Fly Ash Brick Project

Proposed plant can produce (Capacity) = 4 million bricks/yr

Sales Volume = 2.4 million bricks/yr

Average price = 7000 /1000 bricks
Initial Investment = 10 million
From the initial investment(includes
investment by partners from their = 6 million
own resources)
Bank provides loan = 12% ==> mortgage of the equipmen
Sharma Salary = 50,000
Life of project = 5 years
=> mortgage of the equipment
Analysis and Computation

Routine Expenses Per month Per Year Total of 5 years

Building Rent 50,000 600,000 3,000,000
Administrative cost 10,000 120,000 600,000
Office Supply 5,000 60,000 300,000
Electricity 10,000 120,000 600,000
Miscellaneous 20,000 240,000 1,200,000
Total 95,000 1,140,000 5,700,000

Personal Expenses Per month Per Year Total of 5 years

Workers 100,000 1,200,000 6,000,000
Office assistant 20,000 240,000 1,200,000
Watchman 15,000 180,000 900,000
Drivers 25,000 300,000 1,500,000
Sharma himself 50,000 600,000 3,000,000
Total 210,000 2,520,000 12,600,000

Fixed Costs Per month Per Year Total of 5 years

Routine Expenses 95,000 1,140,000 5,700,000
Personal Expenses 210,000 2,520,000 12,600,000
Total 305,000 3,660,000 18,300,000
Financial Structure

Estimated Investment Cost (Rs)

Building Modification 1,400,000
Water Supply 100,000
Machinery 2,000,000
Trucks 3,000,000
Payload machine 1,500,000
Total 8,000,000

Net book value

Costs Per Year

Estimated Investment Cost (Rs)
Yr 1 (Rs) Yr 2 (Rs) Yr 3 (Rs) Yr 4 (Rs)
Building Modification 1,400,000
Water Supply 100,000
Machinery 2,000,000
Trucks 3,000,000
Payload machine 1,500,000
Total 8,000,000 6,400,000 4,800,000 3,200,000 1,600,000

Depreciation : 1600000

Financial Aid
Financial Aid Cost (Rs)
Investment from the
parners (Equity) 6,000,000

Borrow from the Bank

(Loan rate : 12%/annum) 4,000,000

Total (Initial Investment) 10,000,000

Finance Costs Cost/month (Rs) Cost / Year (Rs)

Yr 1 Yr 2 Yr 3 Yr 4
Repayment 66,667 800,000 800,000 800,000 800,000
Interest Payable 40,000 480,000 480,000 480,000 480,000
Total 106,667 1,280,000 1,280,000 1,280,000 1,280,000
Total Liability 3,200,000 2,400,000 1,600,000 800,000
 Yr 5 (Rs)

) Calculation of Interest Payable

Yr 5 Interest rate
800,000 1 year
480,000 Loan
1,280,000 # of years
 per year Interest Payable
0 per month Interest Payable

Calculation of Repayment
Loan
n of Interest Payable
12%
12 months
4000000
5
 480000
40000

n of Repayment
4000000 (5 years)
800000 per year
66666.66667 per month
Variable Cost

Production Cost (for Total for 5 years

200,000 bricks) Per month (Rs) Cost Per unit (Rs/UnPer Year (Rs/Unit)(Rs/Unit)
Fly ash 250,000 1.25 3,000,000 15,000,000
Gypsum 250,000 1.25 3,000,000 15,000,000
Lime 300,000 1.50 3,600,000 18,000,000
Sand 40,000 0.20 480,000 2,400,000
Electricity 10,000 0.05 120,000 600,000
Labour 50,000 0.25 600,000 3,000,000
Total 900,000 4.50 10,800,000 54,000,000

Unit variable cost to produce one unit of brick = 4.5

Number of
bricks
200000
200000
200000
200000
200000
200000
CVP Analysis
Rs
Total Fixed Expense 3660000
Finance Costs 480000
Depreciation 1600000
Selling price of bricks 7
Cost/unit 4.5

Units of brick to be sold per month

Total Fixed + Finance / 2296000 units per month
Selling price - Cost/ unit

Monthly Revenue
16072000
Break Even Analysis

Quantity of Bricks to be Sold annually Rs

Total Fixed costs 3,660,000
Finance Costs 480,000
Depreciation 1,600,000
Annual Expense 5,740,000

Units of Bricks that needs to be sold 2,296,000

Annual Revenue 16072000

(Less) Annual Variable Expense -10,332,000
Gross Prof 5,740,000
(Less) Annual Expense -5,740,000
Annual Net Income (Breakeven) -
Target Profit Analysis

Yr 1 (Rs)
Target Profit 260, 000

Total Fixed costs 3,660,000

Finance Costs 480,000 16800000
Depreciation 1,600,000
Annual Expense 5,740,000

Units of Bricks that needs to be sold 2,400,000

Annual Revenue 16,800,000

(Less) Annual Variable Expense (10,800,000)
Gross Prof 6,000,000
(Less) Annual Expense (5,740,000)
Annual Net Income (Breakeven) 260,000