DISSERTATION PROJECT REPORT

ON

“MY BUSINESS PLAN OF MAKING OF FLY ASH BRICKS in KORAPUT,

ODISHA”

(A Project report submitted to the Department of Business Management, Central University of

Odisha, Koraput in partial fulfillment for the Award of Master of Business Administration Degree)

Submitted by:

Manish Pradip Ekka

Roll no: 20/06/EMBA/12

Under the guidance of

Dr. Akhsita Bahuguna,
Lecturer,
Department Of Business Management

DEPARTMENT OF BUSINESS MANAGEMENT

CENTRAL UNIVERSITY OF ODISHA, KORAPUT
2020

1
Prologue:

This is a Business Plan for promotion of ecofriendly Brick technologies throughout

the Koraput region. It may be noted that the facts and figures contained in this plan are
based on certain assumptions. The actual contents of each business plan will vary
depending on a host of factors.

The plan relates to the setting up of a fly ash brick production unit. The actual
investment required and the revenue generated will depend on the type of machine and
the number proposed in the project. Another factor to be considered is the amount of
land required for a new unit. A decision on quantity of land acquired will determine the
investment needed and impact on the financial projections/performance. The amount of
funds to be borrowed and the repayment schedule is another variable that will impact the
financial forecasts. Once again, the circumstances of each project will determine the
loan amount and how quickly the money can be paid back. It is, therefore, very
important to understand the actual specifics of each business plan even in terms of
marketing mix and SWOT analysis since it will vary depending on the circumstances of
each entrepreneur and his or her project.

Prospective Fly Ash Brick Production Technology entrepreneurs are advised to

contact the technology provider company on equipment/technology before they start
developing their business plans.

It must be mentioned here that a bankable business plan needs to be prepared from
a registered Chartered Accountant for acceptance in any banks for finance.

2
 Executive Summary:-
M/s Eco Bricks is to be owned by me, an experienced Engineer with considerable knowledge of the
construction sector. M/s Eco Bricks intends to set up a fly ash brick production unit in Damanjodi,
Koraput, Odisha with a capacity to produce 15 lakhs bricks per annum. The focus of M/s Eco Bricks
will initially be on producing standard bricks (230mm x 110mm x 70mm) for construction
purposes. The main markets for M/s Eco Bricks will be the adjoining areas of Damanjodi,
Sunabeda, Semiliguda and the Koraput.

M/s Eco Bricks will adopt the environment friendly fly ash technology to produce cured bricks.
This advanced technology will give M/s Eco Bricks an edge over its competitors due to several
factors. The fly ash brick making technology does not use any coal. The fly ash to be used will be
available free of charge from nearby Nalco, which generates fly ash as waste. Thus the major factor
will be savings in raw material and fuel thereby increasing profitability and making it viable
compared to existing brick businesses. The unit will be less polluting than other brick industries
rendering it more acceptable to local communities. The quality of bricks will be conforming to IS
standards with more regular features. Thus there will be more acceptance amongst users since it will
reduce construction costs.

M/s Eco Bricks will target public, private and institutional customers with an aim to attain sales of
Rs. 72 lakhs in the first year. This will rise to Rs. 100.8 lakhs by the end of the fifth year of
operations. Cumulative net cash flow will rise from Rs. 17.95 lakhs in the first year to Rs. 103.6
lakhs by the end of the fifth year.

An initial fixed investment of Rs. 24.50 lakhs will be required to fund capital expenditure. The
promoter will invest Rs. 2.45 lakh as equity and a long term loan of Rs. 22.05 lakh will be sought to
finance the rest of the fixed investment. A subsidy of around 10% will be availed from the Govt. of
India through KVIC under the PMEGP scheme.

The projections indicate that the long term loan will be comfortably repaid by the end of the second
quarter in the fifth year. The company's working capital will be largely funded from internal sources
from the second year onwards. Short term borrowing will not be required from the fourth year
onwards. The project payback is projected at 4 .5 years. The average Debt Service Coverage Ratio
is projected to be very comfortable at 1.1 7.

The prospect for M/s Eco Bricks is very bright in view of the increasing demand for fly ash bricks
in the regions of Koraput.

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 Table of Contents:

1. Problem Statement: ........................................................................................................... 5

2. Business Description: ......................................................................................................... 6
3. Business Accomplishments: ............................................................................................... 7
4. Briefing about this Business Sector: ................................................................................... 7
5. Marketing Plan: ................................................................................................................ 17
6. Capital Spending Plan: ...................................................................................................... 20
7. Revenue Forecast: ............................................................................................................ 23
8. Profit and Loss Forecast: .................................................................................................. 25
9. Cash Flow Forecast: .......................................................................................................... 26
10. Working Capital Requirement: ......................................................................................... 27
11. Financing of Business Plan: ............................................................................................... 28
12. Future Trends: .................................................................................................................. 28
13. Risks Facing Your Business: .............................................................................................. 29

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1. Problem Statement:

To manufacture fly ash bricks out of fly ash generated from power plant of Nalco
Damanjodi with a view point of minimizing fly ash as an Environment Pollutant which
provides the benefit to organization as well as to environment.

The need for such initiatives is due to following factors.

• Approximately 10000 Hectares of top soil is lost every year in manufacturing of

conventional bricks.
• Non-availability of cultivating top soil in future.
• The Govt. has implemented rules which define the constructions within a radius of 100
Km from thermal power plants are bound to use fly ash brick.
• Power Plant uses coal as a fuel have no use with the fly ash left after the combustion
and they need to dump somewhere.
• Dumping of this fly ash may cause huge amount of pollution.
• Fly ash is reported to cause ailments like allergic bronchitis, fibrosis of lungs, silicosis
and asthma.
• Also causes water and soil pollution along.
• NALCO has been making continuous efforts to increase fly ash Utilization in an
environment friendly manner through various methods.
• Fly ash generated in the Plant is used for various activities like manufacturing of
bricks, use in cement industry, asbestos manufacturing, agriculture, concreting work,
road construction work etc.
• As per the directive of Government of Odisha, NALCO is providing subsidy of Rs. 150/-
per MT of fly ash to brick manufacturers.
• The location helps in acquiring of raw materials, which is basically fly ash at a cheaper
cost.
• One of the main advantage is the absence of competitors in the area.
• Land is available in abundance and with the government helping in the acquiring of
the land, the task gets easier.

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2. Business Description:

The Company

M/s Eco Bricks is a company that intends to set up a production and distribution of
high quality “Fly Ash” bricks. The company is owned by me and is registered as a
proprietorship firm with the District Industries Centre, Koraput. The firm registration
number is ABCD/345/13. Owner has also applied for No Objection Certificate (NOC)
to establish the unit to the State Pollution Control Board. It will be granted once the
technology is finalized. Owner has also applied to National Aluminum Company,
Damanjodi Unit for free availability of fly ash to this manufacturing unit. In principle
consent of the same has also been received. Owner also plans to apply to Khadi Village
Industries Commission (KVIC), Bhubaneswar for subsidies under the PMEGP scheme
as eligible and applicable. Permanent account number (PAN) of owner is
AAAAA0000A.

In addition to the on-site sales office, the company also intends to set up a sales office
in Koraput. This office will be operational by June 2022.

The fly ash brick to be produced and sold is a relatively new but well established
building material in the construction sector. It is made from a mix of fly ash and sand
stabilized by either cement or lime depending on the availability. The fly ash is
available free of charge within a radius of 100 km from any thermal power plant.

With the increased generation of fly ash in the country, Ministry of Environment and
Forests, Government of India has made it mandatory to use fly ash products in both
public and private construction within a radius of 100 km from a thermal power plant
throughout the country. This has resulted in a high demand of fly ash bricks and other
products for use in construction. Since no coal is required to produce the brick, thus
the entire production process is environment friendly compared to the highly polluting
burnt clay brick production process.

The fly ash of Nalco has been tested at Technology and Action for Rural Advancement
and has been recommended for production of fly ash bricks. With recommended
addition of additives and proper mixing process a compressive strength of around 80
kg/cm2 can be achieved with consistent quality. The wastage will be around 2-3%
making a high yield of consistent quality bricks. In this technology since the production
is done through a hydraulic machine thus all the bricks produced are of a single class and
quality. Presently the production capacity will be around 5,000 bricks per day. On
successful operation, the production capacity will be increased to an additional 5,000
bricks per day by the installation of another similar machine.

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3. Business Accomplishments:

I am presently employed at Nalco Damanjodi in the capacity of Asst. General Manager. I

have over 22 years of experience in both maintenance and production unit. Further to add,
I was also associated with few of the construction project of Nalco. I do have an exposure
on planning & public procurement of spares, budgeting and to some extent onto the
marketing aspects of Nalco products. These overall experiences do suffice to the pre-
requisite criteria for setting up a Business Plan.

4. Briefing about this Business Sector:

Opportunity/ Market Assessment

Economic growth is directly related to the level and efficiency of fixed capital
formation. In developing countries like India, the share of such fixed capital formation
in construction is often about 50% of the total but can be as high as 80% also. Thus
the construction sector is regarded as one of the backbones of the development process
mainly because of its multiplier effect in other sectors of economy. Building materials
form the single largest input in construction, accounting for almost 50%-80% of the
total value of construction. However in India the annual growth rate in construction
has far outstripped the supply of walling materials resulting in a huge shortfall and
creating an impediment to the development of the country.

Odisha is India’s new miracle economy. In the five year period between 2014 -2055 to
2018-2019, Odisha’s GDP has grown by 11.03%. This has been possible with investment
in various sectors, including the construction sector. If this growth rate needs to be
sustained, the demand growth for quality building materials will be increasing
manifold. Manifestation of the same is already been felt from the acute mismatch
between demand and supply of walling materials. In Indira Awas Yojana (a popular
rural housing scheme for weaker sections) alone there is shortfall of around 5489
million bricks.

7
Presently there are around 4210 registered brick producing units producing around
10,525 million bricks per year. In an average in Odisha around 45 million tonnes of
agricultural top soil is lost every year for producing bricks. Moreover the brick
industry with the present production consumes around 2 million tonnes of coal thereby
releasing around 4 -6 million tonnes of CO2 each and every year. The amount of
suspended particulate matter (SPM) and particulate matter less than 10 microns
(PM10) resulting from the same are also beyond tolerable limits higher than WHO
guidelines. U se of low quality imported coal from North East India e.g. Assam,
Meghalaya etc. (>1% Sulphur content) leads to high CO2 and SO2 emissions
contributing to anthropogenic climate change. Particulate matters and SO 2 cause
serious health problems, predominantly in the respiratory system. Of late interest is
the measurement of black carbon or soot also which is also considered to be a major
source of global warming.

Thus there is a high market and opportunity of introducing fly ash based brick
production and resultant products in the state.

Buyer Behaviour/ Market Characteristics:

Individual brick buyers in Patna are quality and price conscious. Buyers prefer bricks
that are red in colour. A long ringing sound obtained by banging two bricks together is
thought to be a sign of good quality. Private buyers contact brick kilns through sales
depots. There is a feeling in the area that larger sized bricks are cost -effective as less
labour and cement is consumed during construction.

Bulk buyers such as contractors and projects consider quality, price and reliability in
making purchase decisions. Large buyers expect special pricing when bricks are
bought in large quantities.

8
Competition/Industry Analysis

The construction industry contributes to about 10% of the Gross Domestic Product
(GDP), registering an annual growth of about 9%. Clay fired bricks form the
backbone of the construction industry which is valued at approximately US$ 70.8
billion. The brick sector in India, although unorganized, is tremendous in size and
spread. India is the second largest brick producer (China dominates with 54 % share)
in the world. It is continuously expanding on account of a rapid increase in demand for
bricks in infrastructure and housing industries. In order to meet this demand, over
150,000 brick units provide direct employment to more than 8 million workers. During
the 12th Five-year Plan, the annual demand of 170 million bricks per year was estimated
to be generating revenues of over US$ 4.8 billion.

Odisha needs over 7500 million bricks over the next five years just to meet the rural
housing gap of 1.1 million dwellings per year. Potential savings of 2.8 million tons of
CO2e are possible while creating livelihoods for 0.35 million people by introducing
cleaner production systems.

Compared to the conventional burnt clay brick industry, the advantages of a fly ash
brick production technology are as follows:

Use of industrial waste materials available free of charge from thermal power plants

Reduced production cost due to savings in energy consumption

Reduced pollution due to minimal emission and discharge of pollutants

Brick property as specified in IS standards and construction requirements.

Lower construction costs due to low mortar consumption since all bricks are equal in
size, shape and dimensional tolerances.

Despite the comparative advantages of Fly Ash Brick Technology, entrepreneurs still use
the less efficient Fixed Chimney kilns in large numbers. This is mainly due to a lack of
understanding of Fly Ash technology.

9
Analysis of Influences on the Industry

Compared to most industries, the impact of external influences on brick industries is

relatively high.

Economic Influences

This industry is susceptible to economic performance and conditions. However, as

discussed earlier, the brick sub-sectors' prospects continue to remain attractive
despite stagnant macro-economic conditions. Furthermore, the increased interest
showed by financial institutions in housing finance points to a continuing boom in
construction activities.

Social Influences

The making of conventional bricks involves extraction of soil and the firing process
consumes fossil fuel (coal). The brick industry is a labour intensive industry. Labourers
moulding green - bricks are exposed to the harsh conditions of the summer. Kiln
operators work in and around kilns where the temperatures can exceed 1,000OC. The
promoters are aware of these issues and thus have taken to adopt fly ash brick making
technology to create local job opportunities.

There have been cases of local communities opposing the operation of polluting kilns in
their areas. Some kilns have been forced shut or have had to relocate as a result of
local resistance. It is increasingly clear that the twin issues of environment and social
responsibly will play an increasingly important role in shaping of this industry in recent
years.

Political and Legal Influences

The Government has taken steps in response to the growing concerns regarding the
adverse impact of brick industries. New restrictions and regulations have been
introduced on the setting up and operation of kilns. Fly ash brick making has been given
the topmost priority by the Central Government and all State Governments. Movable
BTKs have been banned and no incentives are being provided to existing brick
technologies like fixed chimney. The requirements for Fly Ash technology is less
stringent, the government is offering different schemes for its promotion. This shows the
Government's support for this technology.

10
Environmental

With growing environmental consciousness at all levels of society, the pollution caused
by the brick industry is under the scrutiny of environmentalists and the government.
The Government of India took a step towards controlling environmental (air) pollution
from brick kilns by issuing a notification on emission standards for brick kilns in April
1996. The standard laid by the Government also provides regulations on ‘stack
height’ corresponding to kiln capacity in order to control emissions.

Keeping in line with the rising emphasis on climate change related concerns nationally
and internationally, the National Action Plan on Climate Change (NAPCC) was
introduced in 2008 and outlines the existing and future policies and programs
addressing climate mitigation and adaptation. Two out of eight missions could be
relevant to the brick sector - The National Mission for Sustainable Habitat which
aims to make habitat sustainable through improvements in energy efficiency in
buildings among other measures. The

Recycling of Material and Urban Waste Management will be another area of focus.
However building materials are not part of their focus. The National Mission on
Energy Efficiency has initiatives to promote energy efficiency through market based
mechanisms and fiscal instruments in energy intensive industries. Based on the
National Action Plan, individual States are preparing State Action Plans for Climate
Change to set priorities to tackle climate change.

The Fly Ash Brick Production Technology

What is fly Ash?

Fly ash is one of the residues generated in the combustion of coal. Fly ash is generally
captured from the chimneys of coal-fired power plants, and is one of two types of ash
that jointly are known as coal ash; the other, bottom ash, is removed from the bottom
of coal furnaces. Fly ash material solidifies while suspended in the exhaust gases and is
collected by electrostatic precipitators or filter bags. Since the particles solidify while
suspended in the exhaust gases, fly ash particles are generally spherical in shape and
range in size from 0.5 μm to 100 μm.

11
What are fly ash bricks?

Fly ash bricks are made up of fly ash, sand, lime and gypsum. In these bricks fly ash is used
as primary filler and sand is added as secondary filler. Lime and gypsum is used as bind er
which helps in holding all the raw material together.

Why fly ash bricks?

In India, coal being the principal source of electricity, the problem of fly ash disposal
and utilization has assumed enormous proportion as the annual production of fly ash in
India has surpassed 150 million tones. Its increasing accumulation every year, causes
severe environmental and health hazards around the thermal power plants. Fly ash is
a versatile material and its pozzolanic properties, permit its use in various construction
applications.

Advantages of fly ash bricks

Compact construction & Consistent quality

Better thermal insulation properties

Availability throughout the year.

Better shape & finish

Rationalization of Mortar with optional need of Plaster

With ageing the strength of the bricks goes on increasing as lime is used in bricks.

Absorb less water and also seepage is less.

Saving the natural resource and environment

More resistant to salinity and water.

More lighten than conventional bricks

12
Uses of fly ash blocks

Fly ash blocks can be used as substitute of burnt clay bricks. The application of fly ash
blocks is almost same as like burnt clay bricks. It can be used as masonry units in:

Housing

Residence/shop

Factories/Workshop

Institutional building

Commercial building

Frame structure

Compound boundary wall

Technology

Fly ash brick (FAB) technology is a process of converting industrial waste materials
into quality building materials. At present, the technology is well established in
converting thermal power plant waste into quality bricks.

FAB technology uses dry ash (fly ash collected from ESP or silos of thermal power
plants); filler materials (usually coarse sand); and additives (lime, gypsum or cement).
Various technologies exist of commercial service providers. Essentially they use the
same process but at different machines and mix designs. The present technology to be
used has been developed based on scientific analysis and understanding of the waste
materials; fly ash and lime with optimum utilization of sand and gypsum or cement. The
desired strength of fly ash bricks can be engineered by varying compositions.

13
Characteristics of Fly ash

The physical and chemical properties of Fly Ash are tabulated below

Physical Properties

Specific Gravity 2.54 to 2.65 gm/cc

Bulk Density 1.12 gm/cc

Fineness 350 to 450 M2/Kg

Chemical Properties

Silica 35-59 %

Alumina 23-33%

Calcium Oxide 10-16%

Loss on ignition 1-2%

Sulphur 0.5- 1.5%

Iron 0.5- 2.0 %

It may be seen that lignite fly ash is characterized primarily by the presence of
silica, alumina, calcium etc. Presence of silica in fine form makes it excellent
pozzolanic material. Its abundant availability at practically nil cost gives a very
good opportunity for the construction agencies.

Characteristics of Lignite and Coal Fly Ash:

CONTENTS LIGNITE FLY ASH (%) COAL FLY ASH (%)

L.O.I 1.0 TO 2.0 3-15
Sio2 45.59 40-64
A12 o3 23-33 15-29
Fe2 o3 06-4.0 2-11
CaO 5.0-16.0 0.1-1.0
MgO 1.5-5.0 0.2-4.0
So3 0-5. 0 0.1-1.7

About 50 to 80% fly ash may be used for the production. Fly ash conform to IS
3812/1981is one of the important aspects.

14
Gypsum:

Hydrated calcium sulphate are called gypsum. (Caso4 2H2O). Gypsum should
have minimum 35% purity and 5 to 15% may be used.

Lime :

Quick Lime or hydrated lime or both can be mixed in the composition. Lime should
have minimum 40% Cao content.

Sand:

River sand should be clean & coarse. About 10 to 20% may be used. All the raw
materials are indigenous and readily available from the manufacture or traders

Manufacturing process:

Raw materials will be transported and stored in designated places. Special care (e.g.
water sprinklers) would be taken to ensure that fly ash does not create air
pollution. Fly ash (70%) Lime (10%) Gypsum (5%) and sand (15%) are manually
feed into a pan mixer where water is added to the required proportion for
homogeneous mixing. The proportion of raw material may vary depending upon
quality of raw materials. After mixing, the mixture are allowed to belt conveyor
through feed in to automatic brick making machine were the bricks are pressed
automatically. Than the bricks are placed on wooden pallets and kept as it is for
two days thereafter transported to open area where they are water cured for 10 -
15 days. The bricks are sorted and tested before dispatch.

Inspection and Quality control:

The Bureau of Indian Standards has formulated and published the specifications
for maintaining quality of product and testing purpose. IS: 12894:2002.
Compressive strength achievable: 60-250 Kg/Cm.Sq. Water absorption: 5 – 12 %;
Density: 1.5 gm/cc Co-efficient of softening (depending upon water consistency
factor) Unlike conventional clay bricks fly ash bricks have high affinity to cement
mortar though it has smooth surface, due to the crystal growth between brick and
the cement mortar the joint will become stronger and in due course of time it will
become monolithic and the strength will be consistent.

15
 FLOW SHEET DIAGRAM

Fly Ash Gypsum Lime Sand

↓ ↓ ↓ ↓

----------------------------------------------------------------------

Weighing

Pan Mixer

Conveyor

Fly Ash Brick Making Machine

(Hydralic (or) Power Press)

Transported To Wooden Racks

Kept as it is for two days for setting

Water Curing (7 to 10 days)

Drying (one or two days)

Sorting and Testing

Dispatch

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5. Marketing Plan:

Market Segmentation and Positioning

Brick is a commodity product purchased by a broad section of consumers. Fly ash bricks
will be of a superior finish and shape, and M/s Eco Bricks will target the upper segment of
the market. These buyers tend to be less price-sensitive and are also likely to be more
conscious of quality. The company's principal target segments will be:

high value private residences

builders/ contractors executing large projects

Marketing Mix Product

M/s Eco Bricks will initially produce and sell bricks of one type/quality only. However,
the possibility of introducing brick tiles and hollow bricks will also be looked into in
the later years. The following features of M/s Eco Bricks Fly Ash bricks will be
instrumental in attracting customers:

Uniformity in shape and size of the bricks; this will mean that the Fly Ash bricks will
consume less cement

Strength of the bricks will be as per IS Codes and those specified by construction
agencies

Bricks will be produced in an environmentally friendly facility.

Pricing strategy

The Fly Ash brick will be of a superior shape, size and finish compared to other products
in the market. Being also CLEAN and GREEN, Fly Ash bricks will enjoy a premium of
around 10%. Despite this fact, M/s Eco Bricks will initially price its product at Rs. 5.00/
piece compared to the prevalent price of Rs. 6/piece. This penetrating pricing strategy
will enable Fly Ash to rapidly acquire market-share and help it gain acceptability in
the market.

17
Distribution strategy

Logistics and distribution arrangements will play a key role in success. In order to
ensure control over the market and to gauge customer feedback, M/s Eco Bricks will
handle the distribution aspect itself. Owner will be entering into contract with tractor
and truck owners into transportation of finished goods to the customers on priority basis
with a guarantee of reduced damage as possible.

Promotional strategy

The company will sell its products under its own brand name. The communications
and selling efforts will project 'quality' as the key attribute of the brand.

There will be two aspects to the promotion of Fly Ash bricks produced by M/s Eco
Bricks. The planned Sales Office will act as a point of contact with the market, retail
customers will be serviced from this location. A second element of the promotional
strategy will be personal selling to large institutional buyers. Initially the Owner will
mainly handle this task. Later he will also appoint two Sales Representatives. These sales
representatives will mainly focus on retail sales and smaller projects. The agents will be
retained on a commission basis only; the commission rate initially is planned at 0.20
paisa/piece on the ex-factory price.

18
Organization and Management

The construction sector still remains relatively un-organized. A number of large firms
have been in existence for years, mainly catering to large infrastructure projects.
Informally organized contractors and builders largely still undertake construction of
residences and buildings. However, this trend is slowly changing and a few
professionally managed building and contracting firms have emerged in recent years,
especially in the housing sector. However, brick industries in India continue to
operate with a traditional outlook and practices. M/s Eco Bricks intends to organize
itself as an eco-friendly, modern brick making company. This should enable it to
integrate into the supply chain of organized builders and contractors of green
buildings. A priority of M/s Eco Bricks will be to operate as a professionally managed
firm. The sophisticated Fly Ash technology makes it mandatory for planning and
operation of the unit and production system to be undertaken in systematic manner.

At present Owner will play the role of Manager and Marketing Specialist. In the future
a specialist Marketing Manager will be recruited. This person will be assigned a sales
target and compensation will be linked to performance.

19
6. Capital Spending Plan:

RATED PLANT CAPACITY = 5,000 Nos./Day

= 15,00,000 Nos./Annum

Basis
No. of working days = 25 Days/Month
= 300 Days/Annum
No. of shifts = 1 per Day
One shift = 8 Hour

FIXED CAPITAL
LAND AND BUILDING
Sl. No. Details Cost
1 Land required, 1 acre (Self aquired from relative) 0
2 Working shed, 50 sq-m @ Rs. 2000/- sq-m 100000
3 Adm. bldg., 80 sq-m @ Rs. 2500/- sq-m 200000
TOTAL 300000

PLANT AND MACHINERY

Sl. No. Details Cost
U-Shaped mixer/double-shaft mixer/ counter-current mixer, 300 liters capacity with 2 sets, 15
1 470000
HP Motors and one set of 20 HP motor and other accessories (1 set)
2 Belt conveyor of 10 m length with 5 HP motor and complete with all accessories (1 set) 100000
3 Press feed hopper with vibrator (1 set) 50000
Rotary table press of 200 MT capacity table size 1400 mm dia with 3 HP motor for table
4 200000
rotation and 40 HP motor for hydraulic power jack & production capacity 700 bricks per hour
5 Transfer cars 50000
6 Curing cars 80000
TOTAL 950000

OTHER FIXED ASSET

Sl. No. Details Cost
1 Office equipment, furniture plus other equipment & accessories 100000
2 Installation costs for water, electricity, fuel etc. 250000
3 Technical know-how & consultancy 50000
4 Preowned Trucks (1 Nos.) 250000
5 Factory vehicles (2 Nos.) 100000
6 Miscellaneous 45000
TOTAL 795000

FIXED CAPITAL= Rs. 20,45,000/-

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 WORKING CAPITAL

RAW MATERIALS
Sl. No. Details Cost
1 Fly ash, 300 MT @ Rs. 50/-MT 15000
2 Coarse sand, 200 MT @ Rs. 200/-MT 40000
3 Lime, 15 MT @ Rs. 800/-MT 12000
4 Gypsum, 3MT @ Rs. 700/- MT 2100
TOTAL 69100

SALARY & WAGES/ MONTH

Sl. No. Details Cost
1 Manager (Self) 20000
4 Supervisor (1 No.) 10000
3 Workers (6 Nos. ) 42000
Accountant 7000
9 Electrician-cum-mechanic 7000
8 Clerk/Typist (1 No. ) 5000
11 Peon/Chowkidar 4000
TOTAL 95000

UTILITIES & OVERHEADS

Sl. No. Details Cost
1 Power Consumption of 6500 Kwatt hrs @ Rs. 4.50 per Kwatt hr. 29000
2 Water Consumption of 1000 Kls @ Rs. 3.90 per KL 3900
3 Stationery, Postage, Telephone etc. 5000
4 Conveyance & Transportation etc. 10000
5 Publicity & Sales Promotion 10000
6 Repairs & maintenance 10000
7 Miscellaneous 11000
8 Fuel oil, lubricants, etc. 12000
TOTAL 90900

WORKING CAPITAL= Rs. 2,55,000/-

TOTAL CAPITAL INVESTMENT

• FIXED CAPITAL = Rs. 20,45,000

• WORKING CAPITAL = Rs. 2,55,000
• OPERATING EXPENSES = Rs. 1,50,000
-----------------
TOTAL Rs. 24,50,000

21
Proprietor owns the land and 10% of own investment and 90 % is being raised through
long term and short term loan. The project will entail an initial investment of Rs.
24,50,000 to cover preoperative and capital investment. Out of the total project cost,
10% will be invested by the entrepreneur who holds to Rs. 2,45,000 and the rest Rs.
22,05,000 will be raised in terms of long term loan from financial institutions by the
entrepreneur.

Application of funds

The funds would be utilized for purchase of assets amounting to Rs. 20,45,000. The
balance funds would be utilized for the working capital requirement.

Subsidy (PMEGP)

In the following technology there is a subsidy of around 30% given by the Govt. of
India through KVIC under the PMEGP scheme. In this scheme the subsidy is given on a
loan undertaken by the entrepreneur below Rs.25 lakhs. Out of the total project cost
(not exceeding Rs. 25 lakhs) entrepreneur contribution would be 10% of the overall
capital invested. The overall funds (capital + debt) cannot exceed Rs. 25Lakhs. Release
of the subsidy grant given on the overall funds, would be in the third year of the business
being run continuously.

22
 Financial Analysis & Projections

7. Revenue Forecast:

Detailed Summary of Operations

Production Process

The machine will be under operation for 300 days a year with an average daily
production of 5,000 bricks. The annual production is assumed to be 15 ,00,000 with
an assumption of 4% wastage due to breakage/damage or other factors. The selling
price per brick is Rs. 5, which is projected to be increased by 10 % every year. Eco
Bricks will target public, private and institutional customers with an aim to attain
sales of Rs. 72 lakhs in the first year. This will rise to Rs. 100.8 lakhs by the end of
the fifth year of operations.

Direct expenses
These expenses are raw material costs, labour charges, logistic expenses and power
consumption. The expenses are projected to proportionately increment each year
according to the production. The total expenses amounted to direct an expense is Rs.
60,00,000.
Gross Profit
The total gross profit is Rs . 25,88,400 which increment each year with increase in
sales.
Indirect expenses

The expenses incurred in indirect expenses are manger, supervisor, watchman

salaries and overhead expenses. The expenses are projected to increment
proportionately each year .The total expenses amounted is Rs. 3,96,000.
Depreciation & Amortization

The total depreciation charges are Rs. 4,99,730 in the initial year and decreases
on written down basis.
Net profit before interest and tax (EBIT)
The total net profit before tax and interest amounts to Rs.16,62,670 which
increments in successive years.
Net profit after interest and tax

The net profit after interest and tax is Rs.13,10,925 for the initial year and increases
in the subsequent years.

23
 Financial Projections

Particulars year 0 year 1 year 2 year 3 year 4 year 5

Number of units 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000
Selling Price Per unit 5 5.5 6 6.5 7
TOTAL SALES 7,200,000 7,920,000 8,640,000 9,360,000 10,080,000
Closing Stock 1,158,000 1,186,950 1,208,925 1,281,825 1,368,675
breakage (less) 230,400 246,000 249,000 261,000 279,000
operating cost/Cost of goods sold 8,588,400 9,352,950 10,097,925 10,902,825 11,727,675
opening stock 0 1158000 1186950 1208925 1281825
Raw materials 4,650,000 4,766,250 4,824,375 5,056,875 5,405,625
Direct labor 555,000 568,875 575,813 603,563 645,188
Power 355,000 363,875 368,313 386,063 412,688
carriage 286,000 293,150 296,725 311,025 332,475
other factory and storage
154,000 157,850 159,775 167,475 179,025
expenses
COGS 6,000,000 6,150,000 6,225,000 6,525,000 6,975,000
GROSS PROFIT 2,588,400 2,044,950 2,685,975 3,168,900 3,470,850
Gross Margin 35.95 25.82 31.09 33.86 34.43
Indirect labour 240,000 492,000 498,000 522,000 558,000
Selling/Admin/General Expenses 156,000 369,000 373,500 391,500 418,500
Depreciation 499,730 249,960 208,620 174,257 145,671
Pre operating expenses 30,000 30,000 30,000 30,000 30,000
PBIT 1,662,670 903,990 1,575,855 2,051,143 2,318,679
Interest on term loan (EMI) 351,745 295,501 228,914 150,082 56,754

Net Profit 1,310,925 608,489 1,346,941 1,901,061 2,261,925

Net profit ratio % 18.21 7.68 15.59 20.31 22.44

24
 8. Profit and Loss Forecast:
The Balance Sheet shows assets, liabilities and equity at a particular point of time. It
is basically a snapshot of financial position and projects the profit & loss forecast.

BALANCE SHEET

construction Year end Year end Year end Year end Year end
Sources of Funds
period 0 1 2 3 4 5

Capital 245,000 245,000 245,000 245,000 245,000 245,000

Profit 1,310,925 1,919,414 3,266,355 5,167,416 7,429,341

Term Loan 2,205,000 2,205,000 1,899,146 1,537,048 1,108,363 600,846

Less: repayment 305,854 362,098 183,685 262,517 355,845
Subsidy 245000 245000 245000
Term Loan O/S 1,899,146 1,537,048 1,108,363 600,846 0

Current Liability
Creditors 558,000 571,950 578,925 606,825 648,675

Total 2450000 4,013,071 4,273,412 5,198,643 6,620,087 8,323,016

construction Year end Year end Year end Year end Year end
Application of Funds
period 0 1 2 3 4 5

fixed assets 1,845,000 1,845,000 1,595,040 1,386,420 1,212,163 1,066,492

less- depreciation 299,730 249,960 208620 174257 145671
net balance 1,545,270 1345081 1177800 1037905 920821
current assets
Inventory 1,158,000 1,186,950 1,208,925 1,281,825 1,368,675
Debtors 360,000 324,000 360,000 396,000 432,000
workshed 200,000 200,000
less- depreciation -200,000
Cash and bank/ (OD) 255,000 799,801 1,245,152 2,321,028 3,807,829 5,533,580
net current assets 2,317,801 2,756,102 3,889,953 5,485,654 7,334,255
EXPENDITURE
pre operative expenses 150,000 150,000 120,000 90,000 60,000 30,000
miscellaneous expenses 52,230 40,890 36,527 37,941

Total 2450000 4,013,071 4,273,413 5,198,643 6,620,086 8,323,017

25
 9. Cash Flow Forecast:
The various Cash flow activities have been projected from Operation, from Investment
activities and from financing activities

Particulars year1 year2 year3 year4 year5

Cash Inflow from
Profit Before Interest/Tax 1,662,670 903,990 1,575,855 2,051,143 2,318,679
Add: Depreciation/Amortisation 499,730 249,960 208,620 174,257 145,671
Net Cash Flow from Ops 2,162,400 1,153,950 1,784,475 2,225,400 2,464,350

Incr/(Decr) in Working Capital

Decr/(Incr) in Current Assets -1,718,000 -64,950 -57,975 -108,900 -122,850

Incr/(Decr) in Current Liabilities 558,000 13,950 6,975 27,900 41,850
DECR/(INCR) in Working Capital -1,160,000 -51,000 -51,000 -81,000 -81,000

Cash Payments to

Payment of Interest 351,745 295,501 228,914 150,082 56,754

Outflow from Operations -1,511,745 -346,501 -279,914 -231,082 -137,754

Net Cash from Operating Activities 650,655 807,449 1,504,561 1,994,318 2,326,596

Cash Flow: Investment Activities

Preliminary Expenses -150,000 0 0 0 0

Fixed Assets -1,845,000 0 0 0 0
Net Cash Used in Investing 0 0 0 0 0
Net Cash from financing Activities -1,995,000 0 0 0 0
Cash from Financing Activities

Proceeds from:
Owner's Equity 245,000 0 0 0 0
Term Loan from Bank 2,205,000 0 0 0 0
Less: Repayment of Term Loan 305,854 362,098 428,685 507,517 600,845

Net Cash from Financing Activities 2,144,146 -362,098 -428,685 -507,517 -600,845
Net (Decr)/Incr in Cash 799,801 445,351 1,075,876 1,486,801 1,725,751
opening balance 0 799,801 1245152 2321028 3807829
closing balance 799,801 1,245,152 2321028 3807829 5533580
IRR 9%
Cash outflow -2,546,000
Discounted Cash inflow in 4 years 2,474,102
2 months 132,239
4 years 2
Payback period
months
The IRR achieved would be of 9% from the discounted cash flow. The payback period
would amount to approximately 4 years and 2 months.

26
 10. Working Capital Requirement:

A work cycle of 1 month would be set up. The inventory of finished goods and raw
material would be maintained for a month. The debtors would have a credit period of
15 days. Creditors’ payback period would be around 36 days.

Inventory Qty PD time YEAR 1 YEAR 2 YEAR 3 YEAR 4

Stock of fly ash( 30 days) 7500 30 days 135,000 138,375 140062.5 146812.5

Stock of sand ( 30 days) 7500 30 days 225,000 230,625 233437.5 244687.5

Stock of virgin lime ( 30 days) 1200 30 days 144,000 147,600 149400 156600

Stock of gypsum ( 30 days) 450 30 days 54,000 55,350 56025 58725

Stock of finished goods (30 days) 600,000 615000 630000 675000

CLOSING STOCK 1,158,000 1186950 1208925 1281825
COGS 6000000 6150000 6225000 6525000
Debtors -Due from institutional
360,000 396000 432000 468000
buyers (15 days sale)
CREDIT SALES 7,200,000 7,920,000 8640000 9360000
GROSS WORKING CAPITAL 1,518,000 1582950 1640925 1749825

Creditors - Credit on raw material

558,000 571950 578925 606825
supply (36 days)
CREDIT PURCHASES 4650000 4,766,250 4824375 5056875
NET WORKING CAPITAL 960,000 1011000 1062000 1143000

27
11. Financing of Business Plan:

Long Term and Short Term Loans

A loan from a bank for a specific amount has a specified repayment schedule and a
floating interest rate. Term loans mature within 5 years. The total amount raised from
bank is 77% of investment i.e. Rs. 22,05,000 with an interest rate of 17% paid an EMI of
Rs. 54,800.

TERM-LOAN
AMOUNT 2205000
INTEREST 17%
TIME 5 YEARS

EMI WORKING
Per Month amount 54800

Per Quarter 164400

Per year 657600

Five Years 3287996

12. Future Trends:

FLY ASH MARKET - GROWTH, TRENDS, COVID-19 IMPACT, AND FORECASTS

(2021 - 2026)

Growing population, increasing industrialization, and living standards have driven

the demand in the construction industry and fly ash market. The fly ash market is
estimated to register a CAGR of over 4%, during the forecast period.

28
 13. Risks Facing Your Business:
SWOT Analysis & Critical Success Factors
This final section of this Business Plan contains some of the more important
considerations that have been carefully taken into account by the promoters in
deciding to undertake the project.

Strengths Weaknesses
• Proven/superior Fly Ash technology • Lack of Fly Ash brick production
• Technical support from established experience in the area
service providers • Unwillingness of entrepreneurs to
• Experienced promoters who change from conventional brick
understand the construction sector making to Environmental friendly
• Quality product methods.

Opportunities Threats
• Rising cost of fuel for firing bricks • Economic slowdown and negative
• Growing demand for bricks in growth in the construction sector
the target market • Unstable framework conditions
• Year-round operations

M/s Eco Bricks is confident that the strengths and opportunities far outweigh the
weaknesses and threats associated with the proposal. The following factors are
particularly important:
• In any brick firing technology the cost of coal accounts for 50% of the total
production cost. The prices of fuel are ever increasing and will continue to do so
in the coming years. In the future there will even be no good quality coal
available for brick firing since it will be used in power generation and other
utility projects.
• A reputed and well established commercial service provider will ensure that the
technical aspects related to kiln set up and production will be undertaken
successfully.
• The promoter is an experienced and proven businessman with an established
network within the region's construction sector. The promoter's commercial
acumen and business skills will also contribute to the project's success.
EXIT STRATEGY
In view of Govt. guidelines for utilization of Fly ash, Fly ask brick has good prospect
in future. However closing of business if required, then the exit strategy will be to sell
out this business to any prospective buyer.

29
Annex 2
CV of Mr. Manish Pradip Ekka, Proprietor of M/S Eco Bricks
Curriculum Vitae

1. Name : Manish Pradip Ekka

2. Date of Birth : XX January, XXXX
3. Nationality : Indian
4. Civil Status : Married
5. Education : Bachelor of Engineering (Mechanical)
Institution: Central University Odisha, Koraput
Date: 2020-2021
Degree: MBA (Marketing)

3.Professional Experience
Date: Present
Company: M/S Eco Bricks
Position: Proprietor
Description: Promoter of a new brick-making unit using Fly Ash technology

Date: Present
Company: M/s Nalco
Position: Assistant General Manager
Description: Experience in O&M of Plant. Looking after procurement
planning

Language Reading Speaking Writing

Odia Native tongue
English Good Good Good
Hindi Satisfactory Good Satisfactory

9.Membership of Professional Bodies:

Member, Institute of Engineers

10. Others:
Attended the training Programme "Growing Your Small Business" organized by the
District Industries Centre under the Entrepreneurship Development Programme at
Koraput, July, 2021.

Contact Details:
XXXXXXXXXXXXXXXXXXX
xxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxx
Tel: xxxxxxxxxxxxxx,
Email id: xxxxxxxxxxxxxxxxx

30
 End of Report

India Towards Self Reliance

(EMBA CP 207)
Business Plan

Courtesy

Future Icons Group