CONVENTIONAL BRICKS A. INTRODUCTION The construction activity is one of the vital sectors of the economy. There is hardly any sector in the economy where there is no construction involved. There has been tremendous increase in the growth of construction activities during the last decade and with the higher targets of growth envisaged by end of this century, and in the next century the construction activity is poised for further growth. The general construction sector consisting of industrial projects, agricultural projects, defence projects commercial establishments and housing sector, all contribute to the growth of construction activity. B. PRODUCT SPECIFICATION & USES IS 1077-1957 specifies the strength of bricks as given below: Bricks having a compressive strength of minimum 35 kg/cm2 must be used for any work of permanent nature. Bricks having compressive strength 140 kg/cm2 are classified as class AA bricks. Bricks having a compressive strength between 70 and 140 kgs/cms2 are classified as class A bricks. According to IS 1077-1976 common burnt clay bricks are classified on the basis of their average compressive strength as given in the specifications. C. MARKET POTENTIAL Every year several construction works are undertaken. Several bridges, dams, roads, shopping complexes, commercial complexes, hospitals, hotels, educational institutions, Govt. offices and residential houses are constructed. All these civil construction activities consume large quantity of bricks and therefore consumption of bricks is increasing. The demand for housing is increasing as there is a heavy backlog of houses to be constructed in India and there is a scope of adding 95 lakhs houses every year. This is creating good demand for construction of new flats and houses. 1
The present housing shortage is estimated at 19 million houses per annum. This is likely to touch 25 million in next 10 years. The investment required to meet the demand gap is expected to be $88 billion( about 352,000 crores) The urban sector alone is expected to account for an investment of $ 25 billion in next five years. The demand for housing is increasing as there is a heavy backlog of houses to be constructed in India and there is a scope of adding 200 lakhs houses every year. This allows a big demand for new flat and houses construction. The consumer demand for housing has increased manifold. The rise in nucleus families has increased the demand for the houses / flats. In the last few years, the real estate sector has witnessed a spurt in demand not just for residential property but also commercial property. This rise in demand may be attributed to the large and growing middle class population of about 300 million people. It is estimated that the urban housing sector alone would require a total investment of Rs.1,21,371 crores during the next five years to meet the requirement of housing shortage of 75.7 lakhs DUs (dwelling Units), upgradation of 3.2 lakh semi-pucca EWS ( Economically Weaker Section) units and the additional construction requirement of 86.7 lakh units. The total fund requirement including rural housing need would be 1,50,000 crores whereas the total availability is Rs.52,000 crores only from the formal sector (Rs.34,000 crores for urban and Rs.18,000 crores for rural housing). The demand for the bricks will increase in line with the demand for construction. 2
D. TECHNICAL ASPECTS 1. Installed capacity The installed capacity of the unit proposed is 40,00,000 pieces of bricks per annum. 2. Plant & Machinery The following items of plant & machinery are required. Sl. Item Value Rs. lakhs a. Chamber civil works consisting of 18 chambers with 8.60 the capacity of 17,000 Nos. of bricks in each chamber and 2 Ht. Platform surrounding the outer sides of chamber building with 4 width. b. Klin-covering all the 18 chambers and connected to 1.70 41 height, 21 diameter M.S.Chimney c. Mould 0.50 d. Cart Wheeler 0.40 e. Water Buckets 0.20 f. Pumps & Motor 0.60 Total 12.00 3. Manufacturing Process The following chart shows the manufacturing process of Bricks. Excavation of Clay Mixing of Clay with Sand Moulding Loading of Moulded bricks into chamber kiln Firing Removal of Bricks from Kiln Inspection 3
Packing and Loading 4. Raw Materials Raw materials required for manufacturing 40,00,000 bricks at 100% capacity utilisation per annum. Qty. Rate Value (Rs.lakhs) Clay 8400 MT Rs.180 15.12 Sand 275 MT Rs.650 1.78 Total 17.90 5. Land & Building For installing the machinery required, a land area of 2 acres with constructed floor space of 12600 sq. ft. will be sufficient. A building area of 12600 sq. ft. is required for the following purpose: Area (sqft) Stock Sheds 1000 sqft. Moulding Sheds (Thatched) 4800 sqft. Coal Shed 800 sqft. Store Room 500 sqft. Office 500 sqft. Labour Quarters 5000 sqft. 6. Utilities Power: A single phase load is sufficient for lighting facility. The fuel (fire wood) required for firing bricks will be 50 MT per annum. Water: Water required per day is about 20,000 litres. Pollution: The project does not discharge any harmful effluents. 4
Man power: The direct labour required are as follows. Category Rate Per 1000 bricks Total Value No. of worker to Moulding 95.00 380000 20 Shifting 35.00 140000 14 (Dired Bricks to Chamber) Mounting 10.00 40000 3 (Arranging in firing kiln) Firing 15.00 60000 4 Firewood Transfer 5.00 20000 2 Dismounting 35.00 140000 14 Loading & Unloading 12.00 48000 4 Total 828000 61 In addition to above the unit proposes to appoint the following permanent staff: Category Nos. Salary/month Total salary Accountant 1 4000 4000 Supervisor (Maistry) 1 5000 5000 Day Watchman 1 3000 3000 Night Watchman 1 3000 3000 15000 Add: 20% benefits 3000 Total 18000 Total salary per annum (Rs.lakhs) Rs.2.16 lakhs Total Wages & salaries per annum Rs.10.44 lakhs (Rs.8.28+Rs2.16 lakhs 7. Implementation Schedule The chamber could be constructed within a period of 3 months. The building could be constructed in a period of 4 months. The project could be implemented within a period of 6 months after the idea is conceived. 5
8. ASSUMPTIONS Installed capacity is 40,00,000 of bricks per annum. During first year, the capacity utilisation is at 60%. This will be increased to 70% and 80% in subsequent years. Selling price is assumed at Rs.3000 per 1000 bricks Cost of raw materials Rs.17.90 lakhs at 100% utilization per annum. Power charge is estimated at the current rate, this works out to Rs.3,000 per annum. Wages & Salaries is estimated at Rs.10.44 lakhs per annum. Repairs & Maintenance is estimated at Rs.2000 per month. Depreciation is calculated on WDV method Selling, General & Adm. expenses is Rs.20000 per month. Interest on Term Loan & working capital borrowings are estimated at 12%. Income tax is provided at 33.99% on taxable income. LIST OF MACHINERY SUPPLIERS The chamber is normally constructed by experienced masons under the supervision of civil engineers, who should be locally available. The chimney can be procured from any engineering fabricators. LIST OF RAW MATERIAL SUPPLIERS Suitable sources of clay has to be located nearer the proposed site of the chamber brick factory, so as to reduce the excavation and transportation cost. About 10 acres of land is required for continuous supply of clay. 6
1. COST OF PROJECT Rs.lakhs Land 10.00 Building 15.00 Plant & Machinery 12.00 Other Misc. assets 0.00 Pre-Operative expenses 2.00 Margin for WC 1.89 40.89 2. MEANS OF FINANCE Capital 20.64 Term Loan 20.25 40.89 3. COSTOF PRODUCTION & PROFITABILITY STATEMENTS Years 1 2 3 Installed Capacity (No. of bricks) p.a. 4000000 4000000 4000000 Utilisation 60% 70% 80% Production/Sales (No. of bricks) p.a. 2400000 2800000 3200000 Selling Price Rs.3,000 per 1000 bricks Sales Value 72.00 84.00 96.00 Raw Materials 10.74 12.53 14.32 Consumables (Rs.5000 p.m.) 0.60 0.63 0.66 Electricity 0.03 0.03 0.03 Fuel (Coal 50 MT @ Rs2500 / MT) 3800.00 1.14 1.25 1.38 Wages & Salaries 10.44 10.96 11.51 Repairs & Maintenance 0.24 0.25 0.26 Depreciation 3.30 2.88 0.37 Cost of Production 26.49 28.53 28.53 Admin, & General expenses 2.40 2.52 2.65 Interest on Term Loan 2.43 2.13 1.52 Interest on Working Capital 0.92 0.92 0.92 Total 32.24 34.10 33.62 Profit Before Tax 39.76 49.90 62.38 Provision for tax 13.51 16.96 21.20 Profit After Tax 26.25 32.94 41.18 7
Add: Depreciation 3.30 2.88 0.37 Cash Accruals 29.55 35.82 41.55 4. WORKING CAPITAL: Months Values % Margin Bank Consumptions Amount Finance Raw Materials 2.00 1.79 25% 0.45 1.34 Fuel 2.00 0.19 25% 0.05 0.14 Finished goods 0.50 1.10 25% 0.28 0.82 Debtors 1.00 6.00 10% 0.60 5.40 Expenses 1.00 0.50 100% 0.50 0.00 9.58 1.88 7.70 Say --> Rs.7.70 lakhs 6. PROFITABILITY RATIOS BASED ON 80% UTILISATION Profit after Tax 41.18 43% Sales 96.00 Profit before Interest and Tax 64.82 133% Total Investment 48.59 Profit after Tax 41.18 200% Promoters Capital 20.64 7. BREAK EVEN LEVEL Fixed Cost (FC): Rs.lakhs Wages & Salaries 11.51 Repairs & maintenance 0.26 Depreciation 0.37 Admin. & General expenses 2.65 Interest on TL 1.52 16.31 Profit Before Tax (P) 62.38 BEL = FC x 100 16.31 x 80 x 100 FC +P 16.31+ 62.38 100 17% of installed capacity 8