Case study report - Fly Ash Brick Project.pdf - 1 Executive...

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2 1. Executive Summary Fly Ash Brick Project is the idea of Rajiv Sharma (“Sharma”), which involves the manufacturing and selling of bricks made out of fly ash, a residue obtained from combustion of coal which is widely available in India due to the high utilisation of coal in the production of thermal power. Million tons of fly ash are produced in India every year and this production is increasing as more thermal power plants are built up to meet the demands in the country. Other than the environmental problem that caused by a massive production of fly ash, the handling of the waste is another challenge for the country as the disposal of fly ash waste would need a huge size of land. Given that the waste will increase in the future, it is imperative to innovate the utilization of the fly ash waste. According to a research, fly ash is good to be used in a building material such as bricks and since there would be an increase in construction activities, it is anticipated that the demands for bricks would also be equally increased. Based on such preliminary analysis, Rajiv Sharma (“Sharma”) has come up with a plan to build a fly ash brick manufacturing plant. Sharma, who has years of experience in the construction industry, knew that the expansion of construction activities will raise the demand for bricks and therefore would increase the potential of fly ash bricks in the market. Sharma was of the view that the market has potential to support the ash bricks demands since India has forecasted a shortage of 20 million to 70 million home units to accommodate the increasing population. Hence, it will be a great business opportunity in the construction industry to sell a new product such as fly ash bricks, that is much more reliable than conventional bricks.
3 2. Abstract Sharma had approached his friend, Alok Gupta (“Gupta”) and further discussed with Gupta on the business plan for the proposed fly ash manufacturing. Basically, the plant had the capacity to produce 4 million bricks per year but nonetheless, the production would be much depending on the market demand as well as the capability and productivity of the plant and equipment. After considering those factors, the partners estimated to sell 2.4 million bricks annually at an average price of Rs7,000 per 1,000 bricks. They have also agreed for an initial investment of Rs.10 million in which Rs.6 million would be raised from their own resources while the balance is to be obtained from a loan where they managed to get a loan from a local bank at an interest rate of 12% per annum against the mortgage of the equipment. In addition to the above, Sharma has also forecasted the investment amount in fixed assets, working capital, and monthly expenses and other relevant costs.

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