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Ready mix concrete batching plant - business plan

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Ready mix concrete batching plant - business plan

  1. 1. Farah Taleb Noor Osman Jihad Hajar
  2. 2.  TCF is a startup concrete mixer establishment located in the North of Lebanon.  TCF is expecting to catch the attention of many clients and contracting companies based on the high quality of the offered product.  The Factory is planning to build a strong image and market position in the town.  TCF aims to produce various kinds of concrete including quaking concrete and hard concrete, suitable for large or medium scale building works, road and bridge works.  TCF’s mission is to exceed our costumer’s satisfaction and to become the single trusted source of high quality concrete.
  3. 3. Vision Statement:  Become the most trusted single source and multi-trade industrial contracting and engineering ready mix concrete provider based on technical expertise and continuous development.  Become a safety icon based on the high strength concrete we offer.  Become an innovative factory which determines the concept of reliability, technology and quality in the rapidly changing world. Mission Statement:  Offer a high quality of Concrete at a competitive price to meet the demand of our clients  Establish a strong relationship with the area’s home builders.  Provide customer satisfaction at maximum level by presenting products that are designed and manufactured in compliance with the customer needs and expectations.
  4. 4. Goals:  Increasing sales steadily each year for the next 5 years.  Increase profit and revenue.  Have happy customers.  Support Community.  Being a great place to work.  Build amazing product. Objectives:  Reduce production costs.  Launch new services.  Have onsite customer visits.  Sponsor charitable events.  Apply new technologies.  Offer more training programs.
  5. 5. Logo: Slogan: For Living Concrete
  6. 6.  Providing a high quality of product with fair prices.  Good Relationships with engineering customers.  An advanced batching plant with high technology.  Foresee changes in the market and it is to our clients' benefit that we proactively introduce new technologies and stay ahead of competition.
  7. 7.  TCF offers a high quality of ready mix concrete. Our ready mix concrete is a mix of coarse aggregate, fine aggregate, sand, powder, chemicals and water.  There are five types of ready mixed concrete; it differs according to their weighs.  Starting from 250, 300, 350, 400, and 450 that represent the strength of the product.
  8. 8. 1 Bulldozer. 2 pumps. Diesel container. 2 ready-made houses. Power generator KVA 500. Electrical equipment for lighting and various uses. Equipment requires periodical maintenance. 8 mixers. 1 rapid, 2 Picanto cars.
  9. 9.  Project manager office, including the decor, furniture, computer, telephone, files wardrobe and a big office table. The office will be a hall meeting when need.  Accountant office with furniture, computer, printer, telephone, files wardrobe.  Supervisor room containing simple furniture and 2 small offices.  Kitchen equipment containing small refrigerator, gas and accessories and tools cabinets.
  10. 10. Since we are:  Aiming to produce highly standardized products, using high technology,  Competitors are direct and highly experienced. We chose to apply the Cost Leadership Strategy. This Strategy will allow us to:  Define the market floor price,  Attract buyers who buy on the basis of low prices. We also tried to merge this strategy with the differentiation strategy, since we are offering a larger variety of concrete products (varying in amount of raw material)
  11. 11. Planning • Thinking about and organizing the activities required to achieve a desired goal. • Involves the creation and maintenance of a plan. Organizing • Relationships betweem positions. • Relationships between people occupying these positions. Directing • Motivating Others. • Communicating with others. Controling • Helps to check the errors and to take the corrective action • Setting standards, measuring actual performance and taking corrective action.
  12. 12. Using the Microsoft Project, this step was done. First we mention the steps of the project taking into consideration the timing. Steps: Site Preparation. Getting our name out there through advertisements and publicity. Employment ads. Interviews to choose best employees. Analyze competitors. Set standards and internal rules of company. Financial analysis and expected sales study. Purchase all equipment. Purchase raw materials and resources. Train chosen employees to get familiar with the work. Start producing.
  13. 13. General Manager Accountant Salesmen Supervisor Project Manager Workers
  14. 14.  The right person is put in the right place,  The demand and supply of employees are estimated,  The job analysis (job needs to achieve the objective) is performed,  The job description and specification,  The info of available position is delivered to as many people as possible (internet, media activity, job posting, employment agencies, job fair…)  At this phase the manager of the project will receive a large amount of Curriculum Vitae (CV) that should be filtered in order to choose the right person.  Interviews, examinations, work sampling or even physical test are done in order to know capability and ability of work and skills that distinguish every person from the other one.
  15. 15. At the end the chosen employees were: • 1 Civil Engineers, • 1 Accountant, • 2 Salesmen, • 10 Drivers, • 2 Drivers Helpers, • 2 workers.  Coordination is very important so that the final product has exactly the same quality.  The coordination should be held putting certain standards for results, procedure, and high level of qualification.  Workers are always motivated to work harder and give their full capacity.  This is done essentially by respecting the pyramid of needs  Bonuses are given to those who work extra hours.  Sometimes responsibility of a worker is increased in order to change their work tone. Recognition Self esteem Social Life + Being Accepted Security Biological, Physical
  16. 16. The project is verified if it’s oriented to the objective or not, the comparison between the results and the planning must be done. • The objective is fixed, while continuous evaluation takes place, • The results are analyzed, • Comparison takes place. It is highly important that the final product will always have the same quality and raw materials quantity. Product “A” Same Results Product “B”
  17. 17. The administration: general manager is responsible and he takes the strategic decisions. He represents the company and he has the power to make deals. The financial administration: the accountant is responsible. He records the daily financial operations. The supervisor: he is responsible of the production process, quality control, and leading the workers. Workers: are responsible in conducting the production process, maintenance, transportation and cleaning.
  18. 18.  The industrial sector plays a major role in the local economy through its huge financial investment which provides job opportunity by involving expertise and human resources.  This sector found itself in expansion in the last years.
  19. 19.  Global Concrete and Cement Market research reports that worldwide market value for concrete and cement industry was US$449.4 billion in 2012.  The Asia-Pacific region was the largest regional market and accounted for 58.1% of the global market.  The Asia-Pacific concrete and cement market valued US$261.1 billion in 2012  A study has been created in order to know the feasibility of the project located in Tripoli North of Lebanon.  This ready concrete mixer provides job opportunities since it needs at least 20 workers to operate.  It appears that total sales for the first year is 5.540.400 US $, with a market growth of 3%.
  20. 20. The Concrete Factory (TCF) will focus on the following types of costumers:  Owners of contracting companies,  Structural engineers and builders 96 % [VALUE] % MARKET SEGMENTATION Owners of Contracting Companies Structural Engineers and Builders
  21. 21. Sales 2013 quarter 1 quarter 2 quarter 3 quarter 4 Total Daily Production 100 250 260 150 Quarter production 9000 22500 23400 13500 2013 9000 22500 23400 13500 68400 2014 9510 25000 28000 7942 70452 2015 10000 26500 30340 3680.4 70520.4 2016 10500 27000 31000 2054.6 70554.6 2017 10500 27000 31000 2054.6 70554.6 2018 10500 27000 31000 2054.6 70554.6
  22. 22. 67000 67500 68000 68500 69000 69500 70000 70500 71000 2013 2014 2015 2016 2017 2018
  23. 23. Product Year Unit Price Expected sales Total Expected Sales Ready Mix Concrete 2013 81 68400 5,540,400 Ready Mix Concrete 2014 82 70520.4 5,777,064 Ready Mix Concrete 2015 83 70554.6 5,853,160 Ready Mix Concrete 2016 84 70554.6 5,926,536 Ready Mix Concrete 2017 85 70554.6 5,997,090 Ready Mix Concrete 2018 86 70554.6 6,067,644
  24. 24. Helpful to achieve the objective Harmful To achieve the objective Internal Origin External Origin Equipment of high technology Qualified and Motivated workers Excellent sales staff with strong knowledge of existing product. Highest Quality at Lowest Price. Weak skills in business and marketing Weak experience in the field Similar product in the market is more expensive Raw materials as aggregate and sand are highly available Competitors are highly experienced in the field Similar strong product already exists
  25. 25.  Two direct competitors are present in the market: Holcim and El Sabea.  Our key to success is to penetrate the market is new and high technological batching plant, with high capacity of production and new equipment.
  26. 26.  Holcim is a Swiss-based global building materials and aggregates company. The company also supplies ready-mix concrete and asphalt including associated construction services.  After a visit to the field this SWOT analysis took place: Helpful to achieve the objective Harmful To achieve the objective Internal Origin  Having two mixing machines, so if one is damaged the work won’t stop.  Large planted areas which will reduce the amount of pollution.  The two mixing machines are very small, which will lead to a low production capacity.  Having only one large Kiln, so cleaning it will stop the work. External Origin  High demand on the product due to fast urban growth.  They have only one competitor in the region.  Unsecure region.  Company location is very close to the sea which will cause corrosion to the machines (repairing costs)
  27. 27. Helpful to achieve the objective Harmful To achieve the objective Internal Origin  Having one large mixing machine, so they are capable of having high production capacity.  Having three small kilns so while repairing or cleaning one of them the production won’t stop.  If the mixing machine is damaged the production will stop.  No planted areas which will not help in reducing the amount of pollution. External Origin  High demand on the product due to fast urban growth.  They have only one competitor in the region.  Unsecure region.  Company location is very close to the sea which will cause corrosion to the machines (repairing costs)
  28. 28. Weight Rating Weighted Score Rating Weighted Score Rating Weighted Score Quality 0.30 4 1.2 4 1.2 3 0.9 Lowest Price 0.25 4 1 3 0.75 3 0.75 Customer Retention 0.25 4 1 4 1 3 0.75 Location 0.20 3 0.6 2 0.4 2 0.4 Total 1 3.8 3.35 2.8 Key Success Factors TCF HolcimEl Sabea
  29. 29. Industry Competitors Potential Entrants Buyers Substitutes Suppliers
  30. 30. Industry Competitors • Two experienced competitors are present in the market Potential Entrants • It is not very easy to start this business, so threat of new entrants is not high Buyers •Buyers can buy the product from others companies. •Low and well-chosen prices will attract buyers, so their power on the company is not that high. Suppliers • There many suppliers of rocks, aggregates, sand and other concrete raw materials. Substitutes • Concrete can’t be substituted by any other product, • Buyers may get product from others companies.
  31. 31. Forces Importance(1 to 5) Threat to industry (1to 5) Weighted score Rivalry among existing firms 4 3 12 Bargaining power of suppliers 2 2 4 Bargaining power of buyers 2 3 6 Threat of new entrants 1 3 3 Threat of substitution 2 3 6  Total Weighted Score = 12 + 4 + 6 + 3 + 6 = 31  Minimum Score = 5 (very attractive)  Maximum Score = 125 (very unattractive)  31 is closer to 5 than 125 so the project is fairly attractive.
  32. 32. Questions Very Good Good Average Bad Very Bad Total What do you think about the aggregates amount used in this sample? 12 32 5 1 0 50 What do you think about the strengths of this concrete? 30 15 3 0 2 50 What do you think about the silos? 45 4 1 0 0 50 What do you think about the prices? 29 11 8 2 0 50 What do you think about the quality? 33 7 10 0 0 50 What do you think about the delivery timing? 45 5 0 0 0 50 What do you think about the relation with the company? 39 5 4 2 0 50
  33. 33.  A technical study has been elaborated to determine the basic specification of the project and the annual costs. Project needs have been detailed from:  The fixed costs: salaries, amortization.  The variable costs: these variables are divided on 3 sectors (raw material, power and maintenance).  Raw materials,  Working power,  Machines and equipment,  Human resources (managers and workers).  Two kinds of costs have been shown:
  34. 34.  Site location: the project is located in Tripoli – North Lebanon.  The average total area is approximately 8.000 square meters which is only 100 m away from the main highway and it’s furnished with phone lines and water supplies. It’s possible to provide employees with the lowest possible costs.  Building regularization: an erect support wall should be fixed to maintain the concrete mixer.
  35. 35.  The raw material is put in containers which are filled by a bulldozer.  Ready mixed concrete production is done by mixing: coarse aggregate, fine aggregate, sand, cement powder, chemicals and water.
  36. 36.  The mixed product is emptied in a truck.  It’s noted that the production rate is 36 meters per hour of concrete. Therefore, on the basis of maximum power on a 9 daily hours shift give us 324 meter per day.  The working power of the machine is estimated to be 70% of the maximum power, the real annual production is 82,782 m ( 324 m* 365 *70% ) The factory needs electrical power, electricity will be provided by a power generator (KVA500) for operating the factory.
  37. 37.  Product Essence: it’s produced depending on the desired type and sizes. The measuring unit is meter.  Product Employment: In general it’s concentrated on the contracting sector.  Taxes on revenues: The incomes are subjected to the taxes and paid to the ministry of finance and since the company is a SARL the tax is calculated as per 15% on the out coming profit after deducing the expenditures.
  38. 38. After studying the major specifications for running the project, the annual costs can be determined as fixed and variable costs. Variable costs: are expenses that change in proportion to the activity of a business, they are related to raw material quantity utilized in production process. The quantity is shown as bellow table: 250 300 350 400 450 Cement 23.65 28.38 33.11 37.84 42.57 Sand 7.328 6.576 5.712 5.232 4.944 Coare Agregate 1.748 1.35125 2.07575 1.8515 2.11025 Fine Agregate 1.42025 1.35125 1.38575 1.48925 1.2765 Powder 1.73 1.85 1.66 0.19 1.79 Chemicals 3.542 3.542 3.542 3.542 3.542
  39. 39. 8 mixers, 1 Bulldozer, 2 Pumps. Price per Unit ($) Total Price Land 250,000 250,000 Batching Plant 600,000 600,000 Mixer 45,000 8*45,000 = 360,000 Bulldozer 50,000 50,000 Pump 75,000 2*75,000 = 150,000 Office Tools 30,000 30,000 Work Tools 10,000 10,000 Build Warehouse and Rooms 60,000 60,000 Stock 100,000 100,000
  40. 40. Fixed costs: Amortization: in this project amortization may differ between 8% and 15%. Statement Amortization 2 ready made house 8% Concrete mixer 8% Transport machines 10% Office tools 15% Batching plant Trucks Office tools Ready made house Total Amortization Price ($) 600000 560000 30000 60000 RATE 8% 10% 15% 8% Amortization 48000 56000 4500 4800 113300
  41. 41. Salaries expenses: annual salaries have reached 201600 US $. Position Salary/Month ($) Engineer 2000 Accountant 800 Salesmen (2) 900/salesman Drivers (10) 1000/driver Drivers Helpers (2) 600/helper Worker (2) 500/worker
  42. 42. Investment (at year 0  2018) $$$ Batching Plant 600.000 Trucks 8* 45 000 mixer + 2 * 75 000+ 50.000 =560 000 Office Tools 30 000 Work Tools 10 000 Stock 100.000 Land 250.000 Build warehouse and rooms 60.000 Total Costs 1.610.000
  43. 43. 2012 2013 2014 2015 2016 2017 2018 200.000 100.000 100.000 100.000 100.000 360.000 50.000 50.000 50.000 50.000 30.000 10.000 50.000 50.000 250.000 60.000 960.000 200.000 150.000 150.000 150.000 0 0 TOTAL COST 1.610.000
  44. 44. 2013 2014 2015 2016 2017 2018 Quantity 68,400 70,452 70,520 70,554 70,554 70,554 Average price / unit 81 82 83 84 85 86 Sales 5,540,400 5,777,064 5,853,160 5,926,536 5,997,090 6,067,644 FIXED COSTS 1,451,600 1,451,600 1,451,600 1,451,600 1,451,600 1,451,600 Amortization 113,300 113,300 113,300 113,300 113,300 113,300 EBIT 3,975,500 4,212,164 4,288,260 4,361,636 4,432,190 4,502,744 Interest expenses( 5% ) 198,775 210,608.2 214,413 218,081.8 221,609.5 225,1377.2 EBT 3,776,725 4,001,555.8 4,073,847 4,143,554.2 4,210,580.5 4,277,606.8 TAX (15 %) 566,508.75 600,233.37 611,077.05 621,533.13 631,587.075 641,641.02 Cash Flow 3,210,216.25 3,401,322.43 3,462,769.95 3,522,021.07 3,578,993.425 3,635,965.78 Total revenues 20,841,288.91
  45. 45. 0 500000 1000000 1500000 2000000 2500000 3000000 3500000 4000000 2013 2014 2015 2016 2017 2015 2018
  46. 46. Thank You !!!

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