READYMIX CONCRETE PLANT IN KERALA

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1 PROJECT PROFILE ON READYMIX CONCRETE PLANT IN KERALA Prepared by: Kerala State Industrial Development Corporation September 2012

2 PROJECT PROFILE FOR READY MIX CONCRETE PLANT INTRODUCTION Ready-Mix Concrete (RMC) is a ready-to-use concrete, with predetermined mixture of cement, aggregates, additives and water. It is manufactured in a centrally located factory (Batching plant) according to a set recipe or as per specifications of the client. It is then delivered to the client s worksite, often in special trucks (Transit mixer) capable of mixing the ingredients of the concrete en route. This results in a precise mixture, allowing specialty concrete mixtures to be developed and implemented on construction sites. RMC is preferred to on-site concrete mixing because of the precision of the mixture and reduced worksite confusion. It facilitates speedy construction through programmed delivery at site and mechanized operation with consequent economy. It also decreases labour, site supervising cost and project time, thereby resulting in savings, proper control and economy in the use of raw materials. It assures consistent quality through accurate computerized control of aggregates and water as per mix designs. It minimizes cement wastage due to bulk handling and there is no dust problem and therefore, pollution-free. MARKET The Ready mix concrete business in India is still in its infancy; where as in developed countries, nearly 80% of cement consumption is in the form of ready mix concrete and 20% in the form of recast. In India, ready mix concrete accounts for less than 5% of consumption, and as much as 82% of cement consumption is in the form of site-mixed concrete. While 70% of cement produced in a developed country like Japan is used by RMC business, in India, only around 2% of total cement production is used by RMC. The growth of RMC in India was predominantly driven by demand from metros (Tier-1) and Tier-2 cities. But now, since the focus has shifted to Tier-3 & 4 cities, the demand for RMC has shown steady increase. Anticipating huge potential for the product, cement majors, including Associated Cement Companies, Grasim, L&T, India Cements, Priyadarsini Cements, Chettinad Cement and Madras Cements, have forayed into the RMC business and the share of RMC is expected to go up from present levels of around 5% of the total cement production to the global average of 70%, according to industry players.

3 PROJECT PARAMETERS Capacity The production capacity of a Ready-Mix Concrete Plant varies according to the capacity of the Batching Plant used. Most commonly used RMC Plants will be having a production capacity of 30 m 3 /hr (90,000 m 3 /year, based on 300 working days and single shift of 10 hours). Land An extent of around 1 acre of dry land is required for setting up a Ready-Mix Concrete Plant. Location The project is proposed to be located at Kochi. Raw Material & Utilities The Raw materials that go into production of concrete are Cement, Aggregates (Sand & Metal), Additives and Water. M20 grade concrete is the most widely used, where the Cement/Sand/Metal/Water mix is in the ratio of 1 : 1.5 : 3.5 : 0.5. Since uninterrupted availability of raw materials is the most fundamental success factor for any RMC Plant, options for backward integration (quarry/ metal crushing unit/cement plant/clinker grinding unit) should be carefully considered and analysed while choosing the Plant location. Plant & Machinery The main items of mechanical equipment involved in the ready-mix concrete manufacture are the Concrete Batching Plant, Transit Mixer and Concrete Pump. M/s. Schwing Stetter India (P) Ltd is the leading supplier of RMC equipments in the country. The total cost of machinery for a 30m 3 /hr RMC Plant is around Rs.200 Lakhs. Manpower The total manpower requirement for a typical RMC Plant would be around 20 numbers. Cost of the Project The total project cost for setting up a 30m 3 /hr RMC Plant would be around Rs.400 Lakhs, including cost of 1 acre land. The project implementation period would be 12 months.

4 Means of Finance The proposed means of Finance for the Project is given below: Equity Promoters contribution Unsecured Loan Term Loan /KFC/Banks/FIs Total Project Cost The Debt-Equity ratio is 1:1. Sales Turnover The Revenue at optimum utilisation (80%) would be around Rs Lakhs. FINANCIAL INDICATORS The Profit after Tax is Rs.123 Lakhs. The Break Even Point (BEP) for the project is 58%. The Debt Equity Ratio (DER) for the project is 1:1 Average Debt Service Coverage Ratio (DSCR) is 3.78 The average Internal Rate of Return (IRR) for the project is 28.68%. CONCLUSION Ready Mix Concrete is a modern technique of production of concrete in large quantities away from the actual site of placing. It is very useful in cities where demand of concrete is very high and construction sites are in congested areas, where mixing on site is not possible. The Supervisory and labour costs associated with production of RMC is less, and the quality of concrete is high. It is suitable for huge industrial and residential projects where time plays a vital role. For further details please contact Kerala State Industrial Development Corporation Ltd.

5 Disclaimer: The findings contained in this Project Profile are based on the initial information collated through primary and secondary research, which is indicative in nature. Reference herein to any specific commercial product, process, service by trade name, trademark, manufacturer, or otherwise, does not constitute or imply its endorsement, recommendation, or favoring by or any entities thereof.