Financial Feasibility for SSP
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Transcript of Financial Feasibility for SSP
Financial Feasibility For SSP Factory
RITURAJ PRIYADARSHI DAS
KHR2009PGDMF147
FINANCE
Faculty Guide:Ms. RAKHI SHRIVASTAVA
Agenda
Industry Profile & About The Company
Financial Feasibility
Objective
Detailed Study
Recommendations & Conclusion
Project Description - Glance
Step 1
Step 2
Step 3
Step 4
Step 5
Step 6
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Industry Profile
•National Fertilizers Limited
•Fertilizers & Chemicals Travancore Limited
•Rashtriya Chemicals & Fertilizers Limited
PUBLIC SECTOR COMPANY
•Deepak Fertilizer and Petrochemicals
Corporation Limited
•Bharat Fertilizer Industries Limited
•Gujarat Narmada Valley Fertilizer Co. Limited
PRIVATE SECTOR COMPANY
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Rashtriya Chemical and Fertilizers Ltd.
•Incorporated in 1978 with the re-organisation of erstwhile FCI
•Authorised Capital ` 800 crore
•Paid Up Capital ` 551.69 crore
•ISO-14000, ISO- 9002 & OHSAS 18000 accredition for Thal & Trombay
•Rated amongst Top 10 PSU’s on the basis of MOU performance for the year 2004-05, 2005-06, 2006-07, 2007-08
•Takes part in various Socio – economic activities , CSR activities etc.
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A View of Thal Plants
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Community Service : Sewage Treatment Plant
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Start-Up Capital Requirements
Start-Up Capital Sources
Potential Returns for Investors
Financial Feasibility
Assessment of the financial aspects of a Venture/Plan or Project.
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Project At A GlanceName of the project : Single Super Phosphate fertilizer Project.Location : ThalStream Days : 300Project Time Schedule : 12 MonthsTotal Project Cost : ` 51.51 CroresRealization
: MRP ……..3200 `/MT Subsidy...… 4400 `/MT
Total……....7600 `/MT
Annual Production : 3,00,000 MTPA @ 100% loadCost of Production : 5859.98 `/MTManpower : 70 Nos.IRR : 50.17%Payback Period : 2.29 years
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Objective
•To analyze the Financial Feasibility for setting up of a new factory/Venture.
•To study the constituents of the cost sheet viz.; Variable cost, Fixed cost, Capital cost, IDC, Contribution, Working Capital Management etc. for the factory perspective.
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Product Description
SSP Fertilizer : Single Super Phosphate
Molecular formula : Ca(H20P4)2.H2O Molecular Weight : 234.05 g Moisture per cent by weight : maximum 12.0
Pack : in 50kg bag with inner poly bag.
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Detailed Study
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Manufacturing Process
Ca10(PO4)6F2 + 7H2SO4 + 3H2O 3Ca(H2PO4)2.H2O + 7 CaSO4 + 2HF
Major Raw Materials and their availability
Rock Phosphate : 0.58 MT
Sulphuric Acid (98%) : 0.40 MT
Power : 25 KW
Manpower Requirement
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Designation Strength
Workers/Majdoors 28
Operators 20
Technicians 12
Supervisor 8
Manager 1
General Manager 1
The Overall Time Schedule is 12 months with a workforce of 70 employees.
Project Capital Cost
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Sr.
No.
Description Total Cost
(` Crore)
1. Plant 22
2. Offsite and infrastructure
Facility
15.75
3. Pre-operative expenses 0.1
4. Contingencies 1.89
5. Commissioning expenses 0.5
6. Financing charges 1.79
7. Margin money on working
capital
9.47
Total Project Cost 51.51Debt: Equity= 2:1
Working Capital , IDC , Contingency
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Working Capital : The short term requirement of the company. Margin money(30%)+ Loan component(70%).
Contingency : Cover up of any unforeseen expenditure.
IDC : Interest incurred during the construction period.
Cost of Production
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Items Units `/Unit
Rock Phosphate MT 6000.43
Sulphuric Acid MT 3004.95
Water M3 40
Power KWh 6
Bags No. 14
Items `/MT
Variable Cost 5352.23
Fixed Cost 507.75Total 5859.98
Capacity of SSP to be produced : 1000MTPD
Stream Days : 300
Net Realization , IRR, Payback Period
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Items `/MT
MRP 3200
Subsidy 4400
Total 7600
Less Freight 700
Net Realization 6900
Realization : Breakdown of the total cost of SSP
IRR : Rate of return , 50.17%
Pay back Period : 2.29 years
Sensitivity Analysis
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Analysis of the parameters when there is a deviation from theoriginal value so as to note down the difference in the values,if the scenario was different.
The trends in the sensitivity table show us :Increase in the price, Cost of production increases with decrease in IRR and increase in the payback time & Vice Versa.
sensitivity.xls
Links
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Excel File: Sheets1.xls
Recommendations & Conclusions
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•Average PAT/year: `24.02 Crore Positive revenue
•Internal Rate of Return: 50.17% Beneficial
•Payback time: 2.29 years Increase in Reserves
Hence, it can be said that in order to increase the returns, the companyshould decrease the Cost of Production which would ultimately lead to better reserves of the company
THANK YOU
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