SUBMITTED TO AYESHA KHAN CHIEF TECHNICAL ADVISOR Community Based Livelihood Recovery Program (CBLRP) United National industrial Development Organization (UNIDO)

BY Sardar Shahid Farid Chartered Accountant

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as the conditions of living improve. the project will be capable of producing 4. The civil works and installation of plant is estimated to complete in 3 months. Raw material to be used for the production of concrete based block is available in the local market at reasonable prices. whereas. These blocks are in demand. 1. the housing and construction industry is growing at a steady rate. sand together with water will proceed through a plant to make cement blocks used in construction.000 blocks. Cement and Water will be used as raw material for manufacturing of prefab construction blocks. Crushed raw stone and sand could be purchased directly from the excavator (quarry lease holder) or supplier.1 1. lime stone.1 PROJECT EXECUTIVE SUMMARY PROJECT BRIEF The proposed project envisages the setup of a prefabricated construction blocks manufacturing project in Manshera. The total capital cost of the project is estimated at Rs. Mostly available in and around Manshera 19 employees will be employed directly on the project. Working with the proposed plant and machinery. Sand. 42.29 Million 42% 12% 26% Foreign collaboration sought Joint – Venture Loan Market access Sub contracting Buy – back arrangement Equipment purchase Management expertise Technical expertise Marketing expertise Technology transfer Joint R&D Other :- Studies Available Feasibility study Other Specify Project description Date: 25 October 2007 1 . Crushed Stone.921 Million tons. in 8 hours shift. cement could be sourced from manufacturers by signing a regular supply contract which would lead to a controlled cost. The mixture of cement. Availability of raw material in the region is as follows NWFP 4.130 million.2 FINANCIAL SUMMARY • • • • Sales Gross Profit Margin Net Profit Margin Internal Rate of Return Rs 52. at 100% capacity utilization.

walls making. nonavailability of infrastructure facilities like roads and electricity are the major hurdles in the development that needs to be addressed. The machinery will need to be imported as modern machinery is not available locally. The role of the middleman is played by building material suppliers at a nominal margin of 1% to 2% of the order booked. This process leads to construction of roads. assuring a steep and continuous growth vis-a. for the installed capacity and the number of units working etc. Construction of Diamir-Basha Damp and Kohala Hydro–Electric Project are also synergic factor for this project. 3. and floor coverings of commercial buildings. The area under consideration is badly affected by the earthquake and rehabilitation and reconstruction is in process. The successful block yard must however make blocks of uniform quality and sell them at a price high enough to cover costs and make a reasonable profit.9 percent (Source Statistical Division). precisely. When all the raw material is available in one place and the product in demand this seems to be successful project. flyovers and bypasses there is a mass and consistent need of prefabricated blocks across the country.e. etc.vis investment opportunity in the Prefabricated Construction Blocks. It is easy to make a concrete block. since it is an allied industry of the construction sector. for the building of roads. construction of road side pave ways. market. Local customs and traditions. 2 . Housing and construction is one of the major drivers of growth in more than 40 allied industries and directly adds to the PREFABRICATED CONSTRUCTION BLOCKS industry. There is an easy ordering and delivery procedure. garage and parking floorings. However. growth in construction sector may be considered as a close proxy for the growth in prefab construction blocks sector which is 7. MARKET INFORMATION Prefabricated construction blocks making units across the country are working mostly as unorganized sector (about 80%) and no reliable data is available. Various construction and real estate development projects are in progress and are continuously being commissioned which will have high demand of prefabricated construction material all over the country.9% (Economic Survey of Pakistan 2006). The aforementioned statistics provide enough evidences and ensure a steep and continuous growth vis-à-vis investment opportunity in the PREFABRICATED CONSTRUCTION BLOCKS business. In addition. bridges. etc resultantly gear up construction activates and more use of crushed stones. Construction sector has been registered with a growth rate of 7. In order to make up the backlog and meet the shortfall in the next 20 years. The aforementioned facts and statistics provide enough evidences. This is the extent of the annual housing market in Pakistan which positively predicts a permanent growth in construction sector which directly adds to the potential in prefabricated building blocks segment of the construction industry.000 housing units per annum. Strong distribution and marketing channels will be a strong source of success for the project. block paved driveways.2. overall housing construction industry has to be raised to the level of 500. PROJECT RATIONALE The construction blocks industry is an important industrial sector in the country engaged in producing blocks used as prefabricated material for various construction activities i. new houses. This modern building material is going to replace old building material.

hence there are limited opportunities for export due to high cost of transportation.200 Rs. 4. Maximum capacity of the unit will be utilized. All projections are based on 8 working hrs a day with 26 days a month.000 sq. Total raw material cost of 4000 blocks is Rs 23. 52. 4.2 RAW MATERIALS Crushed Stone. and cubing.600 4. Appropriate commission will be given to the salesmen who bring in the orders. prefab construction blocks are assumed to be produced.291. The process is shown in diagram below and described in detail. Crushed raw stone and sand could be purchased directly from the excavator (quarry lease holder) or supplier.ft of concrete blocks at 100% capacity utilization with single shift of 8 hours a day. cement could be sourced from manufacturers by signing a regular supply contract which would lead to a controlled cost.200/- 4.3 PRODUCTION PROCESS The production of concrete blocks consists of four basic processes: mixing. the project will be capable of producing 4. 167. Rs.Prefabricated construction blocks or other products are heavy. Raw material to be used for the production of concrete based block is readily available in the local market at reasonable price. Sand. BUSINESS PLAN The demand in the local market will be targeted. Contractors for lying of roads and construction of industries.1 PRODUCT SALES For the revenue projections. whereas. Cement and Water will be used as raw material for manufacturing prefab construction blocks. molding. The improvement in living standards and the boom in the construction sector imply that the demand of the prefabricated construction material will increase. Total Value of Blocks Produced per Day 312 Days production Gross Annual Sales. curing. The market scope for prefab construction blocks is found to be encouraging in local market with the increased demand from construction industry. There is also a sufficient demand from Govt. 3 . Working with the proposed plant and machinery.

Emphasis on image development and building acquaintances across individual contractors who are serving private sector.4 MARKETING CHANNELS In the manufacturing industry. Total approximate manpower required for the business operations along with the respective salaries are given in the table below: 4 . The business unit will work on one shift basis (8 hours daily). In the Prefab construction blocks industry.5 HUMAN RESOURCE REQUIREMENT Construction and allied industry is a labor intensive industry. Draw linkages with material suppliers to the housing industry at town level. therefore. individuals and professionals.4. a total 18 persons will be required to handle the production operations of a prefab construction blocks making unit. well known builders and contractors. marketing is considered to be of significant importance. marketing parameters are very limited and largely associated with the construction sector’s performance. Keep up to date information on civil and construction works initiated by local. provincial and central governments. Technical staff with relevant experience will be required for operating the production plant. The staff will be provided training by the plant & machinery supplier. 4. Establish contacts with local civil engineering firms. Some of the marketing promotion activities which should duly be rendered are given below: Developing contacts with the building material suppliers.

3.862. PROJECT FINANCIALS 5. 45.248.200 Cost 2.2 RAW MATERIAL COSTS The main materials required and there cost is as follows.700 Rs.000 1.ft. 5.295 Quantity 66000 50 bags 4720 1180 23. 12.500 Rs.18 0.123.400 1.248.400 998. It is also suggested that preference should be given to literate persons so that they could understand the significance of undertaking health and safety measures.1 OPERATIONAL DATA YEAR 1 OPERTIONAL CAPACITY 70% YEAR 2 80% YEAR 3 90% YEAR 4 100% YEAR 5 100% BLOCKS PRODUCED 7.One to two years of experience on mechanized block making plant would be necessary for the person who will operate the prefab construction blocks plant.000 5.00 Rs.900 sq.6 1. Description Raw Material Water Cement Sand (Bajri) Crushed stone Required/Block 16. 5 Total Raw Material Cost .200 1.500 Rs. RAW MATERIAL 5.5 0.

13 million is estimated to be the capital cost of the project.01 Month Water .070.01 Month 5. FIXED COST A total of Rs.200 6 .130.000 100.01 Month Oil.000 4.000 40.000 31.Three Months (Production Staff) Raw Material Inventories (Cement & Sand/Crushed Stone) .000 30.000 300.07 Days Misc.000 400.3 WORKING CAPITAL Description Electricity . Lubricants & Other consumables .000 950.Three months (@ 5000 /month) Cash balance required Total Amount in Rs.000 238.26 Days Sand and Crushed Stone .000 Salaries . 58240 5000 18900 5.500 15.380 325.000 213.000 42. Telephone . (RUPEES) Land Concrete Blocks Making Plant (Imported) Transportation Machinery/Vehicles Plant & machinery Installation & trial run expenses Vehicle for support & maintenance services .000 60.07 days 5.07 Days Cement .One light vehicle Site/Office Construction Factory / Office Furniture Preliminary Expenses Total Fixed Capital 2. Expenses .000.000 5.000 5.200.

5.000 5.000 3. Expense Utilities Depreciation Maintenance Selling and Distribution Miscellaneous TOTAL Year amount 120.000 604.000 1.4 OVERHEAD COSTS Following Overheads are assumed to occur in the first year of production.226.668 60.383.059.668 7 .

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