CHAPTER - 9

COST ESTIMATION

EQUIPMENTS:-

1. Jaw Crusher2. Roll Crusher3. Screen4. Hopper5. Rotary Kiln6. Cyclone Separator7. Cooler8. Storage Tank

Table 5

YEAR CEPCI Index2002 395.62007 525.42013 564.32014 588.6(Ref:-capci_2012_py.pdf) [13]

9.1 Capital Cost

9.1.1 Jaw CrusherBy Graph: (Pg , Fig , Timmerhaus)Flow rate = 1.517 kg/secCost of Jaw Crusher in 2002 = $60,000

Using formula: C1C2

= I 1I 2

C1/C2 =(395.6588.6

)

60000/C2 = (395.6/588.6)C2 = $89271.99 (2014)

CEPCI (2002) --- 395.6CEPCI (2014) --- 588.6Now according to conversion rate1$ = Rs. 60

Cost = 89271.99*60 = Rs 5356319.515

9.1.2 Roll CrusherFlow rate = 1.517 kg/secCost of Roll Crusher in 2002 = $18000 (from Graph)

Using formula: C1C2

= I 1I 2

C1/C2 = (395.6588.6

)

18000/c2 = (395.6/588.6)C2 = $26781.59 (2014)CEPCI (2002) --- 395.6CEPCI (2014) --- 588.6Now according to conversion rate1$ = Rs. 60

Cost = 26781.59*60 = Rs 1606895.85

9.1.3 ScreenCost of screen in 2007 in $ =20800 (from graph) C=20,800 (588.6/525.4) *60 =Rs 1398121.02 (2014)

9.1.4 HopperVolume of Hopper = 430.181 ft3 Material of Construction = Carbon steelSo, Cost of Hopper in 2014 = $ 10800 (from Matche.com)$1 = Rs 60So, 10800 * 60 = Rs 648000

9.1.5 Rotary KilnTotal Heat Duty = 16Million BTU/hrFlow rate = 2.5 tons/hrInclination = 3%Heat input = 1371.289 kW = 4679030.048 =4*106 Btu/hr From graph: Cost = $ 424060 (1987)Now, Cost Index in 1987 = 320So, applying the formula we get;

C1/C2 = (320

588.6)

424060 / C2 = (320 / 588.6)Cost of Kiln in 2014 = $ 780000$1 = Rs 60So, Cost of Kiln = Rs 46800000

9.1.6 Cyclone Separator Q = 3156.476 ft3/sec = 189388.5621 ft3/min From graph Cost = $38000 (1987)Now, Cost Index in 1987 = 320So, applying the formula we get;

C1/C2 = (320

588.6)

38000 / C2 = (320 / 588.6)Cost of Cooler in 2014 = $ 70000$1 = Rs 60So, Cost of Cooler = Rs 4200000

9.1.7 CoolerArea = 63.9268 ft3

Working pressure = 16.1695 psigCost in 2002 =$ 7500 Cost in 2014 = $ 11158.99 = Rs 669539.4

9.1.8 Storage TankVolume of Storage Tank = 18.026 m3

(Assuming storage for 1 day.)Cost in 2002 = $ 15000

Now, applying the formula = C1C2

= I 1I 2

C1/C2 = (395.6588.6

)

15000/c2 = (395.6/588.6) = $ 22,295.4545$1 = Rs 60So, Cost of Storage Tank = Rs 1337727.27Total purchased cost = Rs 62016601.67

9.2 Total Capital Investment

TCI = Fixed Capital Investment + Working Capital + Start up.

FCI = Total direct cost + Total indirect cost

Total direct cost = Total offsite cost + Total onsite cost.

Table 6

Direct cost Fraction of delivered equipment

Cost(Rs)

Purchased equipment Rs. 62016601.67

a. Onsite Cost

Land 20000m2 (Rs 250/m2) Rs. 5000000

Delivery(% of PEC) 0.10 Rs. 6201660.167

Delivered Equipment cost

PEC + (0.10 *PEC) Rs. 68218261.84

Purchase Installation 0.45 DEC Rs. 30698217.83

IPC 0.18 DEC Rs. 12279287.13

Piping 0.16 DEC Rs. 10914921.89

Electric system 0.10 DEC Rs. 6821826.184

b. Offsite cost

Building 0.25 DEC Rs. 17054565.46

Yard 0.15 DEC Rs. 10232739.28

Service Facilities 0.40 DEC Rs. 27287304.74

Total Direct Cost Rs. 189308784.5

Indirect Cost

Engg. & Supervision 0.33 DEC Rs. 22512026.41

Cost expansion 0.41 DEC Rs. 27969487.35

Legal expansion 0.04 DEC Rs. 2728730.47

Contractor’s fees 0.22 DEC Rs. 15008017.6

Contingent cost 0.35 DEC Rs. 23876391.64

Total Indirect Cost Rs. 92094653.47

FCI = Total Direct Cost + Indirect Cost

= Rs.189308784.5 + 92094653.47

= Rs. 281403438

Working Capital = 0.70 of DEC

= Rs. 47752783.29

Start up = 0.10 * FCI

= Rs. 28140343.8

Total Capital Investment = FCI + WC + Start up

=Rs 357296565.1

9.3 Estimation of Total Product Cost

Total Product Cost = Manufacturing Cost + General Expenses

Now,

MC=Direct production cost + Fixed charges + Plant overheads

Now, 1st we need to find cost of RM used

Table 7

Raw Mat. Qty.

(kg/yr)

Price

(Rs/kg)

Cost per year(Rs)

MgCO3 43269345.5 (kg/yr) 36 1557696438

According to mass balance,

MgCO3 = 5463.27 kg/hr * 330 * 24

= 43269345.5 kg/yr

Cost = Rs. 36 / kg

= Rs. 1557696438

Now, Raw Material Cost is 20 - 70 % of Total Production Cost, considering Raw material cost to be 60% of total production cost we have:

TPC = 1557696438/0.60 = Rs. 2596160730

Direct Production Cost:

Table 8

Parameters % Factor Cost(Rs)

Operating Labour(OL) 10% of TPC Rs. 259616073

Direct Supervision & clerical labour 10% of RM Rs. 155769643.8

Utilities 10% of TPC Rs. 259616073

Maintenance 2% FC Rs. 5628068.76

Labour charge 5% of OL Rs. 12980803.65

Total direct production cost = Rs. 690910662.2

Fixed charges % Factor Cost (Rs)

Local Tax 1% of FCI Rs. 2814034.38

Prof. Tax 4% of FCI Rs. 11256137.52

Financial tax 10% of TCI Rs. 35729656.51

Depreciation 10% of FCI + 2% of Building Cost Rs. 28481435.11

Total Rs. 78281263.52

Plant Overheads

40% of Operating Labour = Rs. 103846429.2

General expenses

Administrative Cost 10% of Operating Labour Rs. 25961607.3

Distribution & Marketing Cost 2% of TPC Rs. 51923214.6

R&D 1% of TPC Rs. 25961607.3

Total Rs. 103846429.2

Manufacturing Cost = Rs. 873038354.9

Total Product Cost = Rs 873038354.9 + 103846429.2

= Rs. 976884784.1

9.4 Profitability Analysis

Total Revenue = Total production * cost/kg of MgO

= (20* 106) kg * Rs 60/kg

= Rs. 1200000000

PBT = Revenue - Total Product Cost

= Rs. 1200000000 - Rs. 976884784.1

= Rs. 223115215.9

Tax rate = 33 %

Profit after Tax = (1-0.33) * PBT

= 0.67 * 223115215.9

Net Profit = 149487194.7

Rate of Return = Net Profit / Total Capital Investment

= 149487194.7 / 357296565.1

= 0.41838 = 41.84%

Payback Period = Total Capital Investment / Net profit

= 357296565.1 / 149487194.7

= 2.39 years