) Interest on term loan and working capital loan is assumed @ 12 % and repairing
and maintenance as 5% of cost of fixed assets.
(d) Depreciation @ 5% of cost of building and 10% of the cost of machinery.
(e) Selling expense is considered as 5 % of total sales turn over. This includes the
advertisement and publicity charges
(f) Insurance expenses of building and machinery is calculated @ 1% of cost
(g) The cost of raw material and finished product is based on the present market rate.

Depreciation: Depreciation on Building, Machinery and Equipment are evaluated on WDV basis and
is tabulated as below
sl
No
1

Particulars
Building

2 year

43year

4 year

5 year

300000

270750

257213

244352

232134

15000

13538

12861

12218

11607

WDV on Building

285000

257213

244352

232134

220528

Machinery and equipment

437500

354375

318938

287044

258339

Depreciation (A)
2

I year

Depreciation(B)
WDV on Machinery and
equipment

43750

35438

31894

28704

25834

393750

318938

287044

258339

232505

Total depreciation(A+B)

58750

48975

44754

40922

37441

58750

48975

44754

40922

37441

SHEDULE OF IMPLIMENTATION

Acquisition of land

Agreement on lease

Construction of Building

Completed after availing the loan

Expected to be completed by
September 2010
Expected to be completed by September
2010
October 2010

Installation of plant and Machinery

Trial run
Commercial Production

14.0 Conclusion:
The net profits after taxation in the first year of operation is estimated
as
RS 600917 /. The break-even point is 35 % of installed capacity. The
return on investment is obtained as 42 % in the 2nd year of operation. The cost of
production and profitability statement for the first 5 years, break-even analysis,
repayment schedule for term loan, cash flow statement and the projected balance
sheet are given in Annexure. Based on the analysis made above it is found that the
scheme is technically feasible and economically viable.

Submitted by:
ASHA XAVIER
KARUKULATHEL
MANJOOR P.O
KURUPPANTHURA
KOTTAYAM

ANNEXURE 1
(as per quotation)
PLANT & MACHINERY
Sl.No.
Item
1
Egg laying type Concrete
block machine with die
2
Trolley for brick and mix
handling
3
Solid die set 4,6
4
Hollow die set 4,6
5
Concrete mixer
6
Vat total @4%+ cess 1%
Total

Nos

Rate Rs Amount Rs

01

130000

04
02
02
01
01

7500
14000
18000
130000
17700

130000
30000
28000
36000
130000
17700
372000

ANNEXURE 2
Profitability statement for 5 years of operation
Particulars
No. of working days
No. of shifts
Installed capacity
Capacity utilization
Production
A

Sales

Cost of Production
Raw materials
Wages
Power, and Fuel
charges
Repair & maintenance
Insurance
Depreciation
Total

C
D

Gross operating profit

Admn. & Selling
expenses
1. Administrative

1 YEAR
300
1
9900000
70
6930000

2 YEAR
300
1
9900000
80
7920000

3 YEAR
300
1
9900000
85
8415000

4 YEAR
300
1
9900000
90
8910000

5 YEAR
300
1
9900000
90
8910000

6930000

7920000

8415000

8910000

8910000

5460000
264000

6240000
301714

6630000
320571

7020000
339429

7020000
339429

120000
5000
5000
58750
5912750

137143
5000
5000
48975
6737832

145714
5000
5000
44754
7151040

154286
5000
5000
40922
7564636

154286
5313
1063
37441
7557530

1017250

1182168

1263960

1345364

1352470

204000

233143

247714

262286

262286

expenses
E

F
G
H
I
J
K
L

2. Selling expenses
Financial expenses
1. Interest on term loan
2. Interest on WC loan
3. Interest on MM loan
Total of D&E
Net operating profit
Income tax
Net profit
Withdrawls
Depreciation
Cash surplus

69300

79200

84150

89100

89100

82834
36000
9038
401171
616079
73911
542167

47014
36000
9038
404394
777774
93315
684459

29104
36000
9038
406006
857954
102937
755018

11194
36000
9038
407617
937747
112512
825235

4478
36000
6778
398641
953829
114441
839387

58750
600917

48975
733434

44754
799772

40922
866157

37441
876828

ANNEXURE-3
BREAK EVEN ANALYSIS
Particulars

1 YEAR

2 YEAR

3 YEAR

4 YEAR

5 YEAR

FIXED COST
Salaries
Repair & Maintenance
Insurance
Administrative expenses
Depreciation
Interest on MM loan
Interest on Term loan
Total

264000
5000
5000
204000
58750
9038
82834
628621

301714
5000
5000
233143
48975
9038
47014
649883

320571
5000
5000
247714
44754
9038
29104
661181

339429
5000
5000
262286
40922
9038
11194
672868

339429
5313
1063
262286
37441
6778
4478
656786

5460000
120000
69300
36000
5685300

6240000
137143
79200
36000
6492343

6630000
145714
84150
36000
6895864

7020000
154286
89100
36000
7299386

7020000
154286
89100
36000
7299386

35.35

36.42

36.99

37.60

36.70

50.50
42.11

45.52
53.16

43.52
58.64

41.78
64.10

40.78
65.20

VARIABLE
COST
Raw Materials
Power Charges
Selling expenses
Interest on WC loan
Total
BEP in % of installed
capacity
BEP in % of capacity
utilization
Return on Investment

ANNEXURE-4

DEBT SERVICE COVERAGE RATIO (DSCR)

A
1
2
3
4
5
B
1
2
3

Particulars
Cash generated
Net Profit
Depreciation
Interest on term loan
Interest on mm loan
Interest on wc loan
Total (A)
Debt Service Requirement
Repayment of term loan
Repayment of interest on term
loan
Repayment of interest on mm
loan
Repayment of interest on wc
loan
Total (B)
Debt service coverage ratio
Average DSCR

1 Year

2 Year

3 Year

4 Year

616079
58750
82834
9038
36000
802700

777774
48975
47014
9038
36000
918800

857954
44754
29104
9038
36000
976850

937747
40922
11194
9038
36000
1034900

953829
37441
4478
6778
36000
1038525

80000

80000

80000

80000

80000

82834

47014

29104

11194

4478

9038

9038

9038

9038

6778

36000
207871
3.86
7.03

36000
172051
5.34

36000
154141
6.34

36000
136231
7.60

36000
127256
8.16

ANNEXURE-5
REPAYMENT OF TERM LOAN
Year
1

Instalment Number

5 Year

1
2
3
4

Principal
746250
708938
671625
634313

5
6
7
8

597000
559688
522375
485063

9
10
11
12

447750
410438
373125
335813

13
14
15
16

298500
261188
223875
186563

17
18

149250
111938

Interest
22388
21268
20149
19029
82834
17910
16791
15671
14552
64924
13433
12313
11194
10074
47014
8955
7836
6716
5597
29104
4478
3358

Balance
708938
671625
634313
597000
559688
522375
485063
447750
410438
373125
335813
298500
261188
223875
186563
149250
111938
74625

repayment
per month
19900
19527
19154
18781
54278
18408
18034
17661
17288
48308
16915
16542
16169
15796
42338
15423
15049
14676
14303
36368
13930
13557

19
20

74625
37313

2239
1119

37313
0

13184
12811

REPAYMENT OF MARGIN MONEY LOAN

Year
1
2
3
4
5
6
7
8

Principal
150625
150625
150625
150625
150625
112969
75313
37656

Interest
9038
9038
9038
9038
9038
6778
4519
2259

Balance
150625
150625
150625
150625
112969
75313
37656
0

REPAYMENT OF WORKING CAPITAL LOAN

1 Year
Total Working capital
required
Loan Amount
Interest @12%

300000
300000
36000

2 Year
300000
300000
36000

3 Year

4 Year

300000
300000
36000

300000
300000
36000

5 Year
300000
300000
36000

ANNEXURE- 6
CASH FLOW STATEMENT
A
1
2
3
4
5
6
7
8
9
10

Source of Funds
Cash accruals(profit before
income tax)
Increase in capital equity
Depreciation
Investment allowance
Increase in long term loan
Increase in MM loan
Increase in unsecured loans
Increase in WC loan
Sales of fixed assets/invests
Others( investment subsidy)
Total
Disposition of Funds
Prelim & Pre-op expenses
Increase in capital expenditure
Increase in current assets
Decrease in long term loans
Decrease in unsecured loans
Decrease in MM loan
Decrease in WC loan
Interest on term loan to bank
Interest on WC loan

Construction
period
0
150625

2 year

3 year

4 year

5 year

807125

869825

932096

993978

53625

48975

44754

40922

0
0
0
1047500

-300000
0
0
560750

300000
0
0
1218800

0
0
0
976850

0
0
0
1034900

125000
862500

0
0
21797
80000

0
0
21804
80000

0
0
21809
80000

0
0
21815
80000

0
0
64924
0

0
0
47014
36000

0
0
29104
36000

37656
0
11194
36000

746250
150625

Interest on MM loan
Taxation
Divident on equity
Other expenses
Total
C
D
E

Opening balance
Net surplus
Closing balance

9038
87962
0

9038
93315
0

9038
102937
0

9038
112512
0

987500

263720

287170

278887

308214

0
60000
60000

573881
297030
870910

870910
931630
1802541

1802541
697963
2500503

2500503
726686
3227190

ANNEXURE-7
PROJECTED BALANCE SHEET

Liabilities
Equity share capital

2 year

3 year

4 year

5 year

150625

150625

150625

150625

150625

1187369

1871828

2626846

3452081

Term loan

746250

586250

506250

426250

346250

Margin Money loan

150625

150625

150625

150625

112969

300000

300000

300000

0
2074869

0
2979328

0
3654346

0
4361925

2 year
803750
53625
750125
125000
328834

3 year
750125
48975
701150
125000
350638

4 year
701150
44754
656396
125000
372447

5 year
656396
40922
615474
125000
394262

870910
2074869

1802541
2979328

2500503
3654346

3227190
4361925

Reserve & Surplus

Working capital loan

Other liabilities(towards
subsidy)
Total Liabilities

Construction
period

Assets
Gross block
Depreciation
Net block
InvestmenT(Prilim. Expences)
Current assets
Reserved Stock accumulated
to be added to current
assets
Cash and bank balance
Total Assets

0
1047500
Construction
period
862500
0
862500
125000

60000
1047500