READY-MIX CONCRETE

BATCHING PLANT
FEASIBILITY STUDY

By

EVERLASTING CEMENT FIXING, INC.

Sto. Niño, Carmen, Davao del Norte
 I. DESCRIPTION OF PRODUCTS

Everlasting Cement Fixing, Inc. is a provider of Ready-mix concrete products in Davao del Norte
and its surrounding areas.

Ready-mix concrete is concrete that is manufactured in a batching plant, according to a set

standard mix and then delivered to a work site by truck mounted in–transit mixers. This results in a
precise mixture, allowing specialty concrete mixtures to be developedand implemented on construction
sites.

Ready-mix concrete is preferred over on-siteconcrete mixing because of the precision of the
mixture and reduced work site confusion. Ready-mix concrete, or RMC as it is popularly called, refers to
concrete that is specifically manufactured fordelivery to the customer's construction site in a freshlymixed
and plastic or unhardened state. Concrete itself isa mixture of Portland cement, water and
aggregatescomprising sand and gravel.

Ready-mix concrete is used in the construction of bridge, dam etc., overhead roads, or viaducts,
pools, and multi-storey buildings etc. Factors that favor the use of Ready-Mix concrete includes, the
potential of portability, as the machinery can be brought directly to the construction site, there is the
greater element of automation and precision in the concrete mixing, thus, there is a much higher quality
and more constituent uniformity and increase stability at a production rate as much as ten times faster
compared to site-mixed concrete.

The superior quality is attributed to the use of sophisticated plant and equipment, the strict control
of quality of all ingredients through rigorous testing, the application of stringent controls on process
parameters, and the meticulously monitoring of key properties of concrete.All these result in providing
uniform and assuredquality of concrete to customers. In contrast, in atypical site-mixed concrete there is
poor control onthe quality of input materials, in the batching of ingredientsand in the mixing of concrete,
thus the resultant quality ofconcrete is poor, non-uniform and inconsistent.

The mechanized operations at ready-mix plants ensure that construction activities are speeded up.
While the production output from a typical site-mixed concrete operation using 8/12 mixer is around 4-5
m3/hour, the output from a ready-mix plant is 30-60m3/hour. Thus there is nearly 10-fold increase in the
output which translates into direct savings to the customer.

When using RMC, customers are not required to procure and store cement, aggregates, sand,
water and admixtures at site. This not only drastically reduces the space requirements at construction sites
but also minimizes efforts on the part of customers to procure different materials, ensure their proper
storage and check their quality parameters from time to time.

Site-mixed concrete is a labour-intensive operation and managing large labor force is a significant
inconvenience for the customer. With the use of RMC the labor requirements are minimized considerably,
thus benefiting the customer.
 In site-mixed concrete job, wastage occurs in handling of all materials, including cement. The
latter is generally of the order of about 2-3 kg per 50 kg bag of cement. All such wastages are
considerably minimized at RMC plant facility due to the use of mechanical conveyances which
automatically measure and deliver the correct proportions of raw materials to the process machinery.

The Increased speed of construction coupled with reduction in labor costand wastage results in
considerable savings to customers. Further, the improved quality of concrete translates into enhanced
long-term durability of the concrete structures formed, thus minimizing the maintenance and repair costs.
Overall, when one considers the lifecycle costs, the use of RMC become cost-effective in the long run.
The benefits directly accrue to thecustomers.

Being a fixed facility, pre-mixed plants of RMC are routinely inspected and must pass the
pollution control norms as duly certified by thestate pollution control authorities. This is in contrast to
site-mixed concrete where the mixer trucks are mobile and the loading areas are transient or itinerant. As
mentionedearlier, wastages are reduced drastically with the useof RMC. RMC plant optimizes the mix
proportions using the maximum possible potential from eachmaterial ingredient. All these improve the
environmental performance of concrete.

The plant at Sto. Nino, Carmen, Davao del Norte uses SICOMA, a twin shaft central mixing plant
that provides an output of up to 150 cubic meter per hour. This is supported by four cement silos with a
capacity of 5000 bags per silo for a total of 20,000 bags. The plant has more than 12 truck mixers that are
ready to serve large volume orders.

II. GOALS

Everlasting Cement Fixing, Inc. is a start-up company which intends to operate in mid 2018. The
industry is ever expanding and it is envisioned to be the lead player and trusted partner in providing
premium ready-mix concrete products in Davao del Norte province and its surrounding areas. The
Company’s goal is to reliably provide our clients concrete of the best quality. The company will be in the
forefront in adopting new designs and invest in new technologies that would help in competently and
competitively deliver upon clients’ expectations.

III. COSTS AND BUDGETING

FACILITY COST
1. Warehouse ₱1,511,848.00
2. Garage ₱447,388.00
3. Electrical Power Supply for Concrete Batching Plant Machine ₱4,746,582.06
4. Batching Plant ₱35,178,410.00
5. Aggregate Stockpile Building ₱2,592,608.00
6. Concrete Mixer Truck x 12 ₱27,720,000.00
7. Cement Bulk Carrier ₱526,050.00
TOTAL ₱72,722,886.06
 RAW MATERIAL COST
1. Cement ₱4,625.00 per Ton
2. Course Sand ₱400.00 per cubic meter
3. GI ₱730.00 per cubic meter
4. Water ₱2,800.00 per Ton
5. Other Additives ₱30,000.00 per Ton
6. 3/4 ₱830.00 per cubic meter

EMPLOYEE/STAFF QTY COMPENSATION PER MONTH

1. Material Engineer 1 ₱40,000.00
2. Laboratory Technician 1 ₱18,000.00
3. Electrician 1 ₱30,000.00
4. Office In-Charge 1 ₱18,000.00
5. Control Operator 3 ₱10,500.00
6. Mixer Drivers 10 ₱15,000.00
7. Heavy Equipment Operator 1 ₱15,000.00
TOTAL ₱302,500.00

IV. THE MANAGEMENT

A. The Corporate Officers; The Administration

1. Mary Lou Cheng, CPA – President

She is in charge of creating, communicating and implementing the organization’s vision, mission
and overall direction. She is also in charge of hiring, firing and managing all employees of the company.
She leads, guides, directs and evaluates all other officers, managers and employees, and ensures they are
carrying out the daily operations of the company.

She meets regularly with other officers or managers of the company to make sure that the
decisions the organization needs to make are prescient and strategic. She confirms that all officers and
managers are conveying the company’s philosophies and guidelines to their own teams so that all
employees understand the expectations of the company. She oversees all the financials aspects of the
company and maintains awareness of both external and internal opportunities for expansion, customers,
markets, new industry developments and standards.

Mary Lou Cheng is a Certified Public Accountant. She is a corporator of Backgem Energy and
Resources, Inc. She also has background in the mining industry.
 2. Demry Cano-Cheng – Corporate Secretary

The corporate secretary ensures the integrity of governance framework, being responsible for the
efficient administration of the company, ensuring compliance with statutory and regulatory requirements
and implementing decisions of the Board of Directors.

Demry Cano-Cheng has been in the media company for almost five years. Being as such she has
honed her management and organizational skills necessary for the efficient governance of the company.

3. Francis A. Cheng – Managing Head

The Managing Head is responsible and he takes the strategic decisions. He represents the
company and he has the power to make deals.

His responsibilities include:

 Formulating and successfully implementing company policy.

 Directing strategy towards the profitable growth and operation of the company.
 Developing strategic operating plans that reflect the longer-term objectives and priorities established
by the board.
 Maintaining an ongoing dialogue with the Chair of the board.
 Putting in place adequate operational planning and financial control systems.
 Ensuring that the operating objectives and standards of performance are not only understood but
owned by the management and other employees.
 Closely monitoring the operating and financial results against plans and budgets.
 Taking remedial action where necessary and informing the board of significant changes.
 Maintaining the operational performance of the company.
 Monitoring the actions of the functional board directors.
 Assuming full accountability to the board for all company operations.
 Representing the company to major customers and professional associations.
 Building and maintaining an effective executive team.

Francis A. Cheng is the owner New Hope Flour Mining Industries in Cagayan de Oro City and
has been in the business for almost five years.

B. The Financial Administration

The Accountant shall be responsible to the financial administration of the project. He records the
daily financial operations.

C. The Supervisor

The Supervisor is responsible of the production process, quality control, and leading the workers.
D. Workers

The Workers are responsible in conducting the production process, maintenance, transportation
and cleaning.

V. PRODUCT MARKET

The RMC sector in the Philippines is growing rapidly. At this time, there are only a few major
players who can fill existing demand. But the Philippines is rapidly building up its infrastructure and
cities see a spurt in verticalization. The ready mix sector is expected to play an increasingly dominant role
mainly because it is seen as the most viable option to speed up construction. RMC is also being
increasingly preferred alternative for most real estate developers because site mixed concrete is dependent
on the availability of labor which is now quite difficult to find.

Overall ready-mix penetration in the Philippines is making headway against traditional site-mixed
concrete. The demand is highest from the housing segment followed by infrastructure and industry
respectively. While earlier, demand for RMC was largely seen in the major cities, the industry has now
grown to all parts of the country particularly in the countryside where major industries are now relocating.

The global ready-mix concrete market size was valued at USD 492.2 billion in 2015. The market
is anticipated to witness immense growth over the next eight years on account of increasing domestic and
foreign investment, channelled into infrastructure development. In the Philippines, significant investments
by neighboring China, Japan, South Korea and Taiwan has increased demand for commercial and
industrial infrastructure. RMC is preferentially used as a building material for large scale developments in
residential & commercial buildings, manufacturing facilities, energy generation plants, roads, ports and
runways. The increasing trend of urbanization is another key factor which is expected to drive industry
growth over the forecast period.

VI. SCHEDULE/STEPS

1. Site Preparation;
2. Getting our name out there through advertisements and publicity;
3. Employment ads;
4. Interviews to choose the best employees;
5. Analyze competitors;
6. Set standards and internal rules of company;
7. Financial analysis and expected sales study;
8. Purchase all equipment;
9. Purchase raw materials and resources;
10. Train chosen employees to get familiar with the work;
11. Start producing.
 VII. MARKETING STRATEGY

Everlasting Cement Fixing, Inc. will focus on the following types of costumers:

1. Owners of contracting companies; and

2. Structural engineers and builders.

Its Ready-Mix Concrete however is available to anyone desiring to purchase the same.

VIII. FINANCIAL PROJECTIONS

 Production Rate: 150 tons per month

 Expected Sales per Month: ₱16,666,667.00
 Cost of running the Plant: ₱100,000.00 per month
 Net Income: ₱15,240,156.67 per month

FINANCIAL ANALYSIS
2018 2019 2020 2021 2022 2023
Quantity 1,800 1,800 1,800 1,800 1,800 1,800
Average 111,112.00 111,112.00 111,112.00 111,112.00 111,112.00 111,112.00
price/unit

Sales 100,000,000.00 200,000,000.00 200,000,000.00 200,000,000.00 200,000,000.00 200,000,000.00

Fixed Costs 8,559,060.00 17,118,120.00 17,118,120.00 17,118,120.00 17,118,120.00 17,118,120.00
Amortizations 6,060,240.505 13,332,529.111 13,332,529.11 13,332,529.111 13,332,529.111 13,332,529.111

EBIT 85,380,699.5 169,549,350.9 169,549,350.9 169,549,350.9 169,549,350.9 169,549,350.9

Cash Flow 85,380,699.5 169,549,350.9 169,549,350.9 169,549,350.9 169,549,350.9 169,549,350.9

Total Revenue 933,127,453.95

 Cash Flow per Year
180000000

160000000

140000000

120000000

100000000

80000000 Cash Flow

60000000

40000000

20000000

0
2018 2019 2020 2021 2022 2023

IX. FINDINGS AND RECOMMENDATIONS

1. Our key to success is to penetrate the market with new and high technological batching plant, with
high capacity of production and new equipment.

2. It is not easy to start this business, so threat of new entrants in not high.

3. There are only 10 batching plants already operating within Region XI.

4. There are many suppliers of rocks, aggregates, sand and other concrete raw materials.

5. Concrete cannot be substituted by any other product.

6. There is high demand on the product due to fast urban growth.