Study and Action Plan for Promoting Downstream Plastic Processing & Allied Industries Mott MacDonald

On Assam Gas Cracker Project NEDFi

Final Report- Volume II (Project Profiles)
North Eastern Development Finance Corporation Limited
Basundhara Enclave
B.K.Kakati Road, Ulubari
Guwahati
Assam- 781007

Study and Action Plan

for Promoting
Downstream Plastic
Processing & Allied
Industries
on the Assam Gas
Cracker Project
Final Report- Volume II
(Project Profiles)

October 2009

Mott MacDonald
A-20, Sector-2,
NOIDA-201301
Tel: +91 120 2543582-85
Fax: +91 120 2543562

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Study and Action Plan for Promoting Downstream Plastic Processing & Allied Industries Mott MacDonald
On Assam Gas Cracker Project NEDFi
Final Report- Volume II (Project Profiles)

Study and Action Plan

for Promoting
Downstream Plastic
Processing & Allied
Industries
on the Assam Gas
Cracker Project
Final Report- Volume II
(Project Profiles)

Issue and Revision Record

Rev Date Originator Checker Approver Description

Iram Anisur Shoma

Draft Report- Volume II
8th May Abdullah, Rahman, Majumdar
01
2009 Archana Project Profiles
Chandrikadevi Iram Abdullah
Iram Anisur Shoma
th
5 October Abdullah, Rahman, Iram Majumdar Final Report- Volume II
02
2009 Archana Abdullah Project Profiles
Chandrikadevi

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Final Report- Volume II (Project Profiles)

This document has been prepared for the titled project or named part thereof and should not be relied upon or used for any
other project without an independent check being carried out as to its suitability and prior written authority of Mott
MacDonald being obtained. Mott MacDonald accepts no responsibility or liability for the consequence of this document
being used for a purpose other than the purposes for which it was commissioned. Any person using or relying on the
document for such other purpose agrees, and will by such use or reliance be taken to confirm his agreement to indemnify
Mott MacDonald for all loss or damage resulting therefrom. Mott MacDonald accepts no responsibility or liability for this
document to any party other than the person by whom it was commissioned.
To the extent that this report is based on information supplied by other parties, Mott MacDonald accepts no liability for any
loss or damage suffered by the client, whether contractual or tortious, stemming from any conclusions based on data
supplied by parties other than Mott MacDonald and used by Mott MacDonald in preparing this report.

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Final Report- Volume II (Project Profiles)

List of Contents Page

Chapters and Appendices

1 Project Profiles 1

2 Pond/Canal Lining 3

3 Disposable Syringes 11

4 Drip Irrigation System 18

5 Geo-Textiles 24

6 Greenhouse Film 33

7 HDPE Pipes 39

8 Moulded Furniture 46

9 Pre-fill PP Polymer 52

10 Toys 58

11 Woven Sacks 64

12 HDPE Mug, Bucket, Containers and PP Comb 70

13 HDPE Small Bottles and Containers 77

14 HDPE Mosquito Nets 83

15 LLDPE Bio-Degradable Sheets/Carry Bags 88

16 PP Blow Moulded Plastic Products 94

17 Moulded Luggage 100

18 Synthetic Wood 105

19 LLDPE Multi-layer Film 111

20 Water Tanks 117

21 Plastic Crates 123

22 Tarpaulins and Covers 130

23 Bi-Axially Oriented Polypropylene (BOPP) Films 138

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24 Leno Bags 145

25 Ropes 150

26 PP Disposable Plastic Cups/ Glasses 156

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1 Project Profiles

As detailed in Volume I of the report, as part of our Scope of Work for the Study and Action Plan for
Promoting Downstream Plastic Processing and Allied Industries, we have prepared the Product
Profiles for the following products:

1. Pond/Canal Lining

2. Disposable Syringes

3. Drip Irrigation Systems

4. Geo-Textiles

5. Greenhouse Film

6. HDPE Pipes

7. Moulded Furniture

8. Pre-fill PP Polymer

9. Toys

10. Woven Sacks

11. HDPE Plastic Combs, Buckets, Mugs etc.

12. HDPE Small Bottles, Small Containers

13. HDPE Mosquito Nets

14. LLDPE Biodegradable Sheets and Carry Bags

15. PP Blow Moulded Plastic Products

16. Moulded Luggage

17. Synthetic Wood

18. LLDPE Multi-layer Film

19. Water tanks

20. Plastic Crates

21. Tarpaulins and Covers

22. BOPP Films

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23. Leno Bags

24. Ropes

25. PP Disposable Plastic Cups/Glasses

The subsequent sections of this report cover the project profiles of the above listed products.

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2 Pond/Canal Lining

2.1 Introduction

Geo-synthetics is the collective term applied to thin, flexible, sheets of material incorporated in or
within soil to enhance its engineering performance. Applications of geo-synthetics mainly fall within
the domain of civil engineering applications. Geo-synthetics as a separate market segment have been
developed and being used at an increasing pace for a greater number of geotechnical applications. The
specific families of geo-synthetics are focused on different categories, such as, geo-textiles, geo-grid,
geo-nets, geo-membranes, geo-synthetic clay liners, geo-pipe, geo-composites and others.

Geo-membranes are a type of geo-synthetic material. They are impermeable membranes used widely
as cut-offs and liners. Until recent years, geo-membranes were used mostly as canal and pond liners.
Geo-membranes are made of various materials. Some common geo-membrane materials are Linear
Low-Density Polyethylene (LDPE), High-Density Polyethylene (HDPE), Polyvinyl Chloride (PVC),
Polyurea and Polypropylene (PP). Another type of geo-membrane is bituminous geo-membrane,
which is actually a layered product of glass and bitumen-impregnated non-woven geo-textile.

In addition to UV and chemical resistance, LLDPE lining sheets exhibit a high degree of flexibility.
Greater flexibility provides increased conformance to subsistence and differential settlement. High
puncture elongation properties make LLDPE liners ideal in applications where conformances to sub
grade irregularities increase the possibility of puncture.

2.2 Market Potential

Geo-membranes are used in the lining of raw water reservoirs, effluent/ desalination/sludge plants,
artificial lagoons/lakes, evaporation pond/leaching pond/ash pond, canals/water storage
tanks/swimming pools. Liners can be made out from Linear Low Density Polyethylene (LLDPE)
fabrics.

In India, research institutions are doing a commendable work in promoting technical textiles,
particularly in the Homotech and Meditech fields but a lot remains to be done. Technical textiles have
a great future in India. Technical textiles do not need any special machinery. China is one of the
manufacturers of this machinery and has allotted almost one full Chinese hinterland solely to the
development of machinery for technical textiles. Even today, there are a few units in India especially
those located in Maharashtra, manufacturing technical textiles in various formats. Units in India, both
existing and those in the pipeline can be assured of sustained demand in various fields going by the
economic activity in India.

The Geo-technical textiles market which includes geo-textiles, geo-membranes and civil engineering
textiles was estimated to be worth Rs. 999 crores in 2005-06 in the country. This market is expected to
grow at about 10% in the coming years.

The Government of India has also extended its support by including technical textile projects under
the “Textile Up-gradation Fund Scheme” whereby intending units will be assured of both 10% capital
subsidy and a 5% remission in interest rates charged by banks.

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2.3 Plant Capacity

The production basis for a typical unit would be as under:

• Working hours/day: 16 (2 shifts)

• Working days in a year: 300

• Annual Production capacity: 1000 TPA LLDPE Liners

The unit has been assumed to operate at 70%, 80% and 90% of its installed capacity in the first,
second and third year and at 100% capacity from fourth year onwards of its operation.

2.4 Process, Plant & Machinery (Details & List of Machinery Suppliers)

Polyethylene resin is pumped directly from storage silos or from totes on the floor to hoppers which
are placed above the extruder.

Hoppers feed resin into the extruder. The resin is heated to the melting point in the extruder barrel. It
is conveyed through the barrel by the rotation of a specially designed screw which, in conjunction with
heating elements along the barrel, provides consistency to produce a molten polymer stream.

The molten material is forced through a screen pack, which act as a final filter for impurities or
contaminants, and up through a die. It extrudes from the circular die as a film tube (“bubble”), pulled
vertically by a set of nip rollers located at the top of a cooling tower. An IBC (Internal Bubble
Cooling) unit, part of the extruder, maintains consistent bubble diameter.

At the top of the tower the bubble passes through a collapsing frame and is pulled through the nip
rollers. The material is directed back toward the ground, and continues cooling as it approaches a
winding machine. Before being taken up by the winder, the tube is split and spread to its deployable
width. The winder rolls the finished geo-membrane onto a specially made heavy-duty core.

As the geo-membrane is rolled and cut to length, thickness measurements are made across its full
width and a full roll width sample is taken for QC testing. Tests include density, uni-axial tensile
properties (most significantly break properties), carbon black content and dispersion, Oxidative
Induction Time, and Stress Cracking Resistance. All tests are not be performed on every roll, and each
test is performed at a different frequency. A sample of material is archived for reference purposes.

A QC certificate is prepared for each roll, listing the roll number, the resin lot and all test results
covering that roll. A copy of the certificate for each roll will be sent to the project engineer or the QA
consultant for each project no later than delivery of the roll to the site.

Each roll will be identified with a label showing the product, the roll number, thickness, and length.
Labels will be placed on the outside of the roll at one end and on the outside or inside of both ends of
the core. This enables the roll to be easily identified when stacked on top of or under others.

The Plant & Machinery required for this project includes Hopper, Multi-Layer Co-extrusion Blown
film plant and Cooling Tower

Following is the list of the plant and machinery suppliers:

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1. SS Mechanical Engineers

WZ-106/56, Rajouri Garden Extn.,

New Delhi-110027

E-MAIL : [email protected]

2. ALMASS INDUSTRIES

324, Functional Industrial Estate,

Patparganj (Near Anand Vihar),

Delhi – 110092

3. DYNAMIC ENGINEERS

Plot No. 35/36/37,

Shri Ram Industrial Estate,

Anup Engineering Compound, G.I.D.C.,

Odhav, Ahmedabad - 382415

2.5 Raw Material & Utilities Requirement

The Raw Material required is LLDPE. We have considered 2% wastage of raw material.

Raw Material Total Requirement Cost (Rs./MT) Total Cost

Requirement
(MTPA) (Rs. Lakhs/MT)

LLDPE with 2% wastage 1020 71124 725

Total Raw Material 725

Cost

The main utilities required are water and power. The total utility cost is Rs. 1.21 Lakhs per annum.

2.6 Land & Built-up Area Requirement

The total land required is 5000 sq.m. and the built-up area is 2000 sq.m.

2.7 Manpower Requirement

Staff Nos

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Plant Manager
1
Laboratory Manager
1
Production Manager
2
Accountant
1
Supervisors
2
Skilled Workers
10
Unskilled Workers
10
Security
3
Total Manpower Required
30
A margin of 25% has been considered for other benefits for the staff.

2.8 Project Cost/ Fixed Capital Requirement & Means of Finance

Land has not been considered as a part of the project cost because it has been considered to be taken
on lease (as applicable in Assam). One time Land Development Charges have been taken as part of the
Project Cost. Also, Special Maintenance Charges and an Annual Service Charge have been considered
as part of operating cost. The Total Project Cost is Rs. 335.38 Lakhs as per the table below:

S.No Cost Head Cost (in Rs. Lakhs)

160.00
1 Building
50.18
2 Machinery
43.88
3 Miscellaneous Fixed Assets
2.00
4 Preliminary and Pre-Operative Expenses
53.83
5 Margin Money for Working Capital
15.49
6 Contingency Expenses
10.00
7 Land Development
335.38
Total

The means of finance considering Debt-Equity ratio of 2:1 will be:

Means of Finance Rs in lakhs

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Equity
111.78
Debt
223.60
335.38
Total

2.9 Working Capital Requirement

The Total Working Capital Requirement is as under:

Year-1 Year-2 Year-3 Year-4 Year-5

Net WC
215.33 246.10 276.86 307.62 307.62
Available Bank Finance
161.50 184.57 207.64 230.71 230.71
Margin Money
53.83 61.52 69.21 76.90 76.90

2.10 Operating Expenses

The Annual Operating expenses for the first year (70% capacity utilization) are given below:

Particulars Expense(Rs in lakhs)

0.85
Utilities
16.74
Wages & Salaries
33.54
Interest on term loan
24.23
Interest on Bank Finance for Working Capital
507.83
Raw Material
12.77
Depreciation
1.15
Maintenance and Service Charges
597.10
Total

2.11 Profitability Estimates

(Rs. In Lakhs)

S. NO. PARTICULARS YEAR

Yr -1 Yr-2 Yr -3 Yr -4 Yr-5

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Production/Sales

Installed Capacity
1000 1000 1000 1000 1000
Capacity Utilization
70% 80% 90% 100% 100%
Estimated Production
700 800 900 1000 1000
Gross Sales Revenue
840 960 1080 1200 1200
Expenses

Raw Material Consumption

508 580 653 725 725
Utilities
1 1 1 1 1
Administrative Overheads
24 24 24 24 24
Salaries
17 17 17 17 17
Sales Expenses
21 24 27 30 30
Loan Repayment
45 45 45 45 45
Maintenance Charges
1 1 1 1 1
TOTAL
616 692 767 843 843
GROSS PROFIT
224 268 313 357 357
Financial Expenses

Interest On Term Loan

34 28 21 14 7
Interest On Working
Capital
24 28 31 35 35
Sub Total
58 55 52 48 42
Depreciation
12.8 12.8 12.8 12.8 12.8
Profit Before Tax
153 200 248 295 302
Provision For Tax
50 66 82 98 100
Profit After Tax
102 134 166 198 203

2.12 Financial Indicators

The Average Break Even Point for the project is 40%.

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(Rs. In Lakhs)

Yr -1 Yr-2 Yr -3 Yr -4 Yr-5

Sales Realisation
840 960 1080 1200 1200
Fixed Costs

Salaries
21 21 21 21 21
Fixed Selling Expenses
21 24 27 30 30
Depreciation (SLM)
13 13 13 13 13
Utilities (Fixed)
1 1 1 1 1
Admin. Overheads
24 24 24 24 24
Loan Repayment
45 45 45 45 45
Interest On L.T. Loan
34 28 21 14 7
Total Fixed Costs
158 155 151 147 140
Variable Cost

Raw Materials
508 580 653 725 725
Interest On Working Capital Loan
24.23 27.69 31.15 34.61 34.61
Total Variable Costs
532 608 684 760 760
Contribution
308 352 396 440 440
Breakeven In %
51% 44% 38% 34% 32%
Average BEP 40%

The IRR for the project is 18.9%, Average ROI is 81% and average DSCR is 3.10.

(Rs. In Lakhs)

Particulars Year of Operation

1 2 3 4 5

Revenue
840 960 1080 1200 1200

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Profit Before Tax

152.81 199.62 247.54 295.47 302.40
Profit After Tax
102.39 133.75 165.85 197.96 202.61
LT Interest
33.54 27.73 20.79 13.86 6.93
Depreciation
12.77 12.77 12.77 12.77 12.77
LT Loan Repayment
44.72 44.72 44.72 44.72 44.72
Return on Investment (%)
59% 72% 84% 96% 96%
Average ROI 81%

Debt-Service Coverage Ratio

- Debt Service
78.26 72.45 65.51 58.58 51.65
- Coverage
148.70 174.25 199.42 224.60 222.31
DSCR
1.90 2.41 3.04 3.83 4.30
Average DSCR 3.10

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3 Disposable Syringes

3.1 Introduction

Disposable Syringes are made of plastic material and are used in medical and veterinary science. Due
to their availability in sterilized condition, ready to use and cost effectiveness, disposable syringes are
fast replacing the age-old glass syringes. Moreover, the horror of AIDS worldwide has almost
dispensed with the reuse of syringes and the demand of disposable syringe has increased
phenomenally. Disposable syringes are mostly injection moulded from polypropylene. Syringes are
available in sizes of 1 ml, 2ml, 5 ml, and 10 ml, in a variety of designs and consist of either two or
three components in their material of construction. The number and size of injection moulding
machines required depends upon syringe construction, number of mould cavities and annual
production.

3.2 Market Potential

Disposable syringes have already penetrated the domestic market in a significant way because of
awareness created by the Government and other non-governmental organisations on AIDS and
Hepatitis-B, thereby insisting on the use of disposable syringes instead of conventional glass type
syringes. There is lot of scope in the local market, even if we assume a usage rate of 1 syringe per
annum per person, the demand would be of the order of over 102 crores syringes per annum.

Disposable syringes have wide market potential. The age-old glass syringes are fast becoming
obsolete. Some of the units manufacturing this product in the country include:

Steryware, Faridabad; Cadila; Dispovan, Faridabad; Cadila hospital product, Ahmedabad; Surgiplus,
Ahmedabad; Transplastic Pondicherry; Disposable Mediate, Chennai; Suru Chemicals, Mumbai;
Albert David, M.P.; Manoj Surgical, Indore. Some of these units are 100% export-oriented units. In
view of the fast expanding market, the prospects of disposable syringes are very bright.

3.3 Plant Capacity

The production basis for a typical unit would be as under:

• Working hours/day: 16 (2 shifts)
• Working days in a year: 300
• Annual Production capacity:

S.No. Size Nos. Weight Total PP required (MTPA)

1. 2 ml 100,000,000 2.5 g 250

2. 5 ml 55,555,556 4.5 g 250

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The unit has been assumed to operate at 80% of its installed capacity in the first and second year, 90%
in the third year and 100% capacity from 4th year onwards of its operation.

3.4 Process, Plant & Machinery (Details & List of Machinery Suppliers)

The manufacturing process for disposable syringes consists of the following steps:
1. Moulding of the various components
2. Graduation of the moulded parts
3. Assembling
4. Sterilization
5. Quality Control Tests
6. Packaging

The two essential parts to be moulded include cylinder or barrel of the syringe and the plunger or
piston. Injection moulding is suitable for production of large quantity of similar shapes, hence the
syringes are injection moulded.

The raw material polypropylene is fed into the injection moulding machine and moulded in chilled
condition to get better clarity. The moulded syringes are then assembled with the needle in automatic
assembly machine (this profile however deals only with the production of the injection moulded
component of the syringe). The whole assembly is then sterilized in sterilization plant using ethylene
oxide. The completed syringe is then blister packed in automatic packing machine.

The product should conform to drug control specification and drug license should be obtained for
production of this item.

List of Plant & Machinery suppliers is as under:

1. DGP Windsor India Limited

5403, SIDC Industrial Estate,

Place IV, Vatva,

Ahmedabad
2. Central Machinery & Plastic Products

Lojya Estate, Mogra Raod

Andheri (E),

Mumbai - 400 069

3. M/s. Sunanda Industrial Machinery

A Division of Mafatlal

Marg Industries Ltd.

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109, Standard House,

83, Maharshi Karup Road,

Mumbai-400002.

3.5 Raw Material & Utilities Requirement

The main raw material required for the project is Polypropylene (PP) while Polyethylene (PE) is
required for packaging. PP required would be around 525 MT at 100% capacity utilisation. Rubber
Gaskets are also required which will be outsourced.

The major utilities required are water, compressed air and power. Water required is around 590 KLPA.
and power required is 200 KW.

3.6 Land & Built-up Area Requirement

The total land required is 1000 sq.m. and the built-up area is 400 sq.m.

3.7 Manpower Requirement & Project Implementation Schedule

Staff Nos
Production Manager 2
Accountant 1
Chemist 2
Sales Executive 2
Operators 10
Skilled Workers 10
Unskilled Workers 10
Security 4
Total Manpower Required 41
Project implementation will take a period of 8 months from the date of approval of the scheme. Break-
up of activities with relative time for each activity is shown below:

S.No. Nature of Activities Period (Month)

1 Scheme Preparation and approval 0-1
2 Provisional registration 1-2
3 Sanction of loan 2-3
4 Clearance from Pollution Control Board 2-5
5 Placement of order for delivery of machine 3-4
6 Installation of machines 4-5
7 Power connection 6-7
8 Trial run 6-7
9 Commencement of production 9 onwards
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3.8 Project Cost/ Fixed Capital Requirement & Means of Finance

Land has not been considered as a part of the project cost because it has been considered to be taken
on lease (as applicable in Assam). One time Land Development Charges have been considered as part
of the Project Cost. Also, Special Maintenance Charges and an Annual Service Charge have been
considered as part of operating cost. The total Project Cost is Rs. 395.91 Lakhs as per the table below.

S.No Cost Head Cost (in Rs. Lakhs)

32.00
1 Building
279.47
2 Machinery
8.58
3 Miscellaneous Fixed Assets
2.00
4 Preliminary and Pre-Operative Expenses
53.10
5 Margin Money for Working Capital
18.76
6 Contingency
2.00
7 Land Development
395.91
Total
The means of finance considering Debt-Equity ratio of 2:1 will be:

Means of Finance Rs (in lakhs)

Equity 131.96
Debt 263.95
395.91
Total

3.9 Working Capital Requirement

The Total Working Capital Requirement is as under:

(Rs in Lakhs)

Particulars Years of Operation

1 2 3 4 5
Net WC 212.41 212.41 238.96 265.51 265.51
Available Bank Finance 159.31 159.31 179.22 199.13 199.13
Margin Money 53.10 53.10 59.74 66.38 66.38

3.10 Operating Expenses

The Annual Operating expenses for the first year (70% capacity utilization) are given below:
S.No. Particulars Expenses(Rs in lakhs)
1 Utilities 1.68
2 Wages & Salaries 23.88

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3 Interest on term loan 39.59
4 Interest on Bank Finance for Working Capital 23.90
5 Raw Material 491.61
6 Depreciation 29.93
7 Maintenance and Annual Charges 0.23
Total 610.82

3.11 Profitability Estimates

(Rs. In Lakhs)

S. NO. PARTICULARS YEAR

Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Production/Sales
Installed Capacity 800 800 800 800 800
Capacity Utilization 80% 80% 90% 100% 100%
Estimated Production 640 640 720 800 800
Gross Sales Revenue 832 832 936 1040 1040
Expenses
Raw Material Consumption 492 492 553 615 615
Utilities 2 2 2 2 2
Administrative Overheads 10 10 10 10 10
Salaries 30 30 30 30 30
Sales Expenses 21 21 23 26 26
Loan Repayment 53 53 53 53 53
Maintenance Charges 0.23 0.23 0.23 0.23 0.23
TOTAL 607 607 671 735 735
GROSS PROFIT 225 225 265 305 305
Financial Expenses
Interest On Term Loan 40 33 25 16 8
Interest On Working Capital 24 24 27 30 30
Sub Total 63 57 51 46 38
Depreciation 29.9 29.9 29.9 29.9 29.9
Profit Before Tax 131 138 183 228 237
Provision For Tax 43 46 60 75 78
Profit After Tax 88 93 123 153 158

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3.12 Financial Indicators

The Average Break Even Point for the project is 49%.

(Rs. In Lakhs)

Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Sales Realisation 832 832 936 1040 1040
Fixed Costs
Salaries 30 30 30 30 30
Fixed Selling Expenses 21 21 23 26 26
Depreciation (SLM) 30 30 30 30 30
Utilities (Fixed) 2 2 2 2 2
Admin. Overheads 10 10 10 10 10
Loan Repayment 53 53 53 53 53
Interest On L.T. Loan 40 33 25 16 8
Total Fixed Costs 185 178 173 167 159
Variable Cost
Raw Materials 492 492 553 615 615
Interest On Working Capital Loan 24 24 27 30 30
Total Variable Costs 516 516 580 644 644
Contribution 316 316 356 396 396
Breakeven In % 58% 56% 48% 42% 40%
AVERAGE BREAK-EVEN 49%
The IRR for the project is 21%, Average ROI is 60% and the average DSCR is 2.38.

(Rs. In Lakhs)
Particulars Year of Operation
1 2 3 4 5
Revenue 832 832 936 1040 1040
Profit Before Tax 131.22 138.08 183.23 228.37 236.55
Profit After Tax 87.92 92.51 122.76 153.01 158.49
LT Interest 39.59 32.73 24.55 16.37 8.18
Depreciation 29.93 29.93 29.93 29.93 29.93
LT Loan Repayment 52.79 52.79 52.79 52.79 52.79
Return on Investment (%) 51% 51% 60% 69% 69%
Average ROI 60%

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Debt-Service Coverage Ratio

- Debt Service 92.38 85.52 77.34 69.16 60.97
- Coverage 157.44 155.17 177.24 199.30 196.60
DSCR 1.70 1.81 2.29 2.88 3.22
Average DSCR 2.38

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4 Drip Irrigation System

4.1 Introduction

Drip irrigation is a slow but even application of low pressure water to soil and plants using plastic
tubing placed directly at the root zone of the plants. Drip irrigation can help use water efficiently. A
well-designed drip irrigation system loses practically no water to runoff, deep percolation, or
evaporation. Drip irrigation reduces water contact with crop leaves, stems, and fruit. Thus, conditions
may be less favourable for the onset of diseases. Irrigation scheduling can be managed precisely to
meet crop demands, holding the promise of increased yield and quality.

Agricultural chemicals can be applied more efficiently with drip irrigation. Since only the crop root
zone is irrigated, nitrogen present in the soil is less subject to leaching losses, and the applied
fertilizers can be used more efficiently. In the case of insecticides, lesser products might be needed.

A wide range of components and system design options is available. Drip tape varies greatly in its
specifications, depending on the manufacturer and its use. The distribution system, valves, and pumps
must match the supply requirements of the tape. Tape, depth of tape placement, distance between
tapes, emitter spacing and flow, and irrigation management systems must be chosen carefully based on
crop water requirements and the soil properties. Drip tubing rather than drip tape is usually used for
perennial crops such as grapes or poplar trees. Drip irrigation system delivers water to the crop using a
network of mainlines, sub-mains and lateral lines with emission points spaced along their lengths.
Each dripper/emitter orifice supplies a measured, precisely controlled uniform application of water,
nutrients, and other required growth substances directly into the root zone of the plant.

Water and nutrients enter the soil from the emitters, moving into the root zone of the plants through
the combined forces of gravity and capillary. In this way, the plant’s withdrawal of moisture and
nutrients are replenished almost immediately, ensuring that the plant never suffers from water stress,
thus enhancing quality, its ability to achieve optimum growth and high yield.

4.2 Market Potential

The use of drip irrigation is rapidly increasing around the world, and this trend is expected to continue
in the foreseeable future. With increasing demand on limited water resources and the need to minimise
environmental consequences of irrigation, drip irrigation technology offers many advantages. The use
of drip irrigation in India has increased rapidly from the time of initial testing at Tamil Nadu
University in Coimbatore in 1970 to all-India coverage of 55,000 hectares by 1992 and is now
estimated to be 225,000 hectares. Studies of comparative crop yield and water use for surface and
conventional drip irrigation of different crops carried out at agricultural universities in India have
consistently found water savings of 30-60% and yield increase of 20-40 % favouring drip irrigation
over surface irrigation methods. The Indian Committee on Irrigation and Drainage estimates the
potential for drip irrigation in India of 10.5 million hectares.

4.3 Plant Capacity

The production basis for a typical unit would be as under:

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• Working hours/day: 8 (1 shift)
• Working days in a year: 300
• Annual Production capacity: 600 TPA HDPE pipes and 400 TPA of LLDPE valves and
fittings.

The unit has been assumed to operate at 75%, 80% and 90% of its installed capacity in the first,
second and third year and at 100% capacity from fourth year onwards of its operation.

4.4 Process, Plant & Machinery (Details & List of Machinery Suppliers)

A process for making low cost drip irrigation lines comprises molding a drip emitter having an
elongated labyrinth channel formed in the depth of the emitter body. Emitters of other configurations
also can be used in the process. A plastic film is extruded and passed through a film die with an air
injection tube at one end forming a plastic film bubble. At the bottom of the extruded plastic film
bubble, a pair of pressure rolls join opposite faces of the bubble to form a continuous unitary extruded
plastic film sheet. The emitters are moved in series towards the nip of the pressure rolls and are
inserted in sequence with their labyrinth faces facing toward the hot bubble. The emitters are bonded
to the extruded film sheet using the heat of extrusion, and the external sheet forms one face of the
labyrinth channel through each emitter. After laminating the emitter to the extruded film, an exit hole
is formed through the film to each emitter and the film is then wrapped and bead sealed to form a
continuous flexible drip irrigation tube with the emitters spaced apart along the inside of the tube. The
process can be used for making multiple drip irrigation lines in parallel along a single extruded plastic
film sheet.

The Machinery required is as under:

Machinery cost of Drip Irrigation project Cost in Rs.

Blenzor IJM 1000 Injection Moulding Machine 5,75,000/-

50 MM PIPE PLANT
Max. Extrusion Output: 50 kgs./hr. 9,00,000/

Machinery Suppliers:

1. SS Mechanical Engineers,

WZ-106/56, Rajouri Garden Extn.,

New Delhi-110027

E-MAIL : [email protected]

2. Blenzor ( India )

1-A,First Floor,

Sharda Mansion,

Dr.Babasaheb Ambedkar Road,

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Dadar East, Mumbai-400014

4.5 Raw Material & Utilities Requirement

The raw material required for the project is HDPE for making pipes and LLDPE for the valves and
fittings. The raw material required would be around 612 MT of HDPE and 408 MT of LLDPE at
100% capacity utilisation.

The major utilities required are water and power. Water required is around 460 KLPA. and power
required is 150 KW.

4.6 Land & Built-up Area Requirement

The total land required is 1500 sq.m. with the built-up area of 600 sq.m.

4.7 Manpower Requirement

Staff Nos
Plant Manager 1
Maintenance Manager 1
Production Manager 1
Accountant 2
Supervisors 4
Skilled Workers 10
Unskilled Workers 10
Security 3
Total Manpower Required 32

4.8 Project Cost/ Fixed Capital Requirement & Means of Finance:

Land has not been considered as a part of the project cost because it has been considered to be taken
on lease (as applicable in Assam). One time Land Development Charges have been taken as part of the
Project Cost. Also, Special Maintenance Charges and an Annual Service Charge have been considered
as part of operating cost. The Total Project Cost is Rs. 190.49 Lakhs as per the table below:

S.No Cost Head Cost (in Rs. Lakhs)

24.00
1 Building
63.00
2 Machinery
44.50
3 Miscellaneous Fixed Assets
2.00
4 Preliminary and Pre-Operative Expenses
47.92
5 Margin Money for Working Capital

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9.07
6 Contingency Expenses
3.00
7 Land Development
190.49
Total
The means of finance considering Debt-Equity ratio of 2:1 will be:

Means of Finance Rs in lakhs

Equity 63.49
Debt 127.00
190.49
Total

4.9 Working Capital Requirement

The Total Working Capital Requirement is given below:

Particulars Years of Operation

1 2 3 4 5
Net WC 191.70 204.48 230.03 255.59 255.59
Available Bank Finance 143.77 153.36 172.53 191.70 191.70
Margin Money 47.92 51.12 57.51 63.90 63.90

4.10 Operating Expenses

The Annual Operating expenses for the first year (75% capacity utilization) are given below:

Particulars Expense(Rs in lakhs)

0.64
Utilities
17.94
Wages & Salaries
19.05
Interest on term loan
21.57
Interest on Bank Finance for Working Capital
528.20
Raw Material
9.46
Depreciation
0.35
Maintenance Charges
597.21
Total

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4.11 Profitability Estimates

(Rs. In Lakhs)

S. NO. PARTICULARS YEAR

Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Production/Sales
Installed Capacity of HDPE Pipes 600 600 600 600 600
Installed Capacity of LLDPE valves and fittings 400 400 400 400 400
Capacity Utilization 75% 80% 90% 100% 100%
Estimated Production of Pipes 450 480 540 600 600
Estimated Production of Valves and Fittings 300 320 360 400 400
Gross Sales Revenue 720 768 864 960 960
Expenses
Raw Material Consumption 528 563 634 704 704
Utilities 1 1 1 1 1
Administrative Overheads 10 10 10 10 10
Salaries 18 18 18 18 18
Sales Expenses 18 19 22 24 24
Loan Repayment 25 25 25 25 25
Maintenance Charges 0.35 0.35 0.35 0.35 0.35
TOTAL 600 637 709 782 782
GROSS PROFIT 120 131 155 178 178
Financial Expenses
Interest On Term Loan 19 16 12 8 4
Interest On Working Capital 22 23 26 29 29
Sub Total 41 39 38 37 33
Depreciation 9.5 9.5 9.5 9.5 9.5
Profit Before Tax 70 83 107 132 136
Provision For Tax 23 27 35 43 45
Profit After Tax 47 56 72 88 91

4.12 Financial Indicators

The Average Break Even Point for the project is 51%.

Yr -1 Yr-2 Yr -3 Yr -4 Yr-5

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Sales Realisation 720 768 864 960 960

Fixed Costs
Salaries 22 22 22 22 22
Fixed Selling Expenses 18 19 22 24 24
Depreciation (SLM) 9 9 9 9 9
Utilities (Fixed) 1 1 1 1 1
Admin. Overheads 10 10 10 10 10
Loan Repayment 25 25 25 25 25
Interest On L.T. Loan 19 16 12 8 4
Total Fixed Costs 105 102 101 99 95
Variable Costs
Raw Materials 528 563 634 704 704
Interest On Working Capital Loan 22 23 26 29 29
Total Variable Costs 550 586 660 733 733
Contribution 170 182 204 227 227
Breakeven In % 61% 56% 49% 44% 42%
Average Break-Even 51%
The IRR for the project is 30.8%, Average ROI is 67% and the average DSCR is 2.58.

Particulars Year of Operation (Rs. In Lakhs)

1 2 3 4 5
Revenue 720 768 864 960 960
Profit Before Tax 69.79 83.25 107.48 131.71 135.65
Profit After Tax 46.76 55.77 72.01 88.25 90.89
LT Interest 19.05 15.75 11.81 7.87 3.94
Depreciation 9.46 9.46 9.46 9.46 9.46
LT Loan Repayment 25.40 25.40 25.40 25.40 25.40
Return on Investment (%) 52% 57% 68% 78% 78%
Average ROI 67%
Debt-Service Coverage Ratio
- Debt Service 44.45 41.15 37.21 33.27 29.34
- Coverage 75.27 80.98 93.28 105.58 104.28
DSCR 1.69 1.97 2.51 3.17 3.55
Average DSCR 2.58

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5 Geo-Textiles

5.1 Introduction

Geo-synthetics is the collective term applied to thin, flexible, sheets of material incorporated in or
within soil to enhance its engineering performance. Applications of geo-synthetics mainly fall within
the domain of civil engineering applications. Geo-synthetics as a separate market segment has been
developed and being used at an increasing pace for a greater number of geotechnical applications. The
specific families of geo-synthetics are focused on different categories such as, geo-textiles, geo-grid,
geo-nets, geo-membranes, geo-synthetic clay liners, geo-pipe, geo-composites and others.

Geo-textiles form one of the two largest groups of geo-synthetics, which are textile fabrics (woven,
non-woven, knitted, braided, etc) specially designed to be used as construction material in conjunction
with other geotechnical materials such as soil and rock in applications of civil engineering nature.
There are at least hundred specific application areas for geo-textiles; however, the fabric always
performs at least one of five discrete functions, namely separation, reinforcement, filtration, drainage
and protection.

5.2 Market Potential

The current major use of geo-textiles is within the foundation components or load-supporting part of a
civil engineering structure. More recently geo-textiles have been used to enhance tensile properties of
civil engineering materials themselves, such as road surface and sub surfaces in both construction of
new and renovation of old highways, mattresses for erosion control etc.

Basically, all available geo-textiles can be broadly classified on the basis of manufacturing techniques
namely woven, non-woven and knitting. Whereas the initial demand of geo-textiles were met by
woven fabrics, the spurt in demand of geo-textiles was observed only on introduction of non-woven
geo-textiles in the market because they are more flexible and deformable.

According to a Study conducted by Freedonia Group, Spunbonded nonwovens would remain the
dominant product, accounting for half of the total volume of non-wovens in 2009. Approximately 65%
of hygiene product components, which include coverstocks, backsheet use spunbond nonwovens.

The total non-woven production in India was estimated to be around 58,000 tons in 2005 out which
14%, i.e 8000 tons was made through spunbond technology (as shown in the chart below) which was
consumed as durables for manufacturing of interlinings, carpets and geotextiles.

The two major producers of PP non – woven spunbond fabric are:

Unimin India Ltd., Mumbai

PVD Plast Mould Industries Ltd., Mumbai (now known as Fiberworld (India) Limited)

These units are 100% EOU, having present production capacity of 3,000 TPA and 3,500 TPA
respectively.

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Hence, at present the entire requirement of spunbond fabric for personal hygiene products and
healthcare textiles is met through imports from countries like China, Brazil, Korea and Taiwan.

5.3 Plant Capacity

The production basis for a typical unit would be as under:

• Working hours/day: 16 (2 shifts)

• Working days in a year: 300

• Annual Production capacity: 2000 TPA of non-woven PP geotextiles

The unit has been assumed to operate at 70%, 80% and 90% of its installed capacity in the first,
second and third year and at 100% capacity from fourth year onwards of its operation.

5.4 Process, Plant & Machinery (Details & List of Machinery Suppliers)

One of the techniques to manufacture non-woven fabric is Spun-bonding. Spun-bond fabrics are
produced by depositing extruded, spun filaments onto a collecting belt in a uniform random manner
followed by bonding the fibers.

The spun-bond fabric consumption is divided into two segments viz disposables and durables. The
disposables consume about 55-65% of the spun-bond fabric and the rest 35-45% is consumed in
making durables. Geo-textiles fall under the category of durables.

For production of high quality, needle-punched, staple fibre geo-textiles, continuous filaments of
polypropylene are extruded on a fibre extrusion line. Fibres are then cut, opened and laid into a web.
They then pass through thousands of needles that penetrate and orient the fibres, locking them with
one another. After this they are heat-set and rolled to create non-woven geo-textiles.

This manufacturing process is detailed out further as below:

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The spunbond nonwoven process consists of several integrated steps for conversion of polymer or
resin chips into finished fabric. The major steps of the process are:

Polymer Feed - Polymer feedstock in pellet or powder form is conveyed from storage bins or silos to
the feeder section of an extruder.

Extruder - Polymer feedstock is mixed with stabilizers, additives, color master-batch, resin modifiers,
or other additives. This blend of raw materials is melted within the extruder barrel.

Fiber Spinning - The molten polymer mix is pumped through a heated conduit to a resin filter system
and then to a distributor section that leads to the spinnerette units. The spinnerette usually consists of a
perforated plate arranged across the width of the line. The resin is forced through the many small holes
in the spinnerette plate to form continuous filaments.

Quenching / Attenuation Zone - As the filaments emerge through the spinnerette holes, they are
directed downward into quench chambers or chimneys. As the filaments travel through these
chambers, cool air is directed across the filament bundle to cool the molten filaments sufficiently to
cause solidification. The filaments are then led further downward into a tapered conduit by an
airsteam. A second stream of high velocity air is directed parallel to the direction of the filaments,
causing an accelerated and accompanying attenuation or stretching of the individual filaments. This
mechanical stretching results in increased orientation of the polymer chains making up the continuous
filament. Such orientation leads to increased filament strength, along with modification of other
filament properties, including the filament denier or thickness.

Web Forming - The filaments are deposited in a random manner on a moving, porous forming belt. A
vacuum under the belt assists in forming the filament web on the forming belt and in removing the air
used in the extrusion / orientation operation. In some processes, an electrostatic charge is placed on the
filament bundle to ensure spreading and separation of individual filaments. In other processes,
deflector plates are used to lay down the filament sheet in a random manner on the forming belt.

Bonding -The continuous filament web is delivered to a bonding section, where one of several
bonding methods can be used to bond the loose filaments into a strong, integrated fabric.

Slitting / Winding - The bonded fabric encounters a slitting section where the two edges are trimmed
to eliminate the non-uniform, rough edge created during the manufacturing step. In some operations,
the fabric may also be further slit into precise, smaller widths to provide finished rolls of precise
dimension. Following slitting, the fabric is wound onto a larger roll, either a full width roll or a series
of narrow slit rolls. From this point, the fabric rolls are ready for wrapping and shipping.

The machinery required is as under:

S. No. Machinery Product Output Number required

1 Leftover opener 50-80 kg/hr 4
2 Fine-Opener 30-180 kg/hr 4
3 Feeder 60-180 kg/hr 4
4 Carding Machine 60-180 kg/hr 4
5 Cross Lapper 20-40 m/min 4

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6 Pre-Needle machine 1-6 m/min 4

7 Main-Needle M/C 1-6 m/min 12
8 Cutting & Coiling Machine 1-15m/min 4
Geo-textile machinery is not manufactured in large scale in India; hence we have considered the
quotations from Chinese manufacturers. List of Plant & Machinery suppliers is as under:

1. CNBM International Corporation, China

2. Changshu Weicheng Non-woven Equipment Co. Ltd, China

3. Jiangsu Yingyang Non-woven Machinery Co. Ltd, China

We have considered the production line from Changshu Weicheng. The production line produces wide
geo-textiles by needle-punching method, which are widely used in construction fields, such as separate
layer (road foundation & railway foundation, airport foundation, asphalt foundation)protection layer
(reservoirs, channels & tunnels, river and sea bank), filtration layer (drainage)reinforced layer (soil
stabilization, road surface facility), etc.

5.5 Raw Material & Utilities Requirement

The major raw material required for the project is Polypropylene. The raw material required would be
around 2100 MT at 100% capacity utilisation.

The major utilities required are water and power. Water required is around 850 KLPA and power
requirement is 700 KW.

5.6 Land & Built-up Area Requirement, co

The total land required is 10000 sq.m. and the built-up area is 4000 sq.m.

5.7 Manpower Requirement

The organizational structure of the geo-textiles plant is illustrated in Figure 1. The Plant Manager, who
has overall responsibility for quality, ensures that all quality requirements are met. This includes
incoming inspection, process control and product labelling. The Plant Manager is further responsible
for approving raw materials and testing finished products according to ASTM or other industry
standards.

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Staff Nos
V.P. (Engineering) 1
Plant Manager 1
Maintenance Manager 1
Laboratory Manager 1
Production Manager 1
Accountant 2
Supervisors 4
Skilled Workers 25
Unskilled Workers 20
Security 3
Total Manpower Required 59
Figure 2 shows the manufacturing quality system under which all geo-textile products should be
manufactured.

5.8 Project Cost/ Fixed Capital Requirement & Means of Finance

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Land has not been considered as a part of the project cost because it has been considered to be taken
on lease (as applicable in Assam). One time Land Development Charges have been taken as part of the
Project Cost. Also, Special Maintenance Charges and an Annual Service Charge have been considered
as part of operating cost. The Total Project Cost is Rs. 959.68 Lakhs as detailed below:

S.No. Cost Head Cost (in Rs. Lakhs)

Building 320.00
1
Machinery 424.98
2
Miscellaneous Fixed Assets 47.63
3
Preliminary and Pre-Operative Expenses 2.00
4
Margin Money for Working Capital 119.37
5
Contingency Expenses 45.70
6
Land Development 20.00
7
Total Cost 959.68

The means of finance considering Debt-Equity ratio of 2:1 will be:

Means of Finance Rs in lakhs

Equity 319.86
Debt 639.82
959.68
Total

5.9 Working Capital Requirement

The Total Working Capital Requirement is as under:

(Rs in lakhs)

Particulars Years of Operation

1 2 3 4 5
Net WC 477.48 545.70 613.91 682.12 682.12
Available Bank Finance 358.11 409.27 460.43 511.59 511.59
Margin Money 119.37 136.42 153.48 170.53 170.53

5.10 Operating Expenses

The Annual Operating expenses for the first year (70% capacity utilization) are given below:
S.No. Particulars Expense(Rs in lakhs)
1 Utilities 5.82
2 Wages & Salaries 32.94
3 Interest on term loan 95.97
4 Interest on Bank Finance for Working Capital 53.72

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5 Raw Material 1051.09
6 Depreciation 39.38
7 Maintenance Charge 2.30
Total 1281.23

5.11 Profitability Estimates

(Rs.in Lakhs)

S. NO. PARTICULARS YEAR

Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Production/Sales
Installed Capacity 2000 2000 2000 2000 2000
Capacity Utilization 70% 80% 90% 100% 100%
Estimated Production 1400 1600 1800 2000 2000
Gross Sales Revenue 1890 2160 2430 2700 2700
Expenses
Raw Material Consumption 1051 1201 1351 1502 1502
Utilities 6 6 6 6 6
Administrative Overheads 27 27 27 27 27
Salaries 33 33 33 33 33
Sales Expenses 47 54 61 68 68
Loan Repayment 128 128 128 128 128
Maintenance Charges 2 2 2 2 2
TOTAL 1294 1451 1608 1765 1765
GROSS PROFIT 596 709 822 935 935
Financial Expenses
Interest On Term Loan 96 79 60 40 20
Interest On Working Capital 54 61 69 77 77
Sub Total 150 141 129 116 97
Depreciation 39.4 39.4 39.4 39.4 39.4
Profit Before Tax 407 529 654 779 799
Provision For Tax 134 174 216 257 264
Profit After Tax 272 354 438 522 535

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5.12 Financial Indicators

The Average Break-Even Point for the project is 37%.

(Rs in Lakhs)

Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Sales Realisation 1890 2160 2430 2700 2700
Fixed Costs
Salaries 41 41 41 41 41
Fixed Selling Expenses 47 54 61 68 68
Depreciation (SLM) 39 39 39 39 39
Utilities (Fixed) 6 6 6 6 6
Admin. Overheads 27 27 27 27 27
Loan Repayment 128 128 128 128 128
Interest On L.T. Loan 96 79 60 40 20
Total Fixed Costs 385 375 362 349 329
Variable Cost
Raw Materials 1051 1201 1351 1502 1502
Interest On Working Capital Loan 53.72 61.39 69.06 76.74 76.74
Total Variable Costs 1105 1263 1420 1578 1578
Contribution 785 897 1,010 1,122 1,122
Breakeven In % 49% 42% 36% 31% 29%
Average BEP 37%
The IRR for the project is 23.2%, Average ROI is 76% and the average DSCR is 2.91.

(Rs. In Lakhs)
Particulars Year of Operation
1 2 3 4 5
Revenue 1890 2160 2430 2700 2700
Profit Before Tax 406.55 528.61 653.86 779.12 798.95
Profit After Tax 272.39 354.17 438.09 522.01 535.30
LT Interest 95.97 79.34 59.50 39.67 19.83
Depreciation 39.38 39.38 39.38 39.38 39.38
LT Loan Repayment 127.96 127.96 127.96 127.96 127.96
Return on Investment (%) 56% 67% 78% 89% 89%
Average ROI 76%
Debt-Service Coverage Ratio
- Debt Service 223.94 207.30 187.47 167.63 147.80

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- Coverage 407.75 472.89 536.98 601.06 594.52

DSCR 1.82 2.28 2.86 3.59 4.02
Average DSCR 2.91

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6 Greenhouse Film

6.1 Introduction

A greenhouse is a structure with a glass or plastic roof (frequently glass or plastic walls); it heats up
because incoming solar radiation from the sun warms plants, soil, and other things inside the building.
Air warmed by the heat from hot interior surfaces is retained in the building by the roof and wall.
These structures range in size from small sheds to very large buildings.

Greenhouses can be divided into glass greenhouses and plastic greenhouses. Plastics mostly used are
PE film and multi-wall sheet in Poly Carbonate or Acrylic Glass. The use of polymers composite as
cover materials for greenhouse or agricultural films, is growing globally because it can improve
product quality and yield by protecting plants from extreme weather changes, optimizing growth
conditions, extending the growing season and reducing plant diseases. While the films are being made,
various additives and stabilizing agents are employed to provide desired applications including
prevention of thermal oxidation, discoloration in the melt process and improvement of long term heat
and light stability.

6.2 Market Potential

At present the use of greenhouses in agriculture is growing because greenhouses protect crops from
too much heat or cold, shield plants from dust storms and blizzards, and help to keep out pests. Light
and temperature control allows greenhouses to turn barren land into arable land. They are being used
for growing flowers, vegetables, fruits, and tobacco plants.

Their usage and hence demand for LLDPE films for the same is expected to grow because cultivating
in a greenhouse has distinctive advantages like the yield increases by 5 - 15 times or even more, there
is a reduction in labour cost, less fertilizer is required, lesser requirement of water requirement, less
chances of disease attack, thus reduction in disease control cost, they help in cultivating even in
problematic topography, climate and soil conditions, they are easy to operate, maintain & control.

Greenhouse film is mostly produced by LDPE and LLDPE blending. It can also be co-extruded
composite film of LLDPE, LDPE and EVA.

6.3 Plant Capacity

The production basis for a typical unit would be as under:

• Working hours/day: 16 (2 shifts)

• Working days in a year: 300

• Annual Production capacity: 1000 TPA greenhouse film.

The unit has been assumed to operate at 70%, 80% and 90% of its installed capacity in the first,
second and third year and at 100% capacity from fourth year onwards of its operation.

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6.4 Process, Plant & Machinery (Details & List of Machinery Suppliers)

These films are made by a process known as co-extrusion blown film process, in which plastic pellets
or flakes and additives, if any, are premixed, melted into an extruder, propelled into a die which causes
the molten material to flow around a mandrel and emerge through a ring-shaped opening in the form
of a tube. A die with multiple flow channels is used in co-extrusion to form multiple individual layers.
Air is introduced into the tube causing it to expand and bubble. The air is contained in the bubble by
the die at one end and by nip rollers at the other end. Even air pressure is maintained to ensure uniform
thickness of the bubble. Airflow around the outside of the bubble cools and solidifies the melt. The
bubble is stretched to orient the plastic and improve its strength and properties. After solidification, the
film bubble moves into a set of pinch rollers to flatten and roll the material onto a winder.

The machinery required is a co-extrusion blown film plant.

Machinery Suppliers:

1. SS Mechanical Engineers

WZ-106/56, Rajouri Garden Extn.,

New Delhi-110027

E-MAIL : [email protected]

2. Vijayalaxmi Machines Pvt. Ltd.

A-31, Naraina Industrial Area,

Phase - 1, New Delhi - 110 028

3. Shreya Industries, Ahmedabad

B / H 30, Sidhdhpura Estate,

Near Ramol X Road, Phase – 4

G. I. D. C, Vatwa, Ahmedabad - 382 445

6.5 Raw Material & Utilities Requirement

The main raw material required is LLDPE. Raw Material requirement at 100% capacity is 1020 MT.
Utilities required are power and water. Around 418 KL of water and 100 KW of power are required.

6.6 Land & Built-up Area Requirement

The total land required is 2000 sq.m. and the built-up area is 800 sq.m.

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6.7 Manpower Requirement

Staff Nos
Plant Manager 1
Production Manager 1
Accountant 2
Supervisors 2
Skilled Workers 10
Unskilled Workers 10
Security 3
Total Manpower Required 29

6.8 Project Cost/ Fixed Capital Requirement & Means of Finance:

Land has not been considered as a part of the project cost because it has been considered to be taken
on lease (as applicable in Assam). One time Land Development Charges have been taken as part of the
Project Cost. Also, Special Maintenance Charges and an Annual Service Charge have been considered
as part of operating cost. The Total Project Cost is Rs. 220.36 Lakhs as detailed in the table below:

S.No Cost Head Cost (in Rs. Lakhs)

64.00
1 Building
50.18
2 Machinery
44.50
3 Miscellaneous Fixed Assets
2.00
4 Preliminary and Pre-Operative Expenses
45.38
5 Margin Money for Working Capital
10.30
6 Contingency Expenses
4.00
7 Land Development
220.36
Total
The means of finance considering Debt-Equity ratio of 2:1 will be:

Means of Finance Rs in lakhs

Equity 73.45
Debt 146.91
220.36
Total

6.9 Working Capital Requirement

The Total Working Capital Requirement is given below:

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(Rs. In Lakhs)

Particulars Years of Operation

1 2 3 4 5
Net WC 181.52 207.46 233.39 259.32 259.32
Available Bank Finance 136.14 155.59 175.04 194.49 194.49
Margin Money 45.38 51.86 58.35 64.83 64.83

6.10 Operating Expenses

The Annual Operating expenses for the first year (70% capacity utilization) are given below:
S.No. Particulars Expense(Rs in lakhs)
1 Utilities 0.85
2 Wages & Salaries 15.06
3 Interest on term loan 22.04
4 Interest on Bank Finance for Working Capital 20.42
5 Raw Material 507.83
6 Depreciation 9.61
7 Maintenance Charge 0.46
Total 576.26

6.11 Profitability Estimates

(Rs.in Lakhs)

S. NO. PARTICULARS YEAR

Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Production/Sales
Installed Capacity 1000 1000 1000 1000 1000
Capacity Utilization 70% 80% 90% 100% 100%
Estimated Production 700 800 900 1000 1000
Gross Sales Revenue 679 776 873 970 970
Expenses
Raw Material Consumption 508 580 653 725 725
Utilities 1 1 1 1 1
Administrative Overheads 10 10 10 10 10
Salaries 15 15 15 15 15
Sales Expenses 17 19 22 24 24
Loan Repayment 29 29 29 29 29
Maintenance Charges 0.46 0.46 0.46 0.46 0.46
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TOTAL 580 655 730 805 805

GROSS PROFIT 99 121 143 165 165
Financial Expenses
Interest On Term Loan 22 18 14 9 5
Interest On Working Capital 20 23 26 29 29
Sub Total 42 42 40 38 34
Depreciation 9.6 9.6 9.6 9.6 9.6
Profit Before Tax 47 70 93 117 121
Provision For Tax 15 23 31 39 40
Profit After Tax 31 47 62 78 81

6.12 Financial Indicators

The Average Break-Even Point for the project is 56%.

(Rs In Lakhs)
Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Sales Realisation 679 776 873 970 970
Fixed Costs
Salaries 19 19 19 19 19
Fixed Selling Expenses 17 19 22 24 24
Depreciation (SLM) 10 10 10 10 10
Utilities (Fixed) 1 1 1 1 1
Admin. Overheads 10 10 10 10 10
Loan Repayment 29 29 29 29 29
Interest On L.T. Loan 22 18 14 9 5
Total Fixed Costs 107 106 104 102 97
Variable Cost
Raw Materials 508 580 653 725 725
Interest On Working Capital Loan 20.42 23.34 26.26 29.17 29.17
Total Variable Costs 528 604 679 755 755
Contribution 151 172 194 215 215
Breakeven In % 71% 62% 54% 47% 45%
Average Break-Even 56%
The IRR for the project is 21.2%, Average ROI is 51% and the Average DSCR is 2.02.

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(Rs. In Lakhs)
Particulars Year of Operation
1 2 3 4 5
Revenue 679 776 873 970 970
Profit Before Tax 46.68 69.61 93.28 116.94 121.50
Profit After Tax 31.28 46.64 62.50 78.35 81.40
LT Interest 22.04 18.22 13.66 9.11 4.55
Depreciation 9.61 9.61 9.61 9.61 9.61
LT Loan Repayment 29.38 29.38 29.38 29.38 29.38
Return on Investment (%) 36% 44% 53% 62% 62%
Average ROI 51%
Debt-Service Coverage Ratio
- Debt Service 51.42 47.60 43.05 38.49 33.94
- Coverage 62.92 74.47 85.77 97.07 95.57
DSCR 1.22 1.56 1.99 2.52 2.82
Average DSCR 2.02

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7 HDPE Pipes

7.1 Introduction

Pipes made from Polyethylene (PE) are a cost effective solution to a number of piping problems in
Metropolitan, Municipal, Industrial, Underwater, Mining, Landfill Gas extraction, Cable duct and
agricultural applications. HDPE Pipes are manufactured from High Density Polyethylene. The pipes
are better substitutes for costly Metallic and Non-Metallic pipes like CI, GI, AC, RCC & MS.
HDPE Pipes are generally made black in colour by addition of Carbon Black to protect from ageing
& degradation due to ultraviolet sunrays. They have wide application areas and can be used for
potable water supply, irrigation/agriculture, gas transmission, industrial effluents, telephone cable
ducts, sewerage & drainage, sprinkler system, slurry transportation, chemical industries, tube-wells
etc.

They have the lowest repair frequency per kilometre of pipe per year compared to all other pipe
materials used for urban water and gas distribution. HDPE pipe is actually a superior type
product for many applications. The superiority of HDPE pipes can be seen from the
following properties:

• Economical than traditional pipe material.

• Resistant to chemicals- external and internal.

• Resistant to electrolytic corrosion.

• Resistant to rusting and rotting.

• Light Weight - One sixth of the weight of steel. Low specific gravity giving an outstanding
light weight product for easy transportation, handling, fitting etc.

• Very good thermal insulation due to low thermal conductivity.

• Smooth bore provides less head loss. Flow resistance is approximately 30% less than that of
conventional pipes, permitting the use of a smaller bore pipe for a given rate of flow.

• Perfect stability for material reduces the risk of ageing.

• Fire resistant

• Low maintenance cost.

• Easy to install.

• Longer Life than G.I., M.S. Cement & Other Pipes.

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7.2 Market Potential

There are 2-3 HDPE pipes manufacturers in the NER, with a total consumption of about 20-30 TPM
HDPE, of which about 50% is consumed in Assam. The HDPE pipes are mainly used in household
and agricultural sector. HDPE pipes are used in drip irrigation systems as well as for water and
sewerage. They have a large market potential in the North-East because they can replace the PVC and
GI pipes that are currently and most widely used in the region.

7.3 Plant Capacity

The production basis for a typical unit would be as under:

• Working hours/day: 16 (2 shifts)

• Working days in a year: 300

• Annual Production capacity: 600 TPA laminated HDPE Pipes.

The unit has been assumed to operate at 70%, 80% and 90% of its installed capacity in the first,
second and third year and at 100% capacity from fourth year onwards of its operation.

7.4 Process, Plant & Machinery (Details & List of Machinery Suppliers)

When HDPE pipes are made, HDPE granules or pellets are generally fed into a hopper where they are
melted down into HDPE resin. The HDPE resin is then carried through a cylindrical barrel with a
rotating screw and pumped through to the extrusion point, where it is pushed through a circular die
into yet another cylindrical barrel containing a die, an annular channel of clear space where the pipe
will be formed, and an outer shell known as a mandrel. The HDPE is pushed along this die and formed
into the shape of the pipe. The pipe is then drawn off at the end of the extrusion moulding barrel,
cooled and cut to length.

The process is fairly noisy, and needs to be overseen by experienced technicians in order that high
quality HDPE pipes emerge. This is especially true in case HDPE pipes are created from reprocessed
HDPE. Problems can emerge if the HDPE gets too hot when melted, or if friction in the screw is too
great. If the temperature rises too high, then the molecular structure of the HDPE can begin to break
down, reprocessed HDPE is more susceptible to this as it has already undergone one heating process,
which predisposes it to later weaknesses. If the molecular structure of the HDPE begins to fail, then
the structural soundness of the pipe gets compromised.

The machinery required for manufacturing HDPE pipes is as under:

1. Pipe Extrusion Plant (complete with hopper, barrels and dies)

2. Cutter

List of Machinery Suppliers:

1. Green Hose Extrusion Engineering
B-904, Akshardham Towers,
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Nr. Shahibaug Underbridge,
Shahibaug, Ahmedabad-380004
Gujarat
2. Suresh Engineering Works
14 B, Kalyan Vishranti Grah,
2, South Tukoganj
Indore - 452 001,
Madhya Pradesh
3. Umang Engineers
45, Adarsh Estate, Part-1,
Near Johnson Pump, Odhav
Ahmedabad - 382 415
Gujarat

7.5 Raw Material & Utilities Requirement

The raw material required is HDPE. Raw Material requirement at 100% capacity is 612 MT. Utilities
required are power and water. Around 432 KLPA of water and 75 KW of power are required.

7.6 Land & Built-up Area Requirement

The total land required is 5000 sq.m. and the built-up area is 2000 sq.m.

7.7 Manpower Requirement

Staff Nos
Production Manager 1
Accountant 2
Supervisors 4
Skilled Workers 10
Unskilled Workers 10
Security 3
Total Manpower Required 30

7.8 Project Cost/ Fixed Capital Requirement & Means of Finance

Land has not been considered as a part of the project cost because it has been considered to be taken
on lease (as applicable in Assam). One time Land Development Charges have been taken as part of the
Project Cost. Also, Special Maintenance Charges and an Annual Service Charge have been considered
as part of operating cost. The Total Project Cost is Rs. 255.95 Lakhs as per the table below:
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S.No Cost Head Cost (in Rs. Lakhs)

160.00
1 Building
27.27
2 Machinery
16.29
3 Miscellaneous Fixed Assets
2.00
4 Preliminary and Pre-Operative Expenses
28.68
5 Margin Money for Working Capital
11.71
6 Contingency Expenses
10.00
7 Land Development
255.95
Total
The means of finance considering Debt-Equity Ratio of 2:1 is:
Means of Finance Rs in lakhs
Equity 85.31
Debt 170.64
Total 255.95

7.9 Working Capital Requirement

The Total Working Capital Requirement is given below:

(Rs. In Lakhs)

Particulars Years of Operation

1 2 3 4 5
Net WC 114.72 131.11 147.50 163.89 163.89
Available Bank Finance 86.04 98.33 110.62 122.91 122.91
Margin Money 28.68 32.78 36.87 40.97 40.97

7.10 Operating Expenses

The Annual Operating expenses for the first year (70% capacity utilization) are given below:
S.No. Particulars Expense(Rs in lakhs)
1 Raw materials 447.20
2 Utilities 0.64
3 Wages & Salaries 14.34
4 Interest on term loan 25.60
5 Interest on Bank Finance for Working Capital 12.91
6 Depreciation 9.17
7 Maintenance Charges 1.15
Total 511

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7.11 Profitability Estimates

(Rs.in Lakhs)

S. NO. PARTICULARS YEAR

Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Production/Sales
Installed Capacity 600 600 600 600 600
Capacity Utilization 70% 80% 90% 100% 100%
Estimated Production 420 480 540 600 600
Gross Sales Revenue 567 648 729 810 810
Expenses
Raw Material Consumption 313 358 402 447 447
Utilities 1 1 1 1 1
Administrative Overheads 16 16 16 16 16
Salaries 18 18 18 18 18
Sales Expenses 14 16 18 20 20
Loan Repayment 34 34 34 34 34
Maintenance Charges 1 1 1 1 1
TOTAL 397 444 491 537 537
GROSS PROFIT 170 204 238 273 273
Financial Expenses

Interest On Term Loan 26 21 16 11 5

Interest On Working Capital 13 15 17 18 18
Sub Total 39 36 32 29 24
Depreciation 9.2 9.2 9.2 9.2 9.2
Profit Before Tax 122 159 197 234 240
Provision For Tax 40 52 65 77 79
Profit After Tax 82 106 132 157 161

7.12 Financial Indicators

The Average Break-Even Point for the project is 38%.

(Rs In Lakhs)
Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Sales Realisation 567 648 729 810 810

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Fixed Costs
Salaries 18 18 18 18 18
Fixed Selling Expenses 14 16 18 20 20
Depreciation (SLM) 9 9 9 9 9
Utilities (Fixed) 1 1 1 1 1
Admin. Overheads 16 16 16 16 16
Loan Repayment 34 34 34 34 34
Interest On L.T. Loan 26 21 16 11 5
Total Fixed Costs 118 115 112 109 104
Variable Cost
Raw Materials 313 358 402 447 447
Interest On Working Capital Loan 12.91 14.75 16.59 18.44 18.44
Total Variable Costs 326 373 419 466 466
Contribution 241 275 310 344 344
Breakeven In % 49% 42% 36% 32% 30%
Average Break-Even 38%

The IRR for the project is 20.3%, Average ROI is 84% and the average DSCR is 3.19.

(Rs. In Lakhs)
Particulars Year of Operation
1 2 3 4 5
Revenue 567 648 729 810 810
Profit Before Tax 122.07 158.92 196.62 234.32 239.61
Profit After Tax 81.79 106.47 131.73 156.99 160.54
LT Interest 25.60 21.16 15.87 10.58 5.29
Depreciation 9.17 9.17 9.17 9.17 9.17
LT Loan Repayment 34.13 34.13 34.13 34.13 34.13
Return on Investment (%) 61% 74% 87% 99% 99%
Average ROI 84%
Debt-Service Coverage Ratio
- Debt Service 59.73 55.29 50.00 44.71 39.42
- Coverage 116.55 136.80 156.77 176.74 174.99
DSCR 1.95 2.47 3.14 3.95 4.44

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Average DSCR 3.19

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8 Moulded Furniture

8.1 Introduction

In recent years, furniture is being manufactured using different polymers in place of traditional
material like wood, metal etc. The furniture is manufactured using Injection Moulding Technique. The
main polymer used for manufacturing is Polypropylene although HDPE is also used. Injection
Moulded furniture is easy to handle, has long life and can be attractively coloured and decorated in a
single step manufacturing process only.

There are many variants of injection moulded furniture like chairs either as a single moulded unit or
with metal leg supports in numerous designs, coffee tables, table tops, multi-purpose racks, drawer and
drawer fittings, trolleys, specially designed safe furniture for children, furniture for open pavilions,
auditoria, airport/railway stations etc.

In this profile, the furniture considered is stackable one shot plastic chairs with no metal or any other
base material.

8.2 Market Potential

There are about 550-600 manufacturers of moulded furniture in India, of which about 7-8
manufacturers are based in North-Eastern region. Most of the manufacturers in the region are engaged
in manufacturing of different varieties of chairs such as plastic foldable chairs, baby chairs and garden
chairs. Other manufactured products include tepoys, stools and tables.

Although plastic furniture has the advantage of increased flexibility and ease of handling, the industry
faces a direct competition from traditional wooden furniture and steel furniture. Moreover, the plastic
furniture market is driven by reprocessed/recycled polymer, which offers significant price advantage
over virgin polymer, PP (IM grade). The total requirement of virgin PP in this segment falls in the
range of about 400 TPM, of which about 250-270 TPM is consumed in Assam. The
reprocessed/recycled PP accounts for an additional 400 TPM. This is indicative of the increased
presence of cost effective reprocessed moulded furniture in the NER markets. The past growth of this
industry has been about 15-20%.

8.3 Plant Capacity

The production basis for a typical unit would be as under:

• Working hours/day: 16 (2 shifts)

• Working days in a year: 300

• Annual Production capacity: 1000 TPA processing of PP for manufacturing chairs.

The unit has been assumed to operate at 80%, 85% and 90% of its installed capacity in the first,
second and third year and at 100% capacity from fourth year onwards of its operation.

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8.4 Process, Plant & Machinery (Details & List of Machinery Suppliers)

The manufacturing process of injection moulded furniture is very simple. The PP granules are fed via
a regulated hopper into a homogenous molten mass by application of heat and shearing action of a
continuously rotating extruded screw which also pushes the plastic melt forward. The melt gets
collected at the forward end of the extruder cylinder and is pushed into the mould cavity by the screw
which now acts as a hydraulic piston.

The mould is kept at a pre-specified temperature and once injected, the plastic melt is held under high
pressure to ensure that the material reaches all ends of the mould. In furniture moulding, moulds used
have very large depth. A locking force of an order of 1500 tonnes or so is essential to reduce the
wastage. The mould is opened after the plastic melt has solidified sufficiently and the moulded item is
ejected by means of ejector pins or plates. During the cooling cycle in the mould, the extruder screw
prepares another batch of plastic melt, ready to be injected, and thus, the cycle goes on continuously.

The moulded articles usually don’t require any finishing operation, except for removal of excess
material, if any. Otherwise, after visual inspection, they are kept for curing for about 40-50 hours and
then despatched.

The machinery required for the plant is Hopper, Injection Moulding Machine, Moulds and Cooling
Plant.

The Plant and machinery Suppliers include:

1. Anu Engineering Works

253/260, 1st Main, Vinayaka Nagar,

Kamakshipalya Industrial Area

Mumbai- 560079

2. Ace Automation,

228/1, M. G. R. Street,

Sivanandapuram, Saravanampatti

Coimbatore - 641 035

3. G.S Azad Industry

A-31, Nariana Industrial Area Phase I

New Delhi - 110 028

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8.5 Raw Material & Utilities Requirement

The raw material used, include PP (Injection Moulded Grade), which is the most popularly used raw
material for injection moulded furniture. Apart from PP, some additives and stabilizers are also
required.

Major utilities required are electricity, cooling water and compressed air.

8.6 Land & Built-up Area Requirement

The total land required is 1000 sq.m. and the built-up area is 400 sq. m.

8.7 Manpower Requirement

Staff Nos
Production Manager 2
Accountant 2
Supervisors 2
Skilled Workers 10
Unskilled Workers 15
Security 3
Total Manpower Required 34

8.8 Project Cost/ Fixed Capital Requirement & Means of Finance

Land has not been considered as a part of the project cost because it has been considered to be taken
on lease (as applicable in Assam). One time Land Development Charges have been taken as part of the
Project Cost. Also, Special Maintenance Charges and an Annual Service Charge have been considered
as part of operating cost. The Total Project Cost is Rs. 295.14 Lakhs with the following break-up:

S.No Cost Head Cost (in Rs. Lakhs)

32.00
1 Building
167.25
2 Machinery
22.13
3 Miscellaneous Fixed Assets
2.00
4 Preliminary and Pre-Operative Expenses
57.71
5 Margin Money for Working Capital
14.05
6 Contingency Expenses
2.00
7 Land Development
295.14
Total

The means of finance considering Debt-Equity Ratio of 2:1 will be:

Means of Finance Rs in lakhs

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Equity 98.37
Debt 196.77
295.14
Total

8.9 Working Capital Requirement ( in Rs Lakhs)

The Total Working Capital Requirement is given below:

Particulars Years of Operation

1 2 3 4 5
Net WC 230.85 245.28 259.70 288.56 288.56
Available Bank Finance 173.14 183.96 194.78 216.42 216.42
Margin Money 57.71 61.32 64.93 72.14 72.14

8.10 Operating Expenses

The Operating Expenses for the first year of operation i.e. at 80% capacity utilisation are as under:

Sl No Particulars Expense(Rs in lakhs)

4.15
1 Utilities
15.36
2 Wages & Salaries
29.52
3 Interest on term loan
25.97
4 Interest on Bank Finance for Working Capital
17.98
5 Depreciation
600.63
6 Raw Materials
0.23
7 Maintenance Charge
693.83
Total

8.11 Profitability Estimates

(Rs. In Lakhs)

S. NO. PARTICULARS YEAR

Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Production/Sales
Installed Capacity 1000 1000 1000 1000 1000
Capacity Utilization 80% 85% 90% 100% 100%
Estimated Production (TPA) 800 850 900 1000 1000
Gross Sales Revenue 880 935 990 1100 1100
Expenses
Raw Material Consumption 601 638 676 751 751
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Utilities 4 4 4 4 4
Administrative Overheads 22 22 22 22 22
Salaries 19 19 19 19 19
Sales Expenses 22 23 25 28 28
Loan Repayment 39 39 39 39 39
Maintenance Charges 0.23 0.23 0.23 0.23 0.23
TOTAL 708 746 785 863 863
GROSS PROFIT 172 189 205 237 237
Financial Expenses
Interest On Term Loan 30 24 18 12 6
Interest On Working Capital 26 28 29 32 32
Sub Total 55 52 48 45 39
Depreciation 18.0 18.0 18.0 18.0 18.0
Profit Before Tax 99 119 139 174 180
Provision For Tax 33 39 46 57 59
Profit After Tax 66 79 93 117 121

8.12 Financial Indicators

The Average Break-Even Point for the project is 51%.

(Rs in Lakhs)
Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Sales Realisation 880 935 990 1100 1100
Fixed Costs
Salaries 19 19 19 19 19
Fixed Selling Expenses 22 23 25 28 28
Depreciation (SLM) 18 18 18 18 18
Utilities (Fixed) 4 4 4 4 4
Admin. Overheads 22 22 22 22 22
Loan Repayment 39 39 39 39 39
Interest On L.T. Loan 30 24 18 12 6
Total Fixed Costs 154 150 146 142 136
Variable Cost
Raw Materials 601 638 676 751 751
Interest On Working Capital Loan 25.97 27.59 29.22 32.46 32.46
Total Variable Costs 627 666 705 783 783
Contribution 253 269 285 317 317

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Breakeven In % 61% 56% 51% 45% 43%

51%
Average Break-Even

The IRR for the project is 27.3%, Average ROI is 60% and the average DSCR is 2.37.

(Rs. In Lakhs)

Particulars Year of Operation

1 2 3 4 5
Revenue 880 935 990 1100 1100
Profit Before Tax 98.97 118.55 139.11 174.14 180.24
Profit After Tax 66.31 79.43 93.21 116.67 120.76
LT Interest 29.52 24.40 18.30 12.20 6.10
Depreciation 17.98 17.98 17.98 17.98 17.98
LT Loan Repayment 39.35 39.35 39.35 39.35 39.35
Return on Investment (%) 50% 55% 59% 69% 69%
Average ROI 60%
Debt-Service Coverage Ratio
- Debt Service 68.87 63.75 57.65 51.55 45.45
- Coverage 113.81 121.81 129.48 146.85 144.84
DSCR 1.65 1.91 2.25 2.85 3.19
Average DSCR 2.37

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9 Pre-fill PP Polymer

9.1 Introduction

The Thermoplastic compounding industry forms a vital interface between resin production and the
plastic converter. Most processors require the polymers they use, to be coloured or modified in some
way (i.e. with the addition of additives such as flame retardants or UV light stabilizers) and in the case
of PVC, all resin has to be compounded before it can be processed. Very few processors carry out their
own compounding; the majority buy in ready compounded material either directly from the polymer
supplier or through independent compounders.

With wide range of application, the demand of the compounds/master-batches continues to grow and
help in increasing the value-addition of the polyolefin. While compounding enhances the properties of
polymers coupled with the reduction in costs, the master-batches provide the desired aesthetics to the
polymer.

9.2 Market Potential

Thermoplastic compounding industry was estimated to be 7 MMT in 2003. It is expected to grow at

around 3% with the shift of processing industry towards Asia, especially China. Major processors are
investing in fresh capacity in this region and this has also promoted compounders to look into
investment in this region. Also, the US market is very matured and rising raw material pricing has
affected the margins of compounders.

Demand for compound in Asia is estimated to be 7.8 MMT in 2004 and the market has been
increasing at an average of nearly 10% per year since 2000.

 Compounding industry in India can be broadly classified as:

Exclusive compounders of PP & the other engineering compounds.

Producers of compounds & Master-batches.

Mainly wire & cable Compounders.

 The Indian compounding industry scenario has been briefly summarized as below:

Total Installed Capacity 165 KTA

Total production 99 KTA

Capacity Utilization 60%
No. of players 21
Major applications Automobiles, Appliance, Wire & Cable
Major compounders Machino Plast, Hydro S&S, Tipco, Zylog Shakun
polymers

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9.3 Plant Capacity

The production basis for a typical unit would be as under:

Working hours/day: 16 (2 shifts)

Working days in a year: 300

Annual Production capacity: 500 TPA Compounded PP Polymer

The unit has been assumed to operate at 70%, 80% and 90% of its installed capacity in the first,
second and third year and at 100% capacity from the fourth year onwards of its operation.

9.4 Process, Plant & Machinery (Details & List of Machinery Suppliers)

Polymer compounds are manufactured by extrusion compounding. In a step-by-step operation,

polymer compounds are made as follows:

Incorporate additives and then blend the two polymers in a mixer.

A stable poly blend is obtained by dispersing and stabilizing the system by means of an
appropriate compatibilizer by earlier step

Alloying of stabilized polymers is done on a compounding extruder with 5 temperature
profiles and removal of volatiles. The screening of the melt is achieved in this step.

The strands are extruded through a strand die and then cooled by passing through a water bath
and an air knife and then to the strand pelletizer, and collected as pellets at the end of the line.

The pellets of the compounded polymer alloys thus obtained can be stored for further use or
sale.

The major plant and machinery required for the Compounding project is:

Twin screw extruders

Dosing Pumps

Pelletisers

Micro Processor based Programmable Logic Control (PLC) system

Air Compressors

Chilling Plant

Hopper Loading System

Colour matching system

Pellet wrapping machine

Material Handling system for RM & Finished goods

Stand-by DG Sets
 The heart of compounding technology is the extruder equipments. The prominent suppliers of
Twin-screw extruders are:

Overseas Suppliers

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Fressia Macros

Werner and Pfleidler

Berstoff

Buss Co-kneader Extrusion systems

Thyssen Machinenbau GmbH

Ferrel Corporation

Domestic Suppliers

Inventa

Windsor

Rubplast

Interplast

9.5 Raw Material & Utilities Requirement

The raw material required is PP and additives. At 100% capacity utilisation 525 MT of PP and 53 MT
of additives are required. The main utilities are power and water. Around 449 KL of water and 150
KW of power is required per annum.

9.6 Land & Built-up Area Requirement

The total land required is 2000 sq. m. and the built-up area is 800 sq. m

9.7 Manpower Requirement

Staff Nos
Plant Manager 1
Laboratory Manager 1
Production Manager 1
Accountant 2
Supervisors 4
Skilled Workers 10
Unskilled Workers 12
Security 3
Total Manpower Required 34

9.8 Project Cost/ Fixed Capital Requirement & Means of Finance:

Land has not been considered as a part of the project cost because it has been considered to be taken
on lease (as applicable in Assam). One time Land Development Charges have been taken as part of the

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Project Cost. Also, Special Maintenance Charges and an Annual Service Charge have been considered
as part of operating cost. The total project cost is Rs. 218.31 Lakhs as per the table below:

S.No Cost Head Cost (in Rs. Lakhs)

64.00
1 Building
64.67
2 Machinery
43.25
3 Miscellaneous Fixed Assets
2.00
4 Preliminary and Pre-Operative Expenses
30.18
5 Margin Money for Working Capital
10.21
6 Contingency Expenses
4.00
7 Land Development
Total 218.31
The means of finance considering Debt-Equity ratio of 2:1 will be:

Means of Finance Rs in lakhs

Equity 72.76
Debt 145.55
218.31
Total

9.9 Working Capital Requirement

The total working capital requirement is as under:

Particulars Years of Operation

1 2 3 4 5
Net WC 120.74 137.98 155.23 172.48 172.48
Available Bank Finance 90.55 103.49 116.42 129.36 129.36
Margin Money 30.18 34.50 38.81 43.12 43.12

9.10 Operating Expenses

The Annual Operating Expenses for the first year (70 % capacity utilisation) are as under:

S.No Particulars Expense(Rs in lakhs)

1.10
1 Utilities
18.54
2 Wages & Salaries
21.83
3 Interest on term loan @ 15%
13.58
4 Interest on Bank Finance for Working Capital @ 15%
256.60
5 Raw Material
9.36
6 Depreciation
0.46
7 Maintenance Charges

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321.48
Total

9.11 Profitability Estimates

S. NO. PARTICULARS YEAR

Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Production/Sales
Installed Capacity 550 550 550 550 550
Capacity Utilization 70% 80% 90% 100% 100%
Estimated Production 385 440 495 550 550
Gross Sales Revenue 481 550 618.75 687.5 687.5
Expenses
Raw Material Consumption 257 293 330 367 367
Utilities 1 1 1 1 1
Administrative Overheads 14 14 14 14 14
Salaries 19 19 19 19 19
Sales Expenses 12 14 15 17 17
Loan Repayment 29 29 29 29 29
Maintenance Charges 0.46 0.46 0.46 0.46 0.46
Total 332 370 408 447 447
Gross Profit 150 180 210 241 241
Financial Expenses
Interest On Term Loan 22 18 14 9 5
Interest On Working Capital 14 16 17 19 19
Sub Total 35 34 31 28 24
Depreciation 9.4 9.4 9.4 9.4 9.4
Profit Before Tax 105 137 170 203 208
Provision For Tax 35 45 56 67 68
Profit After Tax 70 92 114 136 139

9.12 Financial Indicators

The average break-even point is 41%.

Particulars (Rs In Lakh)

Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Sales Realisation 481 550 619 688 688
Fixed Costs
Salaries 23 23 23 23 23

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Fixed Selling Expenses 12 14 15 17 17

Depreciation (SLM) 9 9 9 9 9
Utilities (Fixed) 1 1 1 1 1
Admin. Overheads 14 14 14 14 14
Loan Repayment 29 29 29 29 29
Interest On L.T. Loan 22 18 14 9 5
Total Fixed Costs 110 108 106 103 98
Variable Cost
Raw Materials 257 293 330 367 367
Interest On Working Capital Loan 13.58 15.52 17.46 19.40 19.40
Total Variable Costs 270 309 347 386 386
Contribution 211 241 271 302 302
Breakeven In % 52% 45% 39% 34% 33%
Average BEP 41%

The IRR for the project is 23.2%, Average ROI is 86% and the average DSCR is 3.27

(Rs. In Lakhs)
Particulars Year of Operation
1 2 3 4 5
Revenue 481 550 619 688 688
Profit Before Tax 104.88 137.10 170.05 202.99 207.50
Profit After Tax 70.27 91.86 113.93 136.01 139.03
LT Interest 21.83 18.05 13.54 9.02 4.51
Depreciation 9.36 9.36 9.36 9.36 9.36
LT Loan Repayment 29.11 29.11 29.11 29.11 29.11
Return on Investment (%) 62% 75% 88% 101% 101%
Average ROI 86%
Debt-Service Coverage Ratio
- Debt Service 50.94 47.16 42.65 38.13 33.62
- Coverage 101.47 119.27 136.83 154.39 152.90
DSCR 1.99 2.53 3.21 4.05 4.55
Average DSCR
3.27

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10 Toys

10.1 Introduction

Plastics due to possibility of wide range of shapes, designs and colours and suitability to mass
production are finding ever increasing acceptance as the conventional raw materials for toys. This is
also the fastest growing market because of increasing urbanization and an awareness about the quality
of toys. All the present manufacturers of branded toys use different plastics as the major raw material
for their toys.

Newer designs continue being introduced in the market to attract consumer attention. However, the
basic themes for toys are almost the same over the years e.g. dolls, cars, aeroplanes, trains, animals,
robots etc. For the present profile, we have considered a project to manufacture quality plastic
moulded toys based on all the above themes.

10.2 Market Potential

The household goods, toys sector is highly fragmented in the north east, characterized by the presence
of about 9-10 small scale manufacturers. The total consumption of PP by these industries ranges from
100-150 TPA, of which the consumption in Assam is about 15-20 TPM. The total PE consumption
(mainly HDPE consumption) is about 50 TPM, of which Assam accounts for about 10%. The overall
growth of industries in this sector has been 10-15%.

10.3 Plant Capacity

The production basis for a typical unit would be as under:

Working hours/day: 8 (1 shift)

Working days in a year: 300

Annual Production capacity: 500 TPA of LLDPE Toys

The unit has been assumed to operate at 75%, 80% and 90% of its installed capacity in the first,
second and third year and at 100% capacity from the fourth year onwards of its operation.

10.4 Process, Plant & Machinery (Details & List of Machinery Suppliers)

The manufacturing process involves preparation of charge, injection moulding of parts or entire toy,
finishing and assembling, printing and packaging. IM grade LLDPE is mixed with other additives like
stabilizers and colourants. This compounded charge is fed in controlled quantity through a feed-hopper
to the extruder cylinder, where by means of band heaters and shearing action of continuously rotating
screw it is converted into an easily flowing melt. Through a well designed nozzle, runner and gate
arrangement the melt is transferred into the required mould, mounted on the fixed platen of injection
moulded unit. The moving platen closes the mould at specified locking tonnage and the part or entire
toy gets moulded under required pressure.
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The article remains in the mould till it is cooled and is then ejected by means of ejector pins or plates.
The moulded part is then sent to the finishing section where extra materials are removed and sent for
recycling. If printing is to be done, the finished part is sent to printing unit. Otherwise it is directly sent
to assembly and packaging unit where assembling and final packaging is done before despatching the
toy to stores.

The machinery required is as under:

1. Injection Moulding Machine
2. Printing Machine
3. Moulds
4. Utility equipments

Machinery Suppliers:
1. Anu Engineering Works

253/260, 1st Main, Vinayaka Nagar,

Kamakshipalya Industrial Area

Mumbai- 560079
2. Ace Automation,

228/1, M. G. R. Street,

Sivanandapuram, Saravanampatti

Coimbatore - 641 035

3. G.S Azad Industry

A-31, Nariana Industrial Area Phase I

New Delhi - 110 028

10.5 Raw Material & Utilities Requirement

The raw material required is LLDPE. At 100% capacity utilisation 510 MT of LLDPE is required. For
packaging, 51 MT of LLDPE is required.

Raw Material Total requirement per annum Cost (Rs./MT) Total Cost(Rs.
Requirement (MT) Lakhs)

LLDPE( 2% wastage) 510 72098 368

LLDPE for packaging 51 72098 37

Total Raw Material Cost 404

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The main utilities are power and water. Around 386 KL of water and 20 KW of power is required per
annum.

10.6 Land & Built-up Area Requirement

The total land required is 2000 sq. m. and the built-up area is 800 sq. m

10.7 Manpower Requirement

Staff Nos
Plant Manager 1
Production Manager 1
Accountant 1
Supervisors 2
Skilled Workers 10
Unskilled Workers 10
Security 3
Total Manpower Required 28
A margin of 25% has been considered for other benefits for the staff.

10.8 Project Cost/ Fixed Capital Requirement & Means of Finance:

Land has not been considered as a part of the project cost because it has been considered to be taken
on lease (as applicable in Assam). One time Land Development Charges have been taken as part of the
Project Cost. Also, Special Maintenance Charges and an Annual Service Charge have been considered
as part of operating cost. The total project cost is Rs. 152.82 Lakhs as per the table below:

S.No. Cost Head Cost (in Rs. Lakhs)

64.00
1 Building
19.23
2 Machinery
19.88
3 Miscellaneous Fixed Assets
2.00
4 Preliminary and Pre-Operative Expenses
36.63
5 Margin Money for Working Capital
7.09
6 Contingency Expenses
4.00
7 Land Development
152.82
Total
The means of finance considering Debt-Equity ratio of 2:1 will be:
Means of Finance Rs in lakhs
Equity 50.94
Debt 101.89

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Total 152.82

10.9 Working Capital Requirement

The total working capital requirement is as under:

Particulars Years of Operation

1 2 3 4 5
Net WC 109.88 117.21 131.86 146.51 146.51
Available Bank Finance 82.41 87.91 98.89 109.88 109.88
Margin Money 27.47 29.30 32.96 36.63 36.63

10.10 Operating Expenses

The Annual Operating Expenses for the first year (75 % capacity utilisation) are given below:

S.No Particulars Expense(Rs in lakhs)

0.1
1 Utilities
14.34
2 Wages & Salaries
15.28
3 Interest on term loan
12.36
4 Interest on Bank Finance for Working Capital
303.35
5 Raw Material
5.18
6 Depreciation
0.46
7 Maintenance Charge
351.08
Total

10.11 Profitability Estimates

S. NO. PARTICULARS YEAR

Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Production/Sales
Installed Capacity 500 500 500 500 500
Capacity Utilization 75% 80% 90% 100% 100%
Estimated Production 375 400 450 500 500
Gross Sales Revenue 413 440 495 550 550
Expenses
Raw Material Consumption 303 324 364 404 404
Utilities 0 0 0 0 0
Administrative Overheads 11 11 11 11 11
Salaries 14 14 14 14 14
Sales Expenses 10 11 12 14 14
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Loan Repayment 20 20 20 20 20
Maintenance Charges 0.46 0.46 0.46 0.46 0.46
Total 360 381 423 465 465
Gross Profit 53 59 72 85 85
Financial Expenses
Interest On Term Loan 15 13 9 6 3
Interest On Working Capital 12 13 15 16 16
Sub Total 28 26 24 23 20
Depreciation 5.2 5.2 5.2 5.2 5.2
Profit Before Tax 20 28 43 58 61
Provision For Tax 7 9 14 19 20
Profit After Tax 13 19 29 39 41

10.12 Financial Indicators

The average break-even point for the project is 68%.

Particulars (Rs In Lakh)

Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Sales Realisation 413 440 495 550 550
Fixed Costs
Salaries 18 18 18 18 18
Fixed Selling Expenses 10 11 12 14 14
Depreciation (SLM) 5 5 5 5 5
Utilities (Fixed) 0 0 0 0 0
Admin. Overheads 11 11 11 11 11
Loan Repayment 20 20 20 20 20
Interest On L.T. Loan 15 13 9 6 3
Total Fixed Costs 80 78 76 75 71
Variable Cost
Raw Materials 303 324 364 404 404
Interest On Working Capital Loan 12.36 13.19 14.83 16.48 16.48
Total Variable Costs 316 337 379 421 421
Contribution 97 103 116 129 129
Breakeven In % 83% 76% 66% 58% 55%
Average BEP 68%
The IRR for the project is 22%, Average ROI is 37% and the average DSCR is 1.49.

(Rs. In Lakhs)
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Particulars Year of Operation

1 2 3 4 5
Revenue 413 440 495 550 550
Profit Before Tax 19.69 28.11 42.80 57.48 60.64
Profit After Tax 13.19 18.83 28.67 38.51 40.63
LT Interest 15.28 12.63 9.48 6.32 3.16
Depreciation 5.18 5.18 5.18 5.18 5.18
LT Loan Repayment 20.38 20.38 20.38 20.38 20.38
Return on Investment (%) 26% 30% 38% 45% 45%
Average ROI 37%
Debt-Service Coverage Ratio
- Debt Service 35.66 33.01 29.85 26.69 23.54
- Coverage 33.68 36.67 43.35 50.04 48.99
DSCR 0.94 1.11 1.45 1.87 2.08
Average DSCR 1.49

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11 Woven Sacks

11.1 Introduction

Synthetic Woven Sacks made from HDPE or PP are one of the bulk packaging materials. These sacks
are presently being used for packaging of bulk commodities like cement, fertilizers and some other
applications like sugar, salt, chemicals, wheat flour, starch, poultry products, bulk drugs etc. Some of
the newer applications of woven sacks are Geo-synthetic products, postal/mail bags, tea packaging etc.

High density polyethylene or HDPE woven sacks have become a versatile commodity in the
packaging industry. Introduced for the first time in India during the year 1969 it has over the years
replaced the conventional jute bags to a large extent. HDPE sacks have an edge over the conventional
jute sacks in the sense that the former are light in weight, strong and attractive. These sacks are
immune to the effect of corrosion, decay, moisture, atmosphere, rats, rodents, moths and insects.
Being superior in quality and economic as compared to the traditional jute material, these modern
sacks have gradually captured a large market for packing fertilizers, chemicals, food stuffs, animal
foods, oil cakes etc. Sacks made of HDPE are laminated with LDPE inside it. This gives protection
against moisture, air and the material packed cannot penetrate out of the sack.

11.2 Market Potential

Woven Sacks industry constitutes PP & HDPE polymers and is primarily used for packaging of
industrial goods such as cement, fertilizer, flour, chemicals, sugar as well as agricultural produce. The
total estimated installed capacity of woven sacks segment in North-Eastern Region is in the range of
900 MTPM dominated by PP. The woven sacks industry is the single largest PP consuming sector in
the NER. At present there are no units manufacturing laminated HDPE woven sacks in Assam or in
any part of the N.E. Region. As a result the full requirement of laminated HDPE woven sacks is
supplied by manufacturers from outside the state and region.

The current demand for woven sacks in North Eastern region is estimated to be in the range of 600-
650 MTPM of which only 60-70% of the requirement is fulfilled by local industries. Cement,
Fertilizer and Flour Mills are major woven sacks consuming sectors in North-Eastern Region. The
only fertilizer complex (urea based) of NER is located in Assam with installed capacity of 0.5
MMTPA, and has reported a production growth of 12% in the past five years. Apart from urea
complex, there are 9 bio-fertilizer units in the region with a total installed capacity of 1115 MTPA.
The consumption of HDPE for a standard packaging size of 50 kg fertilizer ranges between 110-120
gm. Based on this, the annual HDPE consumption for the fertilizer industry is estimated to be about
800 TPA (nearly 70 TPM). Almost entire quantity of the HDPE sacks requirement is met by suppliers
outside the NER.

11.3 Plant Capacity

The production basis for a typical unit would be as under:

• Working hours/day: 8 (1 shift)

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• Working days in a year: 300

• Annual Production capacity: 600 TPA laminated HDPE woven sacks and 400 TPA of PP
woven sacks.

• The unit has been assumed to operate at 75%, 80% and 90% of its installed capacity in the
first, second and third year and onwards of its operation.

11.4 Process, Plant & Machinery (Details & List of Machinery Suppliers)

The process of manufacture of laminated HDPE woven sacks involves four major operations which
maintain continuity from the raw material or HDPE granules stage to the finished product stage. These
operations or processes are as follows:
1. Production of mono-axially oriented tapes in the extruder and auxiliary equipment
2. Processing of the tapes thus produced in textile equipment and machinery to obtain the woven
material or fabric.
3. Extrusion coating/laminating the out coming woven material with low density polyethylene in
the extrusion coating/laminating plant.
4. Cutting and stitching the laminated woven material into the required sizes and finally printing
the name, trade mark etc. of the agency whose product is to be packed on the sack to obtain
the final or finished product.

Major machinery required for manufacturing woven sacks is as under:

• Extrusion Tape Lines for Raffia Tape Manufacture

• Circular Weaving Machines

• Laminating Machines

• Cutting Machine

• Stitching Machines

• Printing Machines

Under this project, the plant would be producing the output till the laminating stage. Cutting, stitching
and printing can be outsourced (on job work basis) since the production capacity is not that high and
hence it is advisable to go in till the laminating stage in the initial phase. For future expansion,
machines for cutting, stitching and printing can be added.

Plant and Machinery Suppliers

The following table gives the names and addresses of suppliers along with the machinery type suitable
for the process and product.

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Sl No Name Communication Address
1 Lohia Starlinger Ltd D-3/A, Panki Industrial Estate,
Kanpur - 208 022, INDIA
2 DGP Windsor India Ltd 5403, Phase IV, G. I. D. C. Industrial Area, Vatva,
Ahmedabad 380 44, Gujarat
3 J.P.Industries 1701, G.I.D.C. Industrial Estate
Ankleshwar - 393 002,
Dist. Bharuch, Gujarat, India.
4 Brimco Plastic Machinery (P) Brimco House, 55 Govt. Indl. Estate,Charkop, Kandivli
Ltd (W), Mumbai - 400067 ,Maharashtra, India

11.5 Raw Material & Utilities Requirement

The major raw material required for the project is as follows:

• Raffia grade high density polyethylene (HDPE)

• Raffia grade polypropylene (PP)

• Lamination grade low density Polyethylene (LDPE)

The production capacity of HDPE & PP has been taken at 60:40. The raw material required would be
around 630 MT of HDPE and 420 MT of PP at 100% capacity utilisation.

11.6 Land & Built-up Area Requirement

The total land required is 8000 sq.m. and the built-up area is 3200 sq.m.

11.7 Manpower Requirement & Project Implementation Schedule

Staff Nos
Production Manager 1
Accountant 2
Supervisors 4
Skilled Workers 10
Unskilled Workers 15
Security 3
Total Manpower Required 35
A margin of 25% has been considered for other benefits for the staff.

11.8 Project Cost/ Fixed Capital Requirement & Means of Finance:

Land has not been considered as a part of the project cost because it has been considered to be taken
on lease (as applicable in Assam). One time Land Development Charges have been taken as part of the
Project Cost. Also, Special Maintenance Charges and an Annual Service Charge have been considered
as part of operating cost. The total Project Cost is Rs. 675.44 Lakhs as per the table below:
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S.No Cost Head Cost (in Rs. Lakhs)

1 Building 256.00
2 Machinery 279.13
3 Miscellaneous Fixed Assets 20.13
4 Preliminary and Pre-Operative Expenses 2.00
5 Margin Money for Working Capital 70.78
6 Contingency Expenses 31.40
7 Land Development 16.00
Total 675.44

The means of finance considering Debt-Equity ratio of 2:1 will be:

Means of Finance Rs in lakhs

Equity 225.12
Debt 450.31
675.44
Total

11.9 Working Capital Requirement

The Total Working Capital Requirement is as under:

Particulars Years of Operation

1 2 3 4 5
Net WC 283.14 302.01 339.77 377.52 377.52
Available Bank Finance 212.35 226.51 254.82 283.14 283.14
Margin Money 70.78 75.50 84.94 94.38 94.38

11.10 Operating Expenses

The Annual Operating expenses for the first year (75% capacity utilization) are given below:

Sl No Particulars Expense(Rs in lakhs)

1.06
1 Utilities
15.84
2 Wages & Salaries
67.55
3 Interest on term loan
31.85
4 Interest on Bank Finance for Working Capital
570.50
5 Raw Material
30.80
6 Depreciation
1.84
7 Maintenance Charges
15.00
8 Job Work Charges
734.44
Total

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11.11 Profitability Estimates

(Rs. In Lakhs)

S. NO. PARTICULARS YEAR

Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Production/Sales
Installed Capacity (HDPE 600 600 600 600 600
Installed Capacity (PP 400 400 400 400 400
Capacity Utilization 75% 80% 90% 100% 100%
Estimated Production 450 480 540 600 600
Estimated Production (PP 300 320 360 400 400
Gross Sales Revenue 1140 1216 1368 1520 1520
Expenses
Raw Material Consumption 571 609 685 761 761
Utilities 1 1 1 1 1
Administrative Overheads 30 30 30 30 30
Salaries 20 20 20 20 20
Sales Expenses 29 30 34 38 38
Loan Repayment 90 90 90 90 90
Maintenance Charges 2 2 2 2 2
Job Work Charges 15 16 18 20 20
Total 757 798 880 962 962
Gross Profit 383 418 488 558 558
Financial Expenses
Interest On Term Loan 68 56 42 28 14
Interest On Working 32 34 38 42 42
Sub Total 99 90 80 70 56
Depreciation 30.8 30.8 30.8 30.8 30.8
Profit Before Tax 253 297 377 457 471
Provision For Tax 83 98 124 151 155
Profit After Tax 169 199 253 306 316

11.12 Financial Indicators

The average break-even point for the project is 40%.

Particulars (Rs In Lakh)

Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Sales Realisation 1140 1216 1368 1520 1520
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Fixed Costs
Salaries 20 20 20 20 20
Fixed Selling Expenses 29 30 34 38 38
Depreciation (SLM) 31 31 31 31 31
Utilities (Fixed) 1 1 1 1 1
Admin. Overheads 30 30 30 30 30
Loan Repayment 90 90 90 90 90
Interest On L.T. Loan 68 56 42 28 14
Total Fixed Costs 268 258 248 238 224
Variable Cost
Raw Materials 571 609 685 761 761
Interest On Working Capital Loan 31.85 33.98 38.22 42.47 42.47
Total Variable Costs 602 643 723 803 803
Contribution 538 573 645 717 717
Breakeven In % 50% 45% 38% 33% 31%
Average BEP 40%

The IRR for the project is 18.9%, Average ROI is 66% and the average DSCR is 2.54.

(Rs. In Lakhs)
Particulars Year of Operation
1 2 3 4 5
Revenue 1140 1216 1368 1520 1520
Profit Before Tax 252.64 297.29 377.14 456.98 470.94
Profit After Tax 169.27 199.18 252.68 306.18 315.53
LT Interest 67.55 55.84 41.88 27.92 13.96
Depreciation 30.80 30.80 30.80 30.80 30.80
LT Loan Repayment 90.06 90.06 90.06 90.06 90.06
Return on Investment (%) 52% 57% 67% 76% 76%
Average ROI 66%
Debt-Service Coverage Ratio
- Debt Service 157.61 145.90 131.94 117.98 104.02
- Coverage 267.61 285.82 325.36 364.90 360.29
DSCR 1.70 1.96 2.47 3.09 3.46
Average DSCR 2.54

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12 HDPE Mug, Bucket, Containers and PP Comb

12.1 Introduction

Thermo-plastic materials like High Density Polythene (HDPE) can be blow moulded into containers
of different sizes and shapes. Some of the common items that are produced include buckets, mugs and
jerry cans. Their light weight, flexibility, corrosion and chemical resistance have made these plastic
products popular for storage and handling of water, petrol, diesel etc.

Combs are an item of daily necessity. In earlier days, combs were made out of ivory, horns of cows
and buffaloes, which have now become costly affair. In recent years, plastic combs are being used,
increasingly it is becoming convenient to handle and economic. Plastic combs are produced using
Polypropylene by injection moulding machines.

12.2 Market Potential

Plastic comb, mug, bucket and containers are considered as necessity items for every household. As
per 2001 census the population of North Eastern region is 3.90 Crores. Considering that five persons
constitute a household the total household in the region is 78, 00,000 and also considering that every
year there is a replacement demand to change these items by at least 30% of total number of
households, the requirement of these items on this basis becomes 23,40,000 numbers. This may be in
addition to the new demand for these items by at least 15% of total number of household every year
which stands at 11,70,000. Therefore, every year at least 35, 10,000 such items are required by the
households in the North Eastern Region.

To meet the above demand there exist around 10 numbers of related units in the region in Guwahati,
Dibrugarh and Dimapur. The production of these units is limited and bulk of the requirement is being
met from outside sources, the leading brands being “Brite” and “Prince”. Again plastic combs are of
normal size and pocket size combs. The leading brands the market are Lily, Brite, Joy and Dill.
Therefore there is a scope for additional units to produce plastic mug, bucket, containers and combs.

12.3 Plant Capacity

The production basis for a small unit would be as under:

• Working hours/day: 8 (1 shift)

• Working days in a year: 300

• Annual Production capacity:

o 7, 00,000 nos of products of which 3, 60,000 are Mug, 1, 40,000 Bucket and 2, 00,000
are Containers.

o 6, 00,000 Nos of Plastic comb comprising normal size comb.

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The unit has been assumed to operate at 70%, 80% and 90% of its installed capacity in the first,
second and third year and at 100% capacity from the fourth year onwards of its operation.

12.4 Process, Plant & Machinery (Details & List of Machinery Suppliers)

(i) Manufacturing Process

Mug, bucket and containers are manufactured on a semi-automatic extrusion blow moulding machine.

The main process steps involved are as follows:

• Plastic material in the form of granules is subjected to heat and pressure in an extruder.

• Semi-molten plastic in extruder passed through the nozzle known as Parison. Adjustments have to
be made in the machine to vary the wall thickness of the parison.

• Suitable parison is then inserted in a female mould and air is blown into parison to force the molten
plastic against the sides of the mould.

• The material is then cooled before removal from the mould.

• The article is then trimmed to remove flashes.

The main process steps for plastic combs are as follows:

• Polypropylene is fed into the hopper of the injection moulding machine, which essentially has an
injection unit and a multicavity mould system.

• The mould is held between the two platens which are kept closed by the locking pressure.

• The material which gets plasticized in the barrel is injected under higher pressure into the mould
which results in a moulded article i.e. comb.

• The combs are then finished by removing the injection feed etc.

• The second stage processing operations i.e. buffing, polishing and printing are carried out on the
combs.

• The combs are then kept inside plastic water proof paper cover and packed.

(ii) Plant and Machinery

The following are the plant and machinery required for the project.

The major equipment required by the unit for producing mug, bucket and container are as follows:

• Semi – automatic extrusion blow moulding machine consisting of:

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 500 mm screw extruder with 10 HP motor, variable speed drive and electrical
control cabinet.

 Cross head dies (single, double and triple cores) and spanner.

 Mould closing and opening unit with hydraulic system

 Compressor.

• Water pump

• Moulds, dies tools etc

The main equipment required for producing plastic combs are as follows:

• Semi automatic hydraulic injection moulding machine complete with all accessories

• Scrap grinder

• Buffing, polishing and hot stamping machine

• Moulds

• Small hand-tools, greasing and cooling equipment

• Testing instruments such as micrometer, balance etc

The equipment has been selected keeping in view the capacity and other process considerations.

(iii) Plant and Machinery Suppliers

The following are the list of the plant and machinery suppliers.
Sl No Name Communication Address
1 M/s R.H. Windsor (India) Ltd. E-6 – UZ Road, Thane Industrial Estate,
Thane – 400 604
2 M/s British Plastic & Engineering Works 89.2, Block – A, Naraina Industrial Area,
Phase-1, New Delhi – 110 028
3 M/s Oswal Engineering Corpn. 142/48 S.V. Road,
Ghaswala Industrial Estate,
Jogeswari (West), Mumbai – 400 102
4 M/s Kwality Engineering works 48A, Muktaram Babu Street,
Kolkata – 700 007

12.5 Raw Material & Utilities Requirement

The main raw materials required are PP and HDPE. The annual requirement at 100% capacity
utilisation for PP and HDPE is estimated to be 74 tonnes per annum (considering wastage also).

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The utilities required are power and water. Around 75 KW of Power and 3300 KLPA of water are
required.

Material Items Numbers Approx Wt (gms) Total Weight in

manufactured Tonne/year
HDPE Mug 360000 40 14
Bucket 140000 300 42
Container 200000 50 10
Sub total 66
PP Combs 600000 10 6
Total with 2 % wastage 74

12.6 Land & Built-up Area Requirement

The total estimated land requirement is 1000 sq metre while the built-up area is 700 sq.mtrs.

12.7 Manpower Requirement

The total manpower requirement is 15 nos out of which administrative is 4 and factory staff is 11.
Details of the manpower are given below:
Personnel Nos
Works Manager 1
Accountant-cum-Store Keeper 1
Administrative Assistant 1
Clerk 1
Skilled Workers 6
Unskilled Workers 4
Peon/Watchman 1
Total 15

12.8 Project Cost/ Fixed Capital Requirement & Means of Finance:

Land has not been considered as a part of the project cost because it has been considered to be taken
on lease (as applicable in Assam). One time Land Development Charges have been taken as part of the
Project Cost. Also, Special Maintenance Charges and an Annual Service Charge have been considered
as part of operating cost. The total project cost is estimated at Rs 130.48 lakhs as follows.
Project Cost and Means of Finance
Sl No Particulars Rs in Lakhs
1 Site Development Cost 2.00
2 Building 56.00
3 Plant and Machinery 47.46
4 Miscellaneous Fixed Assets 7.25
5 Preliminary and Pre-Operative Expenses 2.44
6 Margin Money on Working Capital 9.13
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7 Contingencies 6.21
Total 130.48

This project cost may be financed at a debt equity ratio of 3:1 as follows.

Means of Finance Rs in lakhs

Equity 32.62
Debt 97.86
Total 130.48

12.9 Working Capital Requirement

The working capital requirement is estimated as follows.

No. Particulars Years of Operation
1 2 3 4 5
1 Net Working Capital 36.52 41.73 46.95 52.17 52.17
2 Available Bank Finance 27.39 31.30 35.21 39.13 39.13
3 Margin Money 9.13 10.43 11.74 13.04 13.04

12.10 Operating Expenses

The Annual Operating Expenses estimated at Rs 86.95 lakhs (70% capacity utilization) are given
below:
Sl No Particulars Rs in lakhs
1 Maintenance Charges 0.23
2 Raw materials 34.23
3 Utilities 5.37
4 Wages & Salaries 9.98
5 Administrative Overheads 4.20
6 Selling expenses 5.75
7 Packing expenses 4.03
8 Interest on term loan 14.68
9 Interest on Bank Finance for Working Capital 4.11
10 Depreciation 4.39
Total 86.95

12.11 Profitability Estimates

(Rs in Lakhs)
Sl No Particulars Year
Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Production/Sales
Installed Capacity 72 72 72 72 72

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Capacity Utilization 70% 80% 90% 100% 100%
Estimated Production 51 58 65 72 72
Gross Sales Revenue 161 184 207 230 230
Expenses
Raw Material Consumption 35 40 45 50 50
Utilities 5 5 5 5 5
Administrative Overheads 4 4 4 4 4
Salaries 10 10 10 10 10
Sales Expenses 4 5 5 6 6
Packing Expenses 4 5 5 6 6
Loan Repayment 0 24 24 24 24
Lease Rentals 0.23 0.23 0.23 0.23 0.23
Total 63 94 100 106 106
Gross Profit 98 90 107 124 124
Financial Expenses
Interest On Term Loan 15 15 11 7 4
Interest On Working Capital 4 5 5 6 6
Sub Total 19 19 16 13 10
Depreciation 4.4 4.4 4.4 4.4 4.4
Profit Before Tax 75 66 86 106 110
Provision For Tax 25 22 28 35 36
Profit After Tax 50 45 58 71 74

12.12 Financial Indicators

The Average Break Even Point for the project is 41%.

Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Sales Realisation 161 184 207 230 230
Fixed Costs
Salaries 10 10 10 10 10
Fixed Selling Expenses 4 5 5 6 6
Depreciation (SLM) 4 4 4 4 4
Repairs & Maintenance 2 2 2 2 2
Utilities (Fixed) 5 5 5 5 5
Admin. Overheads Incl Insurance 4 4 4 4 4
Interest On L.T. Loan 15 15 11 7 4
Loan Repayment - 24 24 24 24
Total Fixed Costs 45 70 67 63 60
Variable Cost
Raw Materials 35 40 45 50 50
Packing 4 5 5 6 6
Interest On Working Capital Loans 4.11 4.70 5.28 5.87 5.87
Total Variable Costs 43 50 56 62 62

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Contribution 118 134 151 168 168
Breakeven In % 38% 52% 44% 38% 36%
Average Breakeven 41%

The IRR for the project is 19.7%, Average ROI is 79% and Average DSCR is 2.78.
Particulars Year of Operation
1 2 3 4 5
Revenue 161 184 207 230 230
Profit Before Tax 74.68 66.43 86.32 106.21 109.87
Profit After Tax 50.03 44.51 57.83 71.16 73.62
LT Interest 14.68 14.68 11.01 7.34 3.67
Depreciation 4.39 4.39 4.39 4.39 4.39
LT Loan Repayment 0.00 24.47 24.47 24.47 24.47
Return on Investment (%) 72% 66% 78% 90% 90%
Average ROI 79%
Debt-Service Coverage Ratio
- Debt Service 14.68 39.14 35.47 31.81 28.14
- Coverage 69.11 63.58 73.23 82.89 81.68
DSCR 4.71 1.62 2.06 2.61 2.90
Average DSCR 2.78

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13 HDPE Small Bottles and Containers

13.1 Introduction

Thermoplastic materials like High Density Polythene (HDPE) can be blow moulded into containers of
different sizes and shapes. Some of the common items that are produced include bottles and containers
of different size. Bottles and containers are more than half of all HDPE packaging products. Their
light weight, flexibility, corrosion and chemical resistance have made these plastic products popular
for storage and handling of water, petrol, diesel etc.

HDPE Bottles are used for detergents, shampoos, motor oil, milk and other liquid products and drugs
and cosmetic products. Milk bottles are the single biggest HDPE packaging material. Most milk and
water bottles use a natural-colored HDPE resin. Bottles used for detergents, shampoos and other
products often have colorants added to the resin. Injection-moulded HDPE containers are used for
products such as margarine and yogurt. Bottles have 90 percent of the HDPE “rigid package” market;
while containers have the remainder. HDPE resin also can be used to make bottle and container caps,
and flexible packaging such as sacks and trash bags. HDPE bottles and containers have been
displacing heavier metal, glass and paper packaging since 1970s.

13.2 Market Potential

Since the early seventies high-density polyethylene (HDPE) has been the polymer of choice for the
production of bottles of up to 5 litres capacity. These bottles are cornering the market for packaging
liquids such as detergents, cosmetics, lubricants and dairy products, a market whose scope has opened
up a multitude of potential applications for HDPE. In this market that was far from mature, growth
could be realized in virtually every segment. There was little competition except from PVC.

At present, cartons, pouches and bottles made of HDPE, polypropylene, PET (recycled bottles) and
polycarbonate all compete for space on retailers' shelves. Glass bottles have lost market share and are
now holding their own in just a few traditional segments.

The features which make HDPE the first choice are the following:

• Highly cost-effective material

• Excellent fitness for use

• Wide-ranging design potential and processing flexibility,

• Excellent polymer supported by a good depth of market experience at all points in the value chain,

• Meets the environmental requirements imposed by modern-day society.

Thus, industry has recognized HDPE as the plastic container of choice to ensure purity of its contents.
Plastic milk containers and the non-clear variety of water jugs are made of High Density Polyethylene.
Opaque vitamin and medicinal products are contained in HDPE containers. Laundry detergent bottles
and fuel tanks in automotive vehicles are also made of HDPE.

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HDPE containers have become very popular among health conscious individuals who want to store
their items in the best food grade plastic material possible. Refillable water bottles, food storage
containers and body product bottles are some of the most requested items in our inventory. HDPE
plastic may be identified by its milky translucent or opaque white color.

13.3 Plant Capacity

The production basis for a small unit would be as under:

• Working hours/day: 16 (2 shift)

• Working days in a year: 300

• Annual Production capacity: 18 lakh HDPE bottles/containers of sizes of 500 ml and 1000 ml.

The unit has been assumed to operate at 70%, 80% and 90% of its installed capacity in the first,
second and third year and at 100% capacity from the fourth year onwards of its operation.

13.4 Process, Plant & Machinery (Details & List of Machinery Suppliers)

(i) Manufacturing Process

HDPE Bottles and containers are manufactured in an automatic/ semi-automatic extrusion blow
moulding machine. The main process steps involved are as follows:

• Plastic material in the form of granules is subjected to heat and pressure in an extruder.

• Semi-molten plastic in extruder passed through the nozzle known as Parison. Adjustments have to
be made in the machine to vary the wall thickness of the parison.

• Suitable parison is then inserted in a female mould and air is blown into parison to force the molten
plastic against the sides of the mould.

• The material is then cooled before removal from the mould.

• The article is then checked for holes etc using compressed plant air.

(ii) Plant and Machinery

The major equipments required by the unit for HDPE bottles are as follows:

• Automatic / Semi – automatic extrusion blow moulding machine consisting of:

o Extruder

o Cross head dies (single, double and triple cores) and spanner.

o Mould closing and opening unit with hydraulic system

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o Compressor.

• Water pump

The equipment has been selected keeping in view the capacity and other process considerations.

(iii) Plant and Machinery Suppliers

The following is the list of the plant and machinery suppliers.

Sl No Name Communication Address
1 Suresh Engineering Works 13,14-B, Kalyan Vishranti Grah.South
Tukoganj, Indore-452 001 (M.P)
2 M/s R.H. Windsor (India) Ltd. E-6 – UZ Road, Thane Industrial Estate,
Thane – 400 604
3 M/s British Plastic & Engineering Works 89.2, Block – A, Naraina Industrial Area,
Phase-1, New Delhi – 110 028
4 M/s Oswal Engineering Corpn. 142/48 S.V. Road,
Ghaswala Industrial Estate,
Jogeswari (West), Mumbai – 400 102
5 M/s Kwality Engineering works 48A, Muktaram Babu Street,
Kolkata – 700 007
13.5 Raw Material & Utilities Requirement

The main raw material required is HDPE. The annual requirement at 100% capacity utilisation for
HDPE is estimated to be 128 tonnes per annum (considering wastage also).
The utilities required are power and water. Around 30 KW of Power and 450 KLPA of water are
required.
13.6 Land & Built-up Area Requirement

The total land area is estimated to be 700 sq metres while the built- up area is 500 sq.mtrs.

13.7 Manpower Requirement

The total manpower requirement is 15 nos out of which administrative is 4 and factory staff is 11.
Personnel Nos
Works Manager 1
Accountant-cum-Store Keeper 1
Administrative Assistant 1
Clerk 1
Skilled Workers 5
Semi Skilled Workers 3
Unskilled Workers 2
Peon/Watchman 1
Total 15

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13.8 Project Cost/ Fixed Capital Requirement & Means of Finance:

Land has not been considered as a part of the project cost because it has been considered to be taken
on lease (as applicable in Assam). One time Land Development Charges have been taken as part of the
Project Cost. Also, Special Maintenance Charges and an Annual Service Charge have been considered
as part of operating cost. The total project cost is estimated at Rs 68.80 lakhs as follows.
Sl No Particulars Rs in Lakhs
1 Site Development Cost 1.40
2 Building 40.00
3 Plant and Machinery 7.25
4 Miscellaneous Fixed Assets 7.38
5 Preliminary and Pre-Operative Expenses 1.28
6 Margin Money on Working Capital 8.21
7 Contingencies 3.28
Total 68.80

The project cost may be financed under a debt equity ratio of 3: 1 as follows:
Means of Finance Rs in lakhs
Equity 17.20
Debt 51.60
Total 68.80

13.9 Working Capital Requirement

The working capital requirement is estimated as follows.

No. Particulars Years of Operation

1 2 3 4 5
1 Net Working Capital 32.84 37.53 42.22 46.92 46.92
2 Available Bank Finance 24.63 28.15 31.67 35.19 35.19
3 Margin Money 8.21 9.38 10.56 11.73 11.73

13.10 Operating Expenses

The annual operating expenses estimated at Rs 95.57 lakhs (80% capacity utilization) as given below:
Sl No Particulars Rs in lakhs
1 Annual Land Charges 0.16
2 Raw materials 60.23
3 Utilities 1.71
4 Wages & Salaries 9.98
5 Administrative Overheads 3.10
6 Selling expenses 3.36
7 Packing expenses 3.36
8 Interest on term loan 7.74
9 Interest on Bank Finance for Working Capital 3.69

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10 Depreciation 2.24
Total 95.57

13.11 Profitability Estimates

(Rs. in Lakhs)
Sl No Particulars Year
Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Production/Sales
Installed Capacity in lakh nos 18 18 18 18 18
Capacity Utilization 70% 80% 90% 100% 100%
Estimated Production 13 14 16 18 18
Gross Sales Revenue 134 154 173 192 192
Expenses
Raw Material Consumption 60 69 77 86 86
Utilities 2 2 2 2 2
Administrative Overheads 3 3 3 3 3
Salaries 10 10 10 10 10
Sales Expenses 3 4 4 5 5
Packing Expenses 3 4 4 5 5
Loan Repayment 0 13 13 13 13
Lease Rentals 0.16 0.16 0.16 0.16 0.16
Total 82 104 114 123 123
Gross Profit 53 49 59 69 69
Financial Expenses
Interest On Term Loan 8 8 6 4 2
Interest On Working Capital 4 4 5 5 5
Sub Total 11 12 11 9 7
Depreciation 2 2 2 2 2
Profit Before Tax 39 35 46 57 59
Provision For Tax 13 12 15 19 20
Profit After Tax 26 23 31 38 39

13.12 Financial Indicators

The Average Break Even Point for the project is 45%.

Particulars Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Sales Realisation 134 154 173 192 192
Fixed Costs
Salaries 10 10 10 10 10
Fixed Selling Expenses 3 4 4 5 5
Depreciation (SLM) 2 2 2 2 2
Repairs & Maintenance 1 1 1 1 1

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Utilities (Fixed) 2 2 2 2 2
Admin. Overheads Incl Insurance 3 3 3 3 3
Interest On L.T. Loan 8 8 6 4 2
Loan Repayment - 13 13 13 13
Total Fixed Costs 29 43 41 40 38
Variable Cost
Raw Materials 60 69 77 86 86
Packing 3 4 4 5 5
Interest On Working Capital Loans 3.69 4.22 4.75 5.28 5.28
Total Variable Costs 67 77 87 96 96
Contribution 67 77 86 96 96
Breakeven In % 43% 55% 48% 41% 39%
Average Breakeven In % 45%

The IRR for the project is 20.1%, Average ROI is 80% and average DSCR is 3.14.
Particulars Year of Operation
1 2 3 4 5
Revenue 134 154 173 192 192
Profit Before Tax 38.83 35.04 46.08 57.12 59.06
Profit After Tax 25.82 23.30 30.64 37.99 66.25
LT Interest 7.74 7.74 5.81 3.87 1.94
Depreciation 2.24 2.24 2.24 2.24 2.24
Return on Investment (%) 71% 65% 79% 92% 92%
Average ROI 80%
Debt-Service Coverage Ratio
- Debt Service 7.74 20.64 18.71 16.77 14.84
- Coverage 35.80 33.28 38.69 44.10 70.43
DSCR 4.63 1.61 2.07 2.63 4.75
Average DSCR 3.14

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14 HDPE Mosquito Nets

14.1 Introduction
Mosquito net is an essential item of the bedding used by people to protect themselves from mosquito
bites during sleep. Though other protective items like mosquito repellent coils and mats, ointments are
available yet people prefer mosquito nets as there are no side effects as present in the chemically
prepared item. Hence, the demand for mosquito nets is always in the increase. With the introduction of
plastic nets, the preference for cotton nets are decreasing as plastic nets have more durability, easier
and lighter to wash with better air circulation.

14.2 Market Potential

Mosquito net is an essential item for human use. Its demand is not seasonal but exists throughout the
year. Apart from domestic consumption, there exists demand in hotels, hospital and defence sector,
who are bulk purchasers of the item through rate contracts.

14.3 Plant Capacity

The proposed plant shall produce HDPE mosquito nets in the weight range of 660-1060 Gms with an
installed capacity of 144 MT at 100% capacity utilisation.

14.4 Process, Plant & Machinery (Details & List of Machinery Suppliers)

(i) Manufacturing Process

The raw material, HDPE is extruded. This fibre is wound onto bobbins and is weaved. The woven net
is cut and stitched and is checked for quality and packed in bails.

(ii) Plant and Machinery

The plant and machineries required for manufacturing HDPE Mosquito Net is as follows:

• Extruder

• Hanking Machine

• Winding Machine

• Warping Machine

• Knitting Looms

• Heat Processing Machine

• Bale Press

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(iii) Plant and Machinery Suppliers

The following table gives the name and address of suppliers along with the machinery type suitable for
the process and product.
Sl No Name Communication Address
1 Neptune Plastics Industries 18 R N Mukherjee Road, 7th Floor
Kolkata-700001, West Bengal, India
2 GCL India (P) Limited A-419/420, 10th Main, 2nd Stage, Peenya Industrial Estate,
Bangalore - 560058, Karnataka, India

14.5 Raw Material & Utilities Requirement

The major raw material required for the project is high density polyethylene (HDPE). The raw
material required would be around 144 MT at 100% capacity utilisation.
The utilities required are power and water. Around 75 KW of Power and 450 KLPA of water are
required.

14.6 Land & Built-up Area Requirement

The total land area is 1500 sq metres and the built up area is 1000 sq mt.

14.7 Manpower Requirement

Total manpower required would be 21 Nos of which administrative is 4 and factory staff is 17.
Personnel Nos
Works Manager 1
Accountant-cum-Store Keeper 1
Administrative Assistant 1
Clerk 1
Skilled Workers 8
Semi Skilled Workers 4
Unskilled Workers 4
Peon/Watchman 1
Total 21

14.8 Project Cost/ Fixed Capital Requirement & Means of Finance

Land has not been considered as a part of the project cost because it has been considered to be taken
on lease (as applicable in Assam). One time Land Development Charges have been taken as part of the
Project Cost. Also, Special Maintenance Charges and an Annual Service Charge have been considered
as part of operating cost. The project cost is estimated at Rs 202.08 lakhs as follows.
Sl No Particulars Rs in Lakhs
1 Site Development Cost 3.00
2 Building 80.00
3 Plant and Machinery 83.05
4 Miscellaneous Fixed Assets 7.80
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5 Preliminary and Pre-Operative Expenses 2.00
6 Margin Money on Working Capital 16.61
7 Contingencies 9.62
Total 202.08

Of this, the project cost may be financed at a debt equity ratio of 3:1 as follows
Means of Finance Rs in lakhs
Equity 50.52
Debt 151.56
Total 202.08

14.9 Working Capital Requirement

The working capital requirement is as given below:

No. Particulars Years of Operation ( Rs in Lakhs)
1 2 3 4 5
1 Net Working Capital 66.44 74.74 83.05 83.05 83.05
2 Available Bank Finance 49.83 56.06 62.29 62.29 62.29
3 Margin Money 16.61 18.69 20.76 20.76 20.76

14.10 Operating Expenses

The annual operating expenses estimated at Rs 151.60 lakhs (80% capacity utilization) is given below:
Sl No Particulars Rs in lakhs
1 Annual Land Charges 0.35
2 Raw materials 77.71
3 Utilities 4.31
4 Wages & Salaries 12.98
5 Overheads 5.36
6 Selling expenses 7.20
7 Packing expenses 7.20
8 Interest on term loan 22.73
9 Interest on Bank Finance for Working Capital 7.47
10 Depreciation 6.63
Total 151.60

14.11 Profitability Estimates

(Rs. in Lakhs)
Sl No Particulars Year
Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Production/Sales
Installed Capacity 144 144 144 144 144
Capacity Utilization 80% 90% 100% 100% 100%

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Estimated Production 115 130 144 144 144
Gross Sales Revenue 288 324 360 360 360
Expenses
Raw Material Consumption 78 87 97 97 97
Utilities 4 4 4 4 4
Administrative Overheads 5 5 5 5 5
Salaries 13 13 13 13 13
Sales Expenses 7 8 9 9 9
Packing Expenses 7 8 9 9 9
Loan Repayment 0 38 38 38 38
Lease Rentals 0.35 0.35 0.35 0.35 0.35
Total 115 165 176 176 176
Gross Profit 173 159 184 184 184
Financial Expenses
Interest On Term Loan 23 23 17 11 6
Interest On Working Capital 7 8 9 9 9
Sub Total 30 31 26 21 15
Depreciation 7 7 7 7 7
Profit Before Tax 136 122 151 157 162
Provision For Tax 46 41 51 52 54
Profit After Tax 90 81 100 104 108

14.12 Financial Indicators

The Average Break Even Point for the project is 38%.

Particulars Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Sales Realisation 288 324 360 360 360
Fixed Costs
Salaries 13 13 13 13 13
Fixed Selling Expenses 7 8 9 9 9
Depreciation (SLM) 7 7 7 7 7
Repairs & Maintenance 3 3 3 3 3
Utilities (Fixed) 4 4 4 4 4
Admin. Overheads Incl 5 5 5 5 5
Interest On L.T. Loan 23 23 17 11 6
Loan Repayment - 38 38 38 38
Total Fixed Costs 62 101 96 91 85
Variable Cost
Raw Materials 78 87 97 97 97
Packing 7 8 9 9 9
Interest On Working Capital Loans 7.47 8.41 9.34 9.34 9.34
Total Variable Costs 92 104 115 115 115
Contribution 196 220 245 245 245

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Breakeven In % 32% 46% 39% 37% 35%
Average Breakeven In % 38%

The IRR for the project is 24.7%, Average ROI is 83% and average DSCR is 2.92.
Particulars Year of Operation
1 2 3 4 5
Revenue 288 324 360 360 360
Profit Before Tax 136.05 121.72 150.95 156.63 162.32
Profit After Tax 90.48 80.94 100.38 104.16 107.94
LT Interest 22.73 22.73 17.05 11.37 5.68
Depreciation 6.63 6.63 6.63 6.63 6.63
LT Loan Repayment 0.00 37.89 37.89 37.89 37.89
Return on Investment (%) 82% 75% 86% 86% 86%
Average ROI 83%
Debt-Service Coverage Ratio
- Debt Service 22.73 60.62 54.94 49.26 43.57
- Coverage 119.84 110.31 124.06 122.16 120.26
DSCR 5.27 1.82 2.26 2.48 2.76
Average DSCR 2.92

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15 LLDPE Bio-Degradable Sheets/Carry Bags

15.1 Introduction

Low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) belong to
polyethylene group of thermo-plastics. LDPE is generally the softest and least crystalline of all the
polyethylene. LDPE has a unique combination of properties namely toughness, high impact strength,
low-brittleness temperature, flexibility, processibility, film transparency, chemical resistance and
having a density of 0.91 – 0.94. LDPE applications are mostly film based. The most common
application areas are in food packaging, milk pouches, industrial products, textiles, frozen foods,
agriculture and horticulture section etc.

LLDPE has all the advantages of LDPE together with the added benefit of low energy output which
leads to a saving of over 20% in the manufacturing cost. The use of LLDPE has been predominantly in
blends with LDPE as far as film extrusion is concerned. LLDPE and LDPE blended film are used for
milk packaging, nursery bags, heavy duty sacks and general purpose bags.

15.2 Market Potential

The unit is proposed to manufacture LLDPE carry bags and LDPE sheets. The biggest advantage of
using LLDPE is the possibility of down gauging of the film upto 30 percent or more with an
improvement in the mechanical properties such as tensile strength, tear strength etc. The common
sizes of plastic carry bags are 1½ ‘ x 1½’ , 1½’ x 2’, 1½’ x 3’, 1½’ x ½’ and ½’ x ½’.Different sizes
LLDPE carry bags are required by grocery shops, stationary shops, textile shops, restaurant, bakery,
pharmaceuticals shops, automobile spare parts shops etc.

Conversion of LDPE is mostly in the form of a film with balanced orientation for better toughness.
LDPE sheets generally come in rolls of size 100m x 2m and weight around 12 kg – 14 kg. LDPE
sheets are mostly required by tea gardens to be used as aprons by labour for plucking of tea leaves, by
vegetables seller and for commercial as well as domestic use for protection from water/rainfall and for
tea packaging along with jute bags etc. LDPE sheets also have a good potential outlet in the filed of
agriculture and horticulture for several packaging and non packaging applications.

Mention may be made here that products manufactured from granules are of “A” Grade quality with
fine finishing fetching high price, the products manufactured from mixing of granules and scraps are
of Grade “B” quality with medium finishing fetching medium price and the products manufacturing
from scraps are of Grade “C” quality with average finish fetching low price. In view of recent ban on
Grade “B” and Grade “C” quality, finished products only “A” Grade quality finished products is
considered for the purpose.

15.3 Plant Capacity

The production basis for the unit would be as under:

• Working hours/day : 8 (1 shift)

• Working days in a year : 300

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• Annual Production capacity : 360 MT (carry bags 240 MT, Sheets 120 MT)

The unit has been assumed to operate at 70%, 80% and 90% of its installed capacity in the first,
second and third year and 100% capacity from the fourth year onwards of its operation.

15.4 Process, Plant & Machinery (Details & List of Machinery Suppliers)

(i) Manufacturing Process

LDPE/LLDPE films are manufactured by extrusion process. Plastic extrusion is basically defined as
converting plastic powder or granules into a continuous uniform melt and forcing this melt through a
die which yields a desired shape. Any thermo-plastic product required in length of uniform cross-
section is extruded. The basic processing steps involved are

• Mixing of colours with granules.

• Feeding of colour mixed granules into the hopper.

• Heating of these mixed raw materials in an extruder.

• Passing of molten raw materials through dies to get desired shape.

• Cooling and winding of film.

• Making of desired size Sheets/Bags and sorting.

• Packing and despatch.

In India, an indigenous technology for LDPE, LLDPE products manufacturing is provided by

organizations like Central Institute of Plastic Engineering & Technology (CIPET).

(ii) Details of Plant and Machinery

The major equipment required by the unit is shown below. The equipment has been selected keeping
in view the capacity and other process considerations.

• Plant and equipment for extrusion of LDPE/LLDPE film which consists of the main assembles –
Low base extruder, spiral type die set, air cooling ring, blower for cooling, take up tower, surface
winder and electrical control panel

• Punches suitable for dies of 50mm and 80mm for processing LLDPE with air ring insert

• Snap winding mechanism and cutting system – (1 No).

• Bottom Seal and both end seal bag making machine (for carry bags).

(iii) Plant and Machinery Suppliers

The following is the list of plant and machinery suppliers.

Sl No Name Communication Address

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1 M/s R.H. Windsor (India) Ltd. E-6 – UZ Road, Thane Industrial Estate,
Thane – 400 604
2 M/s British Plastic & Engineering 89.2, Block – A,Naraina Industrial Area,
Works Phase-1, New Delhi – 110 028
3 M/s Oswal Engineering Corpn. 142/48 S.V. Road, Ghaswala Industrial Estate,
Jogeswari (West), Mumbai – 400 102
4 M/s Kwality Engineering works 48A, Muktaram Babu Street,
Kolkata – 700 007

15.5 Raw Material & Utilities Requirement

The main raw materials required are LDPE/LLDPE granules and master batch (colour). The colour to
be mixed with the raw materials is at the rate of around 2%.

The requirement of LDPE/LLDPE granules and master batch are as follows:

• LDPE/LLDPE granules : 360 MT

• Master batch: 7.2 MT

The utilities required are power and water. Around 100 KW of Power and 3840 KLPA of water are
required.
15.6 Land & Built-up Area Requirement

The total land required is 700 sq m and the built up area is 500 sq.m.

15.7 Manpower Requirement & Project Implementation Schedule

The total manpower required is 22, out of which administrative staff is 5 and factory staff is 17.
Personnel Nos
Works Manager 1
Accountant-cum-Store Keeper 1
Administrative Assistant 1
Clerk 2
Skilled Workers 6
Semi Skilled Workers 6
Unskilled Workers 4
Peon/Watchman 1
Total 22

15.8 Project Cost/ Fixed Capital Requirement & Means of Finance:

Land has not been considered as a part of the project cost because it has been considered to be taken
on lease (as applicable in Assam). One time Land Development Charges have been taken as part of the
Project Cost. Also, Special Maintenance Charges and an Annual Service Charge have been considered
as part of operating cost. The total project cost is estimated at Rs 122.39 lakhs as follows.
Sl No Particulars Rs in Lakhs
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1 Site Development Cost 1.40
2 Building 40.00
3 Plant and Machinery 44.51
4 Miscellaneous Fixed Assets 7.58
5 Preliminary and Pre-Operative Expenses 2.29
6 Margin Money on Working Capital 20.78
7 Contingencies 5.83
Total 122.39

The project cost may be financed under a debt equity ratio of 3: 1 as follows:
Means of Finance Rs in lakhs
Promoter’s contribution 30.60
Term Loan 91.79
Total 122.39

15.9 Working Capital Requirement

The working capital requirement is estimated as follows.

No. Particulars Years of Operation
1 2 3 4 5
1 Net Working Capital 83.12 94.99 106.87 118.74 118.74
2 Available Bank Finance 62.34 71.25 80.15 89.06 89.06
3 Margin Money 20.78 23.75 26.72 29.69 29.69

15.10 Operating Expenses

The annual operating expenses are estimated at Rs 250.53 lakhs (70% capacity utilization) is as given
below:

Sl No Particulars Rs in lakhs
1 Annual Land Charges 0.16
2 Raw materials 182.30
3 Utilities 6.88
4 Wages & Salaries 12.68
5 Overheads 2.81
6 Selling expenses 8.19
7 Packing expenses 8.19
8 Interest on term loan 13.77
9 Interest on Bank Finance for Working Capital 9.35
10 Depreciation 6.21
Total 250.53

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15.11 Profitability Estimates

(Rs. in Lakhs)
Sl No Particulars Year
Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Production/Sales
Installed Capacity 360 360 360 360 360
Capacity Utilization 70% 80% 90% 100% 100%
Estimated Production 252 288 324 360 360
Gross Sales Revenue 328 374 421 468 468
Expenses
Raw Material Consumption 187 214 240 267 267
Utilities 7 7 7 7 7
Administrative Overheads 3 3 3 3 3
Salaries 13 13 13 13 13
Sales Expenses 8 9 11 12 12
Packing Expenses 8 9 11 12 12
Loan Repayment 0 23 23 23 23
Lease Rentals 0 0 0 0 0
Total 226 278 307 336 336
Gross Profit 102 97 114 132 132
Financial Expenses
Interest On Term Loan 14 14 10 7 3
Interest On Working Capital 9 11 12 13 13
Sub Total 23 24 22 20 17
Depreciation 6.2 6.2 6.2 6.2 6.2
Profit Before Tax 73 66 86 106 109
Provision For Tax 24 22 28 35 36
Profit After Tax 49 44 58 71 73

15.12 Financial Indicators

The Average Break Even Point for the project is 44%.

Particulars Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Sales Realisation 328 374 421 468 468
Fixed Costs
Salaries 13 13 13 13 13
Fixed Selling Expenses 8 9 11 12 12
Depreciation (SLM) 6 6 6 6 6
Repairs & Maintenance 1 1 1 1 1
Utilities (Fixed) 7 7 7 7 7
Admin. Overheads incl Insurance 3 3 3 3 3
Interest On L.T. Loan 14 14 10 7 3

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Loan Repayment - 23 23 23 23
Total Fixed Costs 52 76 74 72 68
Variable Cost
Raw Materials 187 214 240 267 267
Packing 8 9 11 12 12
Interest On Working Capital Loans 9.35 10.69 12.02 13.36 13.36
Total Variable Costs 204 234 263 292 292
Contribution 123 141 158 176 176
Breakeven In % 42% 54% 47% 41% 39%
Average Breakeven In % 44%

The IRR for the project is 25.1%, Average ROI is 85% and average DSCR is 2.98.
Particulars Year of Operation
1 2 3 4 5
Revenue 328 374 421 468 468
Profit Before Tax 72.53 66.02 85.89 105.77 109.21
Profit After Tax 48.60 44.23 57.55 70.86 73.17
LT Interest 13.77 13.77 10.33 6.88 3.44
Depreciation 6.21 6.21 6.21 6.21 6.21
LT Loan Repayment 0.00 22.95 22.95 22.95 22.95
Return on Investment (%) 76% 70% 84% 97% 97%
Average ROI 85%
Debt-Service Coverage Ratio
- Debt Service 13.77 36.72 33.27 29.83 26.39
- Coverage 68.57 64.21 74.08 83.96 82.82
DSCR 4.98 1.75 2.23 2.81 3.14
Average DSCR 2.98

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16 PP Blow Moulded Plastic Products

16.1 Introduction

Blow moulded products made from Polypropylene offer excellent combination of good strength,
contact clarity, creep resistance, excellent sealing characteristics, environmental stress and crack
resistance. These are being used in sectors like Cosmetics, Pharmaceuticals, laboratory ware and liquid
packaging.

16.2 Market Potential

Keeping in view the pattern of usage of jug, mug, bucket and jerry can in urban and rural areas, there
is a substantial demand of about 60 to 65 lakhs numbers for assorted products. On the other hand the
water storage tank for domestic purpose, it is estimated that at present about 60,000 MT of plastic tank
equivalent to 10, 80,000 pieces of 1000 litres capacity are required annually. There are 8-10 blow
moulding units in the north eastern region. The production of these units is limited and bulk of the
requirement is being met from outside sources, the leading brands being “Brite” and “Prince”.

16.3 Plant Capacity

The installed capacity for production of Jugs, Mugs, and Buckets would be 81 MT. This would mean
that approximately 6,55,000 nos of the above 3 articles is expected to be produced. The plant is
expected to run single shift of 8 hours for a total 300 days per annum.

16.4 Process, Plant & Machinery (Details & List of Machinery Suppliers)

(i) Manufacturing Process

The main product is proposed to be manufactured on a semi automatic extrusion blow moulding
machine. The main process steps involved are:

• Plastic material in the form of granules is subjected to heat and pressure in an extruder.

• Semi-molten plastic in extruder passed through the nozzle known as parison. Adjustments have to
be made in the machine to vary the wall thickness of the parison.

• Suitable parison is then inserted in a female mould and air is blown into parison to force the molten
plastic against the sides of the mould.

• The material is then cooled before removal from the mould.

• The article is then trimmed to remove flashes.

(ii) Plant and Machinery

The main equipment required is

• Semi-Automatic extrusion blow moulding machine consisting

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o screw extruder motor, variable speed drive and electrical control cabinet

o Cross head dies (single, double and triple cores) and spacer

o Mould closing and opening unit with hydraulic System

• Compressor with motor

• Water Pump with

• Moulds, dies, tools etc

(iii) Plant and Machinery Suppliers

The following is a list of plant and machinery manufacturers for the blow moulding products.
Sl No Name Communication Address
1 M/s Ahura Industrial Engineers 18, Sidhpura Industrial Estate
Tarun Compound,SV Road Goregaon,
Andheri (East),Mumbai – 400 062
2 M/s Boolani Engineering Corporation 402, Prabhadevi Industrial Estate
Savarkar Road, Mumbai – 400 018
3 M/s Brimco Plastic Machinery Plot 55, Govt. Kandivli Industrial
Corporation Estate,Kandivli (West),
Mumbai – 400 067
4 M/s Universal Machinery Services Tarun Compound, SV Road, Goregaon,
Andheri (East)
Mumbai – 400 062

16.5 Raw Material & Utilities Requirement

The major raw material required is PP. About 83 MT of PP is required per year. At a cost of Rs 64 per
kg inclusive of state tax, customs duty, transportation charges etc.

Raw Material Requirement Nos Total wt in gms Annual Tonnage in MT

Jugs 150,000 50 7.5
Mugs 300000 40 12
Buckets 205,000 300 61.5
Total Raw Material Reqd with wastage of 2% 82.62

The utilities required are power and water. Around 75 KW of Power and 4500 KLPA of water are
required.

16.6 Land & Built-up Area Requirement

The total land area required is 300 square metres and the build up area is 200 square metres.

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16.7 Manpower Requirement

The total manpower requirement is 14 nos out of which administrative is 4 and factory staff is 10.
Staff Nos
Works Manager 1
Accountant-cum-Store Keeper 1
Administrative Assistant 1
Clerk 1
Skilled Workers 5
Semi skilled workers 2
Unskilled Workers 2
Peon/Watchman 1
Total 14

16.8 Project Cost/ Fixed Capital Requirement & Means of Finance

Land has not been considered as a part of the project cost because it has been considered to be taken
on lease (as applicable in Assam). One time Land Development Charges have been taken as part of the
Project Cost. Also, Special Maintenance Charges and an Annual Service Charge have been considered
as part of operating cost. The total project cost is estimated at Rs 64.47 lakhs as follows.
Sl No Particulars Rs in Lakhs
1 Site Development Cost 0.60
2 Building 16.00
3 Plant and Machinery 29.26
4 Miscellaneous Fixed Assets 7.35
5 Preliminary and Pre-Operative Expenses 1.20
6 Margin Money on Working Capital 6.99
7 Contingencies 3.07
Total 64.47

The total project cost at a debt equity ratio of 3:1 as follows

Means of Finance Rs in lakhs
Promoter’s contribution 16.12
Term Loan 48.35
Total 64.47

16.9 Working Capital Requirement

The working capital requirement is estimated as follows.

No. Particulars Years of Operation
1 2 3 4 5
1 Net WC 27.94 31.36 34.84 34.84 34.84
2 Available Bank Finance 20.96 23.52 26.13 26.13 26.13
3 Margin Money 6.99 7.84 8.71 8.71 8.71
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16.10 Operating Expenses
The annual operating expenses estimated at Rs 85.90 Lakhs (80% capacity utilization) as given below:
Sl No Particulars Rs in lakhs
1 Annual Land Charges 0.07
2 Raw materials 50.20
3 Utilities 5.97
4 Wages & Salaries 9.53
5 Overheads 1.70
6 Selling expenses 2.90
7 Packing expenses 2.90
8 Interest on term loan 7.25
9 Interest on Bank Finance for Working Capital 3.14
10 Depreciation 2.25
Total 85.90

16.11 Profitability Estimates

(Rs in Lakhs)
Sl No Particulars Year
Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Production/Sales
Installed Capacity 81 81 81 81 81
Capacity Utilization 80% 90% 100% 100% 100%
Estimated Production 66 73 81 81 81
Gross Sales Revenue 116 130 145 145 145
Expenses
Raw Material Consumption 47 52 58 58 58
Utilities 6 6 6 6 6
Administrative Overheads 2 2 2 2 2
Salaries 8 8 8 8 8
Sales Expenses 3 3 4 4 4
Packing Expenses 3 3 4 4 4
Loan Repayment 0 12 12 12 12
Lease Rentals 0.07 0.07 0.07 0.07 0.07
Total 68 74 80 80 80
Gross Profit 47 56 64 64 64
Financial Expenses
Interest On Term Loan 7 7 5 4 2
Interest On Working Capital 3 4 4 4 4
Sub Total 10 11 9 8 6
Depreciation 2.2 2.2 2.2 2.2 2.2
Profit Before Tax 35 43 53 54 56
Provision For Tax 11 14 17 18 19

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Profit After Tax 23 29 35 36 38

16.12 Financial Indicators

The Average Break Even Point for the project is 52%.

Particulars Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Sales Realisation 116 130 145 145 145
Fixed Costs
Salaries 8 8 8 8 8
Fixed Selling Expenses 3 3 4 4 4
Depreciation (SLM) 2 2 2 2 2
Repairs & Maintenance 1 1 1 1 1
Utilities (Fixed) 6 6 6 6 6
Admin. Overheads Incl Insurance 2 2 2 2 2
Interest On L.T. Loan 7 7 7 7 7
Loan Repayment - 12 12 12 12
Total Fixed Costs 29 41 41 41 41
Variable Cost
Raw Materials 47 52 58 58 58
Packing 3 3 4 4 4
Interest On Working Capital Loans 3.14 3.53 3.92 3.92 3.92
Total Variable Costs 53 59 66 66 66
Contribution 62 71 79 79 79
Breakeven In % 46% 58% 52% 52% 52%
Average Breakeven In % 52%

The IRR for the project is 26.3%, Average ROI is 86% and average DSCR is 2.93.
Particulars Year of Operation
1 2 3 4 5
Revenue 116 130 145 145 145
Profit Before Tax 34.77 43.27 52.64 54.46 56.27
Profit After Tax 23.30 28.99 35.27 36.49 37.70
LT Interest 7.25 7.25 5.44 3.63 1.81
Interest on Deposits 0.00 0.00 0.00 0.00 0.00
Depreciation 2.25 2.25 2.25 2.25 2.25
LT Loan Repayment 0.00 12.09 12.09 12.09 12.09
Deposit Repayment 0.00 0.00 0.00 0.00 0.00
Return on Investment (%) 69% 82% 94% 94% 94%
Average ROI 86%
Debt-Service Coverage Ratio
- Debt Service 7.25 19.34 17.53 15.72 13.90
- Coverage 32.80 38.49 42.96 42.36 41.76
DSCR 4.52 1.99 2.45 2.70 3.00
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Average DSCR 2.93

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17 Moulded Luggage

17.1 Introduction

Plastic luggage’s like Brief Cases, Suitcases etc. are manufactured from high-density polyethylene,
ABS plastics, polypropylene and glass reinforced plastic etc. Its main application is for string of items
while travelling. This type of luggage is tailor-made, sometimes, for different applications i.e. for
delicate use like ladies vanity cases, moderate use like ordinary travelling bags or rough use while on
tour. New designs and shapes are being constantly developed to facilitate easy handling while
travelling which offers increasing durability. Luggage bags are being developed using new and
tougher grades of plastic resins, sometimes reinforced with glass fibre and other fillers, to improve
certain specific properties as well as to reduce the cost.

17.2 Market Potential

There is a vast market available for luggage and considering the population of our country; there is
ample scope for growth of this industry. Tailor-made luggage is available to cater to the needs of
different income group’s people and for a variety of applications. Use of plastic in luggage industry is
ever increasing and it will go on replacing other conventional materials such as wood, ply, metal,
leather etc. rapidly. There is a good scope for luggage items in the international market also.

17.3 Plant Capacity

The plant is slated to produce 66,000 nos of moulded luggage of 16”, 18” and 20” Brief case.

17.4 Process, Plant & Machinery (Details & List of Machinery Suppliers)

(i) Manufacturing Process

The required raw material is fed into the hopper of the injection-moulding machine and heated in the
cylinder. The required mould is kept in the locking unit. The plastic melt is stored in front of the screw
in a small adjustable chamber. The predetermined volume of plastic melt is injected into the closed
mould at a very high pressure by forward motion of screw. After 5 to 15 seconds, the solidification of
plastic fed melt being in the mould (which is constantly cooled by cold water circulation), the injected
material is kept under pressure for sometime to ensure adequate filling of the mould and to prevent
back-flow of material.

Further time is allowed to lapse for cooling and material is ejected from the mould when it becomes
rigid by air stream or by mechanical ejectors. After the two parts of the item are ready, metallic
fittings, locks, handles etc. are fixed as per requirement of the luggage.

(ii) Plant and Machinery

Technology required for the project is simple and is normally being supplied by the machinery
suppliers.

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(iii) Plant and Machinery Suppliers
The following is the list of plant and machinery suppliers of the above equipments.

Sl No Name Communication Address

1 M/s. DGP Windsor India Ltd. E-6, U2 Road,Wogle Industrial Estate,
Thane-400604
2 M/s. Sunanda Industrial Machinery, A 109, Standard House,83, Maharishi Karup
Division of Mafatlal Industries Ltd. Road, Mumbai
3 M/s. Indian Hydraulic Inds. Pvt. Ltd 70, Shivaji Marg Indl. Area
New Delhi-15
4 M/s. Ferromatik Milacron India Ltd. Plot No. 92, Phase-1 G.I.D.C Vatva,
Ahmedabad-382445.

17.5 Raw Material & Utilities Requirement

The major raw material required for the project would be HDPE of injection moulding grade, metallic
fixtures / locks and Rexene as per the no of pieces of luggage produced. The raw material required
would be around 45 MT at 100% capacity utilisation.

The unit has been assumed to operate at 70%, 80% and 90% of its installed capacity in the first,
second and third year and at 100% capacity from the fourth year onwards of its operation.

The utilities required are power and water. Around 90 KW of Power and 6000 KLPA of water are
required.

17.6 Land & Built-up Area Requirement

The total land area is 500 sq metres and the built up area is 250 sq mt.

17.7 Manpower Requirement

Total manpower required would be 55 Nos as given below.

Personnel Nos
Works Manager 3
Accountant-cum-Store Keeper 3
Administrative Assistant 2
Clerk 2
Skilled Workers 20
Semi Skilled Workers 15
Unskilled Workers 8
Peon/Watchman 2
Total 55

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17.8 Project Cost/ Fixed Capital Requirement & Means of Finance
Land has not been considered as a part of the project cost because it has been considered to be taken
on lease (as applicable in Assam). One time Land Development Charges have been taken as part of the
Project Cost. Also, Special Maintenance Charges and an Annual Service Charge have been considered
as part of operating cost. The total project cost of Rs 111.22 Lakhs is as follows.

Sl No Fixed Capital Rs in Lakhs

1 Site Development Cost 1.00
2 Building 20.00
3 Plant and Machinery 63.27
4 Miscellaneous Fixed Assets 7.94
5 Preliminary and Pre-Operative Expenses 2.08
6 Margin Money on Working Capital 11.64
7 Contingencies 5.30
Total 111.22

The project cost may be financed with a debt: equity ratio of 3: 1 as follows.
Means of Finance Rs in lakhs
Equity 27.81
Debt 83.42
Total 111.22

17.9 Working Capital Requirement

The working capital requirement is given below.

Sl No Particulars Years of Operation
1 2 3 4 5
1 Net Working Capital 46.56 53.21 59.86 66.51 66.51
2 Available Bank Finance 34.92 39.91 44.90 49.88 49.88
3 Margin Money 11.64 13.30 14.97 16.63 16.63

17.10 Operating Expenses

The annual operating expenses estimated at Rs 112.84 lakhs (70% capacity utilization) is given below:
Sl No Particulars Rs in lakhs
1 Annual Land Charges 0.115
2 Raw materials 44.92
3 Utilities 7.46
4 Wages & Salaries 23.88
5 Overheads 4.24
6 Selling expenses 4.92
7 Packing expenses 4.92
8 Interest on term loan 12.51
9 Interest on Bank Finance for Working Capital 5.24
10 Depreciation 4.63

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Total 112.84

17.11 Profitability Estimates

Sl No Particulars Year
Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Production/Sales
Installed Capacity in lakh nos 0.66 0.66 0.66 0.66 0.66
Capacity Utilization 70% 80% 90% 100% 100%
Estimated Production in lakh nos 0.46 0.53 0.59 0.66 0.66
Gross Sales Revenue 197 225 253 281 281
Expenses
Raw Material Consumption 68 78 87 97 97
Utilities 7 7 7 7 7
Administrative Overheads 4 4 4 4 4
Salaries 24 24 24 24 24
Sales Expenses 5 6 6 7 7
Packing Expenses 5 6 6 7 7
Loan Repayment 0 21 21 21 21
Lease Rentals 0 0 0 0 0
Total 114 146 157 168 168
Gross Profit 83 79 96 113 113
Financial Expenses
Interest On Term Loan 13 13 9 6 3
Interest On Working Capital 5 6 7 7 7
Sub Total 18 18 16 14 11
Depreciation 5 5 5 5 5
Profit Before Tax 61 56 76 95 98
Provision For Tax 20 19 25 32 33
Profit After Tax 41 37 50 63 65

17.12 Financial Indicators

The Average Break Even Point for the project is 50%.

Particulars Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Sales Realisation 197 225 253 281 281
Fixed Costs
Salaries 24 24 24 24 24
Fixed Selling Expenses 5 6 6 7 7
Depreciation (SLM) 5 5 5 5 5
Repairs & Maintenance 2 2 2 2 2
Utilities (Fixed) 7 7 7 7 7
Admin. Overheads Incl 4 4 4 4 4
Interest On L.T. Loan 13 13 9 6 3

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Loan Repayment - 21 21 21 21
Total Fixed Costs 59 81 78 76 73
Variable Cost
Raw Materials 68 78 87 97 97
Packing 5 6 6 7 7
Interest On Working Capital Loans 5.24 5.99 6.73 7.48 7.48
Total Variable Costs 78 89 101 112 112
Contribution 119 136 153 170 170
Breakeven In % 50% 60% 51% 45% 43%
Average Breakeven In % 50%

The IRR for the project is 21% , Average ROI is 82% and average DSCR is 2.83.
Particulars Year of Operation
1 2 3 4 5
Revenue 197 225 253 281 281
Profit Before Tax 60.94 56.34 75.72 95.10 98.23
Profit After Tax 40.52 37.47 50.35 63.24 65.32
LT Interest 12.51 12.51 9.38 6.26 3.13
Interest on Deposits 0.00 0.00 0.00 0.00 0.00
Depreciation 4.63 4.63 4.63 4.63 4.63
LT Loan Repayment 0.00 20.85 20.85 20.85 20.85
Deposit Repayment 0.00 0.00 0.00 0.00 0.00
Return on Investment (%) 70% 66% 81% 95% 95%
Average ROI 82%
Debt-Service Coverage Ratio
- Debt Service 12.51 33.37 30.24 27.11 23.98
- Coverage 57.66 54.60 64.37 74.13 73.08
DSCR 4.61 1.64 2.13 2.73 3.05
Average DSCR 2.83

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18 Synthetic Wood

18.1 Introduction

Plastic Lumber is a new plastic material having similar characteristics to wood. It is being promoted as
an alternate material for wood in furniture, building construction, marine construction and also in
chemical industries. This material has been well received in developed countries because of the
growing awareness about the need to maintain ecological balance and depleting forest resources.

18.2 Market Potential

Plastic Lumber could be used for numerous end use applications. Chiefly, it is used as an alternative to
timber. In general, its applications could be classified into the following categories of manufacturing
convenience furniture like office, restaurant furniture etc. It could also be used for making table tops,
partitions, cupboards, doors, windows etc.

The properties of plastic lumber which make it unique are the following:

• Denser than wood

• Virtually maintenance free

• Long lasting (50 years plus, depending on the application)

• Stain resistant

• Graffiti-proof

• Waterproof

• UV resistant

• Aesthetically pleasing (most plastic lumber has a wood-grained finish)

• Impervious to insects

• Not affected by exposure to most substances

Plastic lumber also:

• Requires no painting or sealing (plastic lumber is available in almost any color and some
wood-composite plastic lumber can be painted as if it were wood)

• Provides a good shock-absorbing surface for pedestrian traffic, such as runners and hikers

18.3 Plant Capacity

The typical size of the project for manufacture of plastic lumber could have an installed capacity of
144 MT per annum. This would mean that approx 4-20 kgs of plastic lumber could be manufactured at
100% capacity utilisation.
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18.4 Process, Plant & Machinery (Details & List of Machinery Suppliers)

(i) Manufacturing Process

Recycled plastic lumber has been in manufactured since the early 1980s. Plastic lumber is most
commonly manufactured from post-consumer high density polyethylene (HDPE), but linear low
density polyethylene (LLDPE) and low density polyethylene (LDPE) are also used.

These plastic feed stocks are derived from such raw materials as post-consumer milk jugs, soda
bottles, grocery bags, plastic wrap, bubble rap, detergent bottles, and water bottles, and other used
plastic commodities.

The recovered plastic is cleaned, shredded, and ground using plastic shredders and Granulators. The
material is then run through plastic extruders and mixed with foaming agents, UV stabilizers, and
color pigments to form plastic wood.

(ii) Plant and Machinery

Two main methods are used to manufacture plastic lumber. These are Flow Moulding and Plastic
Extrusion. Both methods incorporate plastic extruders in the process but differ in the forming
technique.

The specific forming process, either flow moulding or extrusion is dictated by the size and shape of
the "Recycled Plastic Lumber" to be manufactured.

If the board is a large piece with a length of no more than ten feet, then one can consider flow
moulding. Flow moulding is the process of extruding melted plastic directly from the plastic extruder
into a mould of the shape required. However shapes those are to long or too thin will create excessive
pressure during the filling of the plastic lumber mould to be used successfully.

A long board of recycled plastic lumber should be manufactured by using "In Line Plastic Extrusion."
This is a process where the recycled plastic is continually extruded through a die into a forming tank
and then is cut to length.

(iii) Plant and Machinery Suppliers

The following is the list of plant and machinery suppliers of the above equipments.
Sl No Name Communication Address
1 Multitech Engineers Nr.ESIS Hospital,Opp Shri Guru Nanak
Gurudwara, Ulhasnagar No.2, Thane, 421002,
Maharashtra, India
2 Europack Machines (India) Pvt. Ltd. 52, Bindal Industrial Estate, Sakinaka, Andheri
(East), Mumbai 72, India

18.5 Raw Material & Utilities Requirement

The major raw material required for the project would be recycled HDPE bottles. In addition, master
batches are added to add colour. The raw material including HDPE bottles and master batches would
be around 150 MT at 100% capacity utilisation.

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The unit has been assumed to operate at 80% and 90% of its installed capacity in the first and second
year and at 100% capacity from the third year and onwards of its operation.
The utilities required are power and water. Around 55 KW of Power and 900 KLPA of water are
required.

18.6 Land & Built-up Area Requirement

The total land area is 750 sq metres and the built up area is 500 sq mt.

18.7 Manpower Requirement

Total manpower required would be 16 Nos of which administrative is 4 and factory staff is 12.
Additional benefits at the rate of 25% have been considered.
Personnel Nos
Works Manager 1
Accountant-cum-Store Keeper 1
Administrative Assistant 1
Clerk 1
Skilled Workers 6
Semi Skilled Workers 3
Unskilled Workers 2
Peon/Watchman 1
Total 16

18.8 Project Cost/ Fixed Capital Requirement & Means of Finance

Land has not been considered as a part of the project cost because it has been considered to be taken
on lease (as applicable in Assam). One time Land Development Charges have been taken as part of the
Project Cost. Also, Special Maintenance Charges and an Annual Service Charge have been considered
as part of operating cost. The total project cost is estimated at Rs 84.47 lakhs as follows.
Sl No Particulars Rs in Lakhs
1 Site Development Cost 1.50
2 Building 40.00
3 Plant and Machinery 23.33
4 Miscellaneous Fixed Assets 7.61
5 Preliminary and Pre-Operative Expenses 1.58
6 Margin Money on Working Capital 6.43
7 Contingencies 4.02
Total 84.47

This project cost may be financed at a debt equity ratio of 3:1 as follows.

Means of Finance Rs in lakhs

Promoter’s contribution 21.12
Term Loan 63.35
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Total 84.47

18.9 Working Capital Requirement

The working capital requirement is given below.

Sl No Particulars Years of Operation
1 2 3 4 5
1 Net Working Capital 25.70 28.92 32.13 32.13 32.13
2 Available Bank Finance 19.28 21.69 24.10 24.10 24.10
3 Margin Money 6.43 7.23 8.03 8.03 8.03

18.10 Operating Expenses

The annual operating expenses estimated at Rs 58.92 lakhs (80% capacity utilization) is given below:
Sl No Particulars Rs in lakhs
1 Annual Land Charges 0.17
2 Raw materials 19.74
3 Utilities 5.43
4 Wages & Salaries 8.46
5 Administrative Overheads 4.08
6 Selling expenses 2.88
7 Packing expenses 2.88
8 Interest on term loan 9.50
9 Interest on Bank Finance for Working Capital 2.89
10 Depreciation 2.89
Total 58.92

18.11 Profitability Estimates

Sl No Particulars Year
Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Production/Sales
Installed Capacity 144 144 144 144 144
Capacity Utilization 80% 90% 100% 100% 100%
Estimated Production 115 130 144 144 144
Gross Sales Revenue 115 130 144 144 144
Expenses
Raw Material Consumption 20 22 25 25 25
Utilities 5 5 5 5 5
Administrative Overheads 4 4 4 4 4
Salaries 11 11 11 11 11
Sales Expenses 3 3 4 4 4
Packing Expenses 3 3 4 4 4
Loan Repayment 0 16 16 16 16
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Lease Rentals 0.17 0.17 0.17 0.17 0.17
Total 46 65 68 68 68
Gross Profit 69 65 76 76 76
Financial Expenses
Interest On Term Loan 10 10 7 5 2
Interest On Working Capital 3 3 4 4 4
Sub Total 12 13 11 8 6
Depreciation 3 3 3 3 3
Profit Before Tax 54 49 62 65 67
Provision For Tax 18 16 21 22 23
Profit After Tax 36 33 42 43 45

18.12 Financial Indicators

The Average Break Even Point for the project is 45%.

Particulars Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Sales Realisation 115 130 144 144 144
Fixed Costs
Salaries 11 11 11 11 11
Fixed Selling Expenses 3 3 4 4 4
Depreciation (SLM) 3 3 3 3 3
Repairs & Maintenance 1 1 1 1 1
Utilities (Fixed) 5 5 5 5 5
Admin. Overheads Incl Insurance 4 4 4 4 4
Loan Repayment - 16 16 16 16
Interest On L.T. Loan 10 10 7 5 2
Total Fixed Costs 37 53 51 48 46
Variable Cost
Raw Materials 20 22 25 25 25
Packing 3 3 4 4 4
Interest On Working Capital Loans 2.89 3.25 3.61 3.61 3.61
Total Variable Costs 25 29 32 32 32
Contribution 90 101 112 112 112
Breakeven In % 41% 52% 45% 43% 41%
Average BREAKEVEN IN % 45%

The IRR for the project is 23.2%, Average ROI is 82% and average DSCR is 2.87.
Particulars Year of Operation
1 2 3 4 5
Revenue 115 130 144 144 144
Profit Before Tax 54.21 49.23 62.46 64.83 67.21
Profit After Tax 36.05 32.73 41.53 43.11 44.69
LT Interest 9.50 9.50 7.13 4.75 2.38
Interest on Deposits 0.00 0.00 0.00 0.00 0.00
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Depreciation 2.89 2.89 2.89 2.89 2.89
LT Loan Repayment 0.00 15.84 15.84 15.84 15.84
Deposit Repayment 0.00 0.00 0.00 0.00 0.00
Return on Investment (%) 79% 73% 86% 86% 86%
Average ROI 82%
Debt-Service Coverage Ratio
- Debt Service 9.50 25.34 22.96 20.59 18.21
- Coverage 48.44 45.12 51.55 50.75 49.96
DSCR 5.10 1.78 2.24 2.46 2.74
Average DSCR 2.87

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19 LLDPE Multi-layer Film

19.1 Introduction

LLDPE multilayer films are widely used in packaging applications, where wrappings must not affect
contents and at the same time protect from damage and exposure to contaminants. In modern times,
Flexible Plastic Packaging (FPP) has become part & parcel of life of human being. Packaging is being
used in almost all context, may be it household or articles of daily use, to wide variety of materials.

Multi Layer co-extrusion blown films is made of suitable combination of PA, EVOH, LLDPE, LDPE,
EVA & need-based tie / binding materials. These films are very useful to store various foods,
agricultural products, medical apparatus, pesticides chemicals, daily use articles & war industry
articles. Thus PE multilayer films have very high demand potential in local as well as overseas market.

Multi Layer Films are used for

General purpose packaging of food/non-food products

Over wrap application as cling/stretch film

Lamination of heat seal performance

19.2 Market Potential

LLDPE films also meet the criteria for approval for use in the food industry. They also have good
mechanical property, are recyclable and are economically viable. In addition, they may be heat shrunk,
that is they may be subjected to a heat source to shrink the film around a product for improved
packaging.

The multi layer films obtained by co-extrusion method are suitable for Snack foods, crisps,
confectionery, ice creams, biscuits, chocolates, bakery products, cheese, dried vegetables, dried fruits,
frozen vegetables, pies, crusty breads, bacon, coffee, cooked meat, fresh meat, dried soups, dried milk,
margarine, butter tubs, juices, non carbonate beverages, spices & cereals, fresh cut agricultural
produce, flowers etc.

There is good export potential for Multilayer films. Changing life style has created a market for wide
variety of goods including ready-to-eat food products, dairy products, and many household products.
This drives the growth of FPP industry in India and abroad alike.

19.3 Plant Capacity

The typical size of the project for manufacture of LLDPE multilayer film could have an installed
capacity of 144 MT per annum.

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19.4 Process, Plant & Machinery (Details & List of Machinery Suppliers)

(i) Manufacturing Process

Multi-layer Polyethylene (PE) film produce by the “Blown Co-extrusion Process” based on co-
extrusion concept. The manufacture of 3 layer composite film requires 3 extruders feeding resin
through hoppers into a single die. Each extruder processes specific material and is fed through a
common spiral, mandrel and the layers are brought together in the die. The film passes through a
common sizing calibrator into collapsible boards to the top nip roller which is water- cooled. The
platform on which the extruders are mounted may be rotated or the nip roller rotated to minimize
thickness variation, form the nip roll, the film made is passed through a corona treater to the turret
winder station.

(ii) Plant and Machinery

The following are the plant and machinery required:

• Extruders

• Screen Changers (Manual & Hydraulic)

• Micro Processor based Programmable Logic Control (PLC) system

• Stationary Stream Lined Co-extrusion Die (SCD)

• Thickness electronic Gauge Controller with I Flex software

• Eliminator Air Ring insulated distributor manifold

• Internal bubble cooling system

• Bubble stabilizing cage

• Oscillating Haul-off with Teflon coated aluminium rolls & collapsible frame

• Water Annealing Tank SS

• Linear Lay-on Turret winders with GAP features

• Material Handling system for RM & Finished goods

• Euro Chiller

• Slitter & Rewinders

• Softel Corona treater

• Edge Guide system

• Trim collector

• Air Compressor for clean / chilled air in plant area

• Chilling Plant

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• Hopper Loading system

• Cussetting attachment

• Pellet wrapping machine

• Positive air pressure creating system

• Stand by Power DG set

• Fork Lifts

(iii) Plant and Machinery Suppliers

The following is the list of plant and machinery suppliers of the above equipments.
Sl No Name Communication Address
1 Sai Machine Tools Pvt. Ltd Plot No. 23, Sector A, Sanwer Road Industrial
Area, Indore - 452 015 (M.P.) India
2 S. S. Mechanical Engineers (P) Ltd. Wz-106/56, Rajouri Garden Extn. New Delhi-
110027 (India)
3 Kolsite Maschine Fabrik Ltd. (KMF) Kolsite House, Veera Desai Road, Andheri
(West), Mumbai 400 053, Maharashtra, India

19.5 Raw Material & Utilities Requirement

The major raw material required for the project would be LLDPE. The raw material required would be
around 147 MT at 100% capacity utilisation.

The unit has been assumed to operate at 80% and 90% of its installed capacity in the first & second
year and at 100% of its capacity from the third year and onwards of its operation.
The utilities required are power and water. Around 20 KW of Power and 450 KLPA of water are
required.

19.6 Land & Built-up Area Requirement

The total land area is 700 sq metres and the built up area is 500 sq mt.

19.7 Manpower Requirement

Total manpower required would be 13 Nos of which administrative is 4 and factory staff is 9.

Personnel Nos
Works Manager 1
Accountant-cum-Store Keeper 1
Administrative Assistant 1
Clerk 1
Skilled Workers 4
Semi Skilled Workers 2

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Unskilled Workers 2
Peon/Watchman 1
Total 13

19.8 Project Cost/ Fixed Capital Requirement & Means of Finance

Land has not been considered as a part of the project cost because it has been considered to be taken
on lease (as applicable in Assam). One time Land Development Charges have been taken as part of the
Project Cost. Also, Special Maintenance Charges and an Annual Service Charge have been considered
as part of operating cost. The total project cost is estimated at Rs 86.14 lakhs as follows.
Sl No Particulars Rs in Lakhs
1 Site Development Cost 1.40
2 Building 40.00
3 Machinery 20.77
4 Miscellaneous Fixed Assets 7.29
5 Preliminary and Pre-Operative Expenses 1.61
6 Margin Money on Working Capital 10.97
7 Contingencies 4.10
Total 86.14

This project cost may be financed at a debt equity ratio of 3:1 as follows.
Means of Finance Rs in lakhs
Promoter’s contribution 21.54
Term Loan 64.61
Total 86.14

19.9 Working Capital Requirement

The working capital requirement is given below.

Sl No Particulars Years of Operation
1 2 3 4 5
1 Net Working Capital 43.89 50.63 56.26 56.26 56.26
2 Available Bank Finance 32.92 37.97 42.19 42.19 42.19
3 Margin Money 10.97 12.66 14.06 14.06 14.06

19.10 Operating Expenses

The annual operating expenses estimated at Rs 124.06 lakhs (80% capacity utilization) is given below:
Sl No Particulars Rs in lakhs
1 Annual Land Charges 0.15
2 Raw materials 83.34
3 Utilities 1.31
4 Wages & Salaries 8.93
5 Overheads 4.03
6 Selling expenses 4.46
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7 Packing expenses 4.46
8 Interest on term loan 9.69
9 Interest on Bank Finance for Working Capital 4.94
10 Depreciation 2.74
Total 124.06

19.11 Profitability Estimates

Sl No Particulars Year
Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Production/Sales
Installed Capacity in nos 144 144 144 144 144
Capacity Utilization 80% 90% 100% 100% 100%
Estimated Production in nos 115 130 144 144 144
Gross Sales Revenue 179 201 223 223 223
Expenses
Raw Material Consumption 83 94 104 104 104
Utilities 1 1 1 1 1
Administrative Overheads 4 4 4 4 4
Salaries 9 9 9 9 9
Sales Expenses 4 5 6 6 6
Packing Expenses 4 5 6 6 6
Loan Repayment 0 16 16 16 16
Lease Rentals 0.15 0.15 0.15 0.15 0.15
Total 107 134 146 146 146
Gross Profit 72 67 77 77 77
Financial Expenses
Interest On Term Loan 10 10 7 5 2
Interest On Working Capital 5 6 6 6 6
Sub Total 15 15 14 11 9
Depreciation 3 3 3 3 3
Profit Before Tax 55 48 61 63 66
Provision For Tax 18 16 20 21 22
Profit After Tax 36 32 41 42 44

19.12 Financial Indicators

The Average Break Even Point for the project is 43%.

Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Sales Realisation 179 201 223 223 223
Fixed Costs
Salaries 9 9 9 9 9
Fixed Selling Expenses 4 5 6 6 6
Depreciation (SLM) 3 3 3 3 3

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Repairs & Maintenance 1 1 1 1 1
Utilties (Fixed) 1 1 1 1 1
Admin. Overheads Incl 4 4 4 4 4
Interest On L.T. Loan 10 10 7 5 2
Loan Repayment - 16 16 16 16
Total Fixed Costs 32 49 47 45 42
Variable Cost
Raw Materials 83 94 104 104 104
Packing 4 5 6 6 6
Interest On Working Capital Loans 4.94 5.70 6.33 6.33 6.33
Total Variable Costs 93 104 116 116 116
Contribution 86 96 107 107 107
Breakeven In % 38% 51% 44% 42% 40%
Average Breakeven In % 43%

The IRR for the project is 20.6%, Average ROI is 79% and average DSCR is 2.78.
Particulars Year of Operation
1 2 3 4 5
Revenue 179 201 223 223 223
Profit Before Tax 54.50 48.38 60.96 63.38 65.80
Profit After Tax 36.24 32.17 40.54 42.15 43.76
LT Interest 9.69 9.69 7.27 4.85 2.42
Interest on Deposits 0.00 0.00 0.00 0.00 0.00
Depreciation 2.74 2.74 2.74 2.74 2.74
LT Loan Repayment 0.00 16.15 16.15 16.15 16.15
Deposit Repayment 0.00 0.00 0.00 0.00 0.00
Return on Investment (%) 78% 71% 82% 82% 82%
Average ROI 79%
Debt-Service Coverage Ratio
- Debt Service 9.69 25.84 23.42 21.00 18.57
- Coverage 48.68 44.60 50.54 49.73 48.92
DSCR 5.02 1.73 2.16 2.37 2.63
Average DSCR 2.78

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20 Water Tanks

20.1 Introduction

Roto Moulded Plastic Water Storage Tanks are made from Linear Low Density Polyethylene/Low
Density Polyethylene. These tanks are light in weight therefore, it is easy to fix them at the place of
choice. These tanks require no painting, no rotational moulding, product is formed inside a closed
mould rotating biaxial in two plains perpendicular to each other. In batch type-rock-N-Roll type
Rotational Moulding machines, frame of the machine is turned in a primary axis while mould is
rotated in secondary axis.

As rotational moulding does not involve any injection pressure and high shear rates, this process offers
certain basic advantages over other processes and techniques of plastic processing.

• Complex parts can be moulded without need for post-assembly.

• Low machinery cost relative to production capacity.

• Double walled items can be produced.

• Ease of colour and material change.

• Multiple product and multi colours can be moulded at the same time

• Minimum wastages.

• High production capacity on selected parts.

• Production design freedom.

These tanks keep water clean, odour free and maintain the quality of water stores intact. These tanks
are economical, practical and hygienic alternative of storing potable water in single or multi storied
residential units, industrial set-ups, commercial establishments and sites everywhere under the sun.
These tanks are becoming increasingly popular in India and have caught the eyes of many users for
their requirement of storing water for domestic and other purposes. These tanks are also used in
hostels, hospitals, schools, cinema houses and construction sites.

20.2 Market Potential

Roto-moulded Plastic Water storage tanks being lighter in weight are easy in handling and can be
easily fitted at any desired place, and are hence preferred and practically replacing the conventional
tanks of steel, cement concrete or stone. These tanks are available in market in various sizes and
shapes. The prices of these tanks are at the rate of Rs. 3 per litre of water capacity approximately. The
demand of plastic water storage tanks is increasing day-by-day. They are not only installed in the
individual houses and flats but are also fitted in factories, group housing schemes and multi-storeyed
buildings as well.

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Due to increase in the house building activities and preference given by the Government to provide
homes to the homeless people, the demand for plastic water storage tanks is likely to increase in the
years to come. Hence there is a good scope for establishing a few units for the manufacture of water
storage tanks by Roto Moulded process.

20.3 Plant Capacity

At 100% capacity utilisation, the plant is expected to produce 14640 nos of water tanks ranging in
capacity from 500 litres to 2000 litres. The plant is expected to run single shift of 8 hours with
operational days of 300.

20.4 Process, Plant & Machinery (Details & List of Machinery Suppliers)

(i) Manufacturing Process

The HDPE granules are mixed with granules of black colour concentrates. These are extruded and
strands are chopped as granules so as to achieve uniform distribution of carbon black. The granules are
pulverized in a special pulverization system from 30 to 40- mesh powder. This powder is fed in the
mould in the required quantity. The burners of the Roto Moulding Machine are fired with the help of
LPG or Diesel and the moulds are heated to 300ºC. Molten powders when rotated in the heated
moulds form hollow storage tank. White inner coating is given for better finish. After proper time
when the tank is ready, the mould is cooled and opened and the tank is taken out. Finishing of the
tanks is done manually.

Roto Moulded Tanks are manufactured as per IS 12701:1989. This standard covers the requirements
of materials, dimensions, construction shape, tolerances on dimensions, fittings, workmanship,
performance requirements and inspection and testing of rotational moulded polythene water storages
tanks.

This standard is applicable only to water storage tanks subject to the following two conditions:

• Own hydrostatic head of water

• Tank with uniform flat base support

The internal and external surface of the water storage tank should be smooth, clean and free from other
hidden internal defects, such as air bubbles, pits and metallic or other foreign material inclusions. The
mould parting line and excess material near the top rim of the tank should be cut and finished to the
required leave Defects like air bubbles and pits at mould parting line and at top rim of the main man
hole should be repaired by hot air filler rod welding method.

(ii) Plant and Machinery

The major equipment required by the unit for manufacturing plastic water tanks are as follows:

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• Biaxial rotation Moulding Plant 3 arm

• Moulding Machine

• Chain pulley with stands

• Pulverising Machine

• Extruder Machine

• Heavy duty grinding machine

• Weighing Machine

• Cutter machine for rejection Tank

• Testing Equipments

• Moulds

(iii) Plant and Machinery Suppliers

The following is the list of plant and machinery suppliers of the above equipments.
Sl No Name Communication Address
1 M/s. National Plastics Plot No. 84, G.I.D.C., Odhav,
Ahmedabad-382415.
2 M/s. Jai Industrial Works 22-26 A, Industrial Estate,
22, Godam, Jaipur.
3 M/s. Super India B-45, Lawrence Road,
New Delhi-35.
4 M/s. Batliboi and Co. Ltd. P. B. No. 479, V.B. Gandhi Road,
Fort, Mumbai-400023.
5 M/s. Fixopan Machine Pvt. Ltd 71, Nehru Place,
New Delhi-110019.

20.5 Raw Material & Utilities Requirement

The main raw material required for manufacturing plastic water tanks is HDPE and black master
batch. HDPE is available at the rate of Rs 62 per kg inclusive of tax, customs duty, transportation etc.
Black master batch is usually taken at 2% of the HDPE requirement and is priced at Rs 90 per kg.
The utilities required are power and water. Around 135 KW of Power and 4500 KLPA of water are
required.

20.6 Land & Built-up Area Requirement

The total land area is 1700 sq metres and the built up area is 1250 sq mt.

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20.7 Manpower Requirement
Total manpower required would be 14 Nos of which administrative is 4 and factory staff is 10.

Personnel Nos
Works Manager 1
Accountant-cum-Store Keeper 1
Administrative Assistant 1
Clerk 1
Skilled Workers 5
Semi Skilled Workers 2
Unskilled Workers 2
Peon/Watchman 1
Total 14

20.8 Project Cost/ Fixed Capital Requirement & Means of Finance:

Land has not been considered as a part of the project cost because it has been considered to be taken
on lease (as applicable in Assam). One time Land Development Charges have been taken as part of the
Project Cost. Also, Special Maintenance Charges and an Annual Service Charge have been considered
as part of operating cost. The total project cost is estimated at Rs 210.90 lakhs as follows.
Sl No Particulars Rs in Lakhs
1 Site Development Cost 3.40
2 Building 100.00
3 Plant and Machinery 58.66
4 Miscellaneous Fixed Assets 8.36
5 Preliminary and Pre-Operative Expenses 3.94
6 Margin Money on Working Capital 26.50
7 Contingencies 10.04
Total 210.90

The project cost may be financed under a debt equity ratio of 3: 1 as follows:
Means of Finance Rs in lakhs
Equity 52.72
Debt 158.17
Total 210.90

20.9 Working Capital Requirement

The working capital requirement is given below.

Sl No. Particulars Years of Operation
1 2 3 4 5
1 Net WC 106.01 121.15 136.30 151.44 151.44
2 Available Bank Finance 79.51 90.86 102.22 113.58 113.58

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3 Margin Money 26.50 30.29 34.07 37.86 37.86

20.10 Operating Expenses

The annual operating expenses estimated at Rs 306.75 lakhs (70% capacity utilization) is given below:
Sl No Particulars Rs in lakhs
1 Annual Land Charges 0.39
2 Raw materials 220.75
3 Utilities 7.58
4 Wages & Salaries 9.53
5 Overheads 5.39
6 Selling expenses 10.66
7 Packing expenses 10.66
8 Interest on term loan 23.73
9 Interest on Bank Finance for Working Capital 11.93
10 Depreciation 6.53
Total 306.75

20.11 Profitability Estimates

Sl No Particulars Year
Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Production/Sales
Installed Capacity in nos 14640 14640 14640 14640 14640
Capacity Utilization 70% 80% 90% 100% 100%
Estimated Production 10248 11712 13176 14640 14640
Gross Sales Revenue 426 487 548 609 609
Expenses
Raw Material Consumption 215 246 276 307 307
Utilities 8 8 8 8 8
Administrative Overheads 5 5 5 5 5
Salaries 10 10 10 10 10
Sales Expenses 11 12 14 15 15
Packing Expenses 11 12 14 15 15
Loan Repayment 0 40 40 40 40
Lease Rentals 0 0 0 0 0
Total 259 333 366 400 400
Gross Profit 167 155 182 209 209
Financial Expenses
Interest On Term Loan 24 24 18 12 6
Interest On Working Capital 12 14 15 17 17
Sub Total 36 37 33 29 23
Depreciation 7 7 7 7 7
Profit Before Tax 125 111 142 174 179
Provision For Tax 42 37 48 58 60
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Profit After Tax 83 74 95 115 119

20.12 Financial Indicators

The Average Break Even Point for the project is 40%.

Particulars Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Sales Realisation 426 487 548 609 609
Fixed Costs
Salaries 10 10 10 10 10
Fixed Selling Expenses 11 12 14 15 15
Depreciation (SLM) 7 7 7 7 7
Repairs & Maintenance 3 3 3 3 3
Utilities (Fixed) 8 8 8 8 8
Admin. Overheads Incl Insurance 5 5 5 5 5
Interest On L.T. Loan 24 24 18 12 6
Loan Repayment - 40 40 40 40
Total Fixed Costs 66 108 103 99 93
Variable Cost
Raw Materials 215 246 276 307 307
Packing 11 12 14 15 15
Interest On Working Capital Loans 11.93 13.63 15.33 17.04 17.04
Total Variable Costs 238 272 305 339 339
Contribution 189 216 243 270 270
Breakeven In % 35% 50% 43% 37% 34%
Average Breakeven In % 40%

The IRR for the project is 20%, Average ROI is 80% and average DSCR is 2.80.
Particulars Year of Operation
1 2 3 4 5
Revenue 426 487 548 609 609
Profit Before Tax 124.90 110.79 142.16 173.52 179.46
Profit After Tax 83.06 73.68 94.54 115.39 119.34
LT Interest 23.73 23.73 17.79 11.86 5.93
Depreciation 6.53 6.53 6.53 6.53 6.53
LT Loan Repayment 0.00 39.54 39.54 39.54 39.54
Return on Investment (%) 74% 67% 79% 91% 91%
Average ROI 80%
Debt-Service Coverage Ratio
- Debt Service 23.73 63.27 57.34 51.41 45.47
- Coverage 113.31 103.93 118.86 133.79 131.80
DSCR 4.78 1.64 2.07 2.60 2.90
Average DSCR 2.80

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21 Plastic Crates

21.1 Introduction

Crates are material handling containers which can be used for storage, transport or distribution and
handling of products. Traditionally crates in India were manufactured from wood but with
developments in plastics processing and conservation of environment issues gaining importance in
developed societies, most of the material handling crates are being manufactured to size to suit the end
use, but are predominantly made from High Density Polyethylene (HDPE) and sometimes from
Polypropylene (PP). These injection moulded crates have a long life and are easy to handle due to its
light weight, and have many other advantages over the traditional wooden crates.

The advantages of using plastic crates are:

• Considerable reduction in weight and hence easy handling and transportation

• Freedom from sharp corners and splinters facilitating safe handling

• Complete freedom from corrosion unlike in the case of metal crates

• No noise while handling unlike metal crates

• Requires negligible maintenance compared to wooden and metal crates.

• Have fairly long life and are suitable for multiple trips.

• Good resistance to chemicals and harsh environment. Can be made in variety of colors and
hence have better sales appeal.

21.2 Market Potential

In India, at present there are several manufacturers of large injection moulded crates. This segment of
business is dominated mainly by organized sector players. The major players in injection moulded
crates are:

• Nilkamal Crates and Bins

• Bright Brothers

• Supreme Industries Limited

• Prince Plastics

• Synthetic Moulders

• Gold Plast

The following is the sectors and the use of crates in these sectors.
Sector Use

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Soft drink industry Storage, handling, transport and distribution.
Milk and dairy products Handling, transport, distribution.
Fisheries, and Marine Storage, handling, transport and meat products distribution.
Automobile industry Storage
Fruits and vegetable Storage, handling, transport.
Electronic and electricals Storage, handling.
Pharmaceuticals Storage, handling.
Agro-products Storage, handling
Yarn and textiles industry Storage, handling
Defense Sector Storage, handling of bombs

Following types of crates are generally available in Market and are popular amongst end-users.

• Fully closed crates - with all surfaces of crates in solid except top.

• Grilled crates - with all sidewalls grilled and bottom close.

• Totally grilled crates - with all sides and bottom also grilled.

• Crates with lids - a lid on top to protect the contents.

• Folding crates - entire crate can be folded to a flat assembly to save space when not in use.

• Bins - modified shape of crate so that contents can be removed from front without unloading the
bins stacked over it.

• Stacking and nesting crates - height of crate can be reduced when stored in nesting positions.

• Soft drink crates - these are available with partitions to separate bottles rattling with each other.

• Milk pouch crate.

• Tetra pack crates.

• Crates for handling Printed Circuit Boards.

The traditional segments of crates experience stiff competition and hence, the crates manufacturers
are always in look out for newer and newer application. The demand for crates is increasing from a
diverse range of businesses. The usage of crates especially in agri business is full of promise as it has
demonstrated its superiority in handling, storing and transporting of agricultural produce by reducing
the damage level of food products by almost 30%. The entry of crates in agriculture is likely to
revolutionize the crates business and this segment is expected to drive the future growth of this
business.

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21.3 Plant Capacity

The typical size of the project for manufacture of injection moulded crates could have an installed
capacity of 689 MT per annum. This would mean that 3 lakh pieces of crates having an average
weight of 2.25 kg per crate could be manufactured at 100% capacity utilisation.

21.4 Process, Plant & Machinery (Details & List of Machinery Suppliers)

(i) Manufacturing Process

The manufacturing process of injection moulded crate is simple in concept. The Poly Propylene
granules are fed via a regulated hopper into a homogenous molten mass by application of heat and
shearing action of continuously rotating extruded screw, which also keeps pushing the plastic melt
forward. The melt gets collected at the forward end of the extruder cylinder and is pushed into the
mould cavity by the screw, now acting as a hydraulic piston. The mould is kept at pre-specified
temperature and once injected, the plastic melt is held under high pressure to ensure that the material
reaches all the ends of the mould. In crates moulding, the moulds used have comparatively very large
depth.

The mould is opened after plastic melt has solidified sufficiently and the moulded item is ejected by
means of ejector pins or plates. During the cooling cycle in the mould, the extruder screw prepares
another batch of plastic melt, ready to be injected, and thus the cycle goes on continuously. The
moulded articles usually do not require any finishing operation other than removal of wastage.
Otherwise, after visual inspection, they are kept for curing for about 40 to 50 hours and then
despatched.

(ii) Plant and Machinery Suppliers

The following is the list of plant and machinery suppliers

Sl No Name Communication Address
1 M/S Bonhomie Plastics Pvt. Ltd. 14/a, Ujagar Indl. Estate, Next To Dukes,
Deonar,Mumbai-400088,Maharashtra
2 Naroto N.A.Group of Companies Plot No.3725, Phase IV, GIDC,Vatva I.E.,
Ahmedabad - 382445 India
Tel. No.:079 25840374 / 25841821.
Fax : 079 25840809.

21.5 Raw Material & Utilities Requirement

The major raw material required for the project would be polypropylene / HDPE of injection moulding
grade. In addition, some stabilisers and additives would also be needed. The raw material required
would be around 689 MT at 100% capacity utilisation. The unit has been assumed to operate at 70%,
80% and 90% of its installed capacity in the first, second and third year and at 100% capacity from the
fourth year onwards of its operation.
The utilities required are power and water. Around 75 KW of Power and 600 KLPA of water are
required.

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21.6 Land & Built-up Area Requirement

The total land area is 1000 sq metres and the built up area is 750 sq mt.

21.7 Manpower Requirement

Total manpower required would be 14 Nos of which administrative is 4 and factory staff is 10.
Personnel Nos
Works Manager 1
Accountant-cum-Store Keeper 1
Administrative Assistant 1
Clerk 1
Skilled Workers 5
Semi Skilled Workers 2
Unskilled Workers 2
Peon/Watchman 1
Total 14

21.8 Project Cost/ Fixed Capital Requirement & Means of Finance

Land has not been considered as a part of the project cost because it has been considered to be taken
on lease (as applicable in Assam). One time Land Development Charges have been taken as part of the
Project Cost. Also, Special Maintenance Charges and an Annual Service Charge have been considered
as part of operating cost. The total project cost estimated at Rs 215.26 lakhs is as follows.
Sl No Project Cost Rs in Lakhs
1 Site Development Cost 2.00
2 Building 60.00
3 Plant and Machinery 94.91
4 Miscellaneous Fixed Assets 7.80
5 Preliminary and Pre-Operative Expenses 4.02
6 Margin Money on Working Capital 36.28
7 Contingencies 10.25
Total 215.26

Of this, the project cost may be financed with a debt equity ratio of 3:1 as under:
Means of Finance Rs in lakhs
Promoter’s contribution 53.81
Term Loan 161.44
Total 215.26

21.9 Working Capital Requirement

The working capital requirement is given below.

Sl No Particulars Years of Operation
1 2 3 4 5
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1 Net Working Capital 145.12 165.85 186.58 207.31 207.31
2 Available Bank Finance 108.84 124.39 139.93 155.48 155.48
3 Margin Money 36.28 41.46 46.64 51.83 51.83

21.10 Operating Expenses

The annual operating expenses estimated at Rs 432.56 lakhs (70% capacity utilization) is given below:
Sl No Particulars Rs in lakhs
1 Annual Land Charges 0.23
2 Raw materials 339.73
3 Utilities 4.38
4 Wages & Salaries 9.53
5 Overheads 3.50
6 Selling expenses 14.18
7 Packing Expenses 14.18
8 Interest on term loan 24.22
9 Interest on Bank Finance for Working Capital 16.33
10 Depreciation 6.52
Total 432.56

21.11 Profitability Estimates

Sl No Particulars Year
Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Production/Sales
Installed Capacity in Lakh nos 3 3 3 3 3
Capacity Utilization 70% 80% 90% 100% 100%
Estimated Production in lakh nos 2.1 2.4 2.7 3 3
Gross Sales Revenue 567 648 729 810 810
Expenses
Raw Material Consumption 340 388 437 485 485
Utilities 4 4 4 4 4
Administrative Overheads 4 4 4 4 4
Salaries 10 10 10 10 10
Sales Expenses 14 16 18 20 20
Packing Expenses 14 16 18 20 20
Loan Repayment 0 40 40 40 40
Lease Rentals 0 0 0 0 0
Total 386 479 531 584 584
Gross Profit 181 169 198 226 226
Financial Expenses
Interest On Term Loan 24 24 18 12 6
Interest On Working Capital 16 19 21 23 23
Sub Total 41 43 39 35 29
Depreciation 7 7 7 7 7
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Profit Before Tax 134 120 152 184 190
Provision For Tax 45 40 51 62 64
Profit After Tax 89 80 101 123 127

21.12 Financial Indicators

The Average Break Even Point for the project is 38%.

Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Sales Realisation 567 648 729 810 810
Fixed Costs
Salaries 10 10 10 10 10
Fixed Selling Expenses 14 16 18 20 20
Depreciation (SLM) 7 7 7 7 7
Repairs & Maintenance 3 3 3 3 3
Utilities (Fixed) 4 4 4 4 4
Admin. Overheads 4 4 4 4 4
Interest On L.T. Loan 24 24 18 12 6
Loan Repayment - 40 40 40 40
Total Fixed Costs 65 108 103 99 93
Variable Cost
Raw Materials 340 388 437 485 485
Packing 14 16 18 20 20
Interest On Working Capital Loans 16.33 18.66 20.99 23.32 23.32
Total Variable Costs 370 423 476 529 529
Contribution 197 225 253 281 281
Breakeven In % 33% 48% 41% 35% 33%
Average Breakeven In % 38%

The IRR for the project is 22.8%, Average ROI is 83% and average DSCR is 2.90.
Particulars Year of Operation
1 2 3 4 5
Revenue 567 648 729 810 810
Profit Before Tax 134.21 119.94 152.08 184.22 190.27
Profit After Tax 89.25 79.76 101.13 122.50 126.53
LT Interest 24.22 24.22 18.16 12.11 6.05
Interest on Deposits 0.00 0.00 0.00 0.00 0.00
Depreciation 6.52 6.52 6.52 6.52 6.52
LT Loan Repayment 0.00 40.36 40.36 40.36 40.36
Deposit Repayment 0.00 0.00 0.00 0.00 0.00
Return on Investment (%) 77% 70% 82% 94% 94%
Average ROI 83%
Debt-Service Coverage Ratio
- Debt Service 24.22 64.58 58.52 52.47 46.41
- Coverage 119.99 110.50 125.82 141.13 139.11
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DSCR 4.95 1.71 2.15 2.69 3.00
Average DSCR 2.90

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22 Tarpaulins and Covers

22.1 Introduction

Polymer based Polyethylene Covers (Heavy Duty) include High Density Polyethylene tarpaulins and
covers. PE tarpaulins are woven High Density Polyethylene (HDPE) fabrics laminated with Linear
Low Density Polyethylene (L LDPE) film, welded ( heat sealed) at joints and edges, reinforced with
Polyethylene (PE) or Polypropylene (PP) rope hemming and eyelets provided at regular intervals all
round. PE covers however are HDPE Woven fabrics coated / laminated with LDPE and welded (heat
sealed) at joints. Polyethylene covers are usually not provided with rope hemming and eyelets.

The weight of HDPE tarpaulins in grams per square meter (gsm) ranges from 90 for lighter tarpaulins
to 270 for heavier tarpaulins. HDPE tarpaulin should conform to the bureau of Indian Standard’s IS
No: 7903-1984 which deals with the material specification, constructional details, properties, marking,
packing, sampling and testing procedure. There is no BIS standard dealing with covers other than
tarpaulins. However, for fumigation covers which are used for food grain storage, there is a standard
IS: 13217-1991.

22.2 Market Potential

Tarpaulins are used for various applications of protections from rain, dew, dust and sun for different
materials. They are used in the following listed applications:

• Stock Pile Cover

• Bale Wraps

• Truck Liners and Covers

• Fumigation Covers

• Railway Wagon Covers

• Floor linings for Storage

• Tents

• Construction Site Stock Cover

• Roof Covers

• Car and Motor Cycle Covers

• Swimming Pool Covers

• Equipment Covers

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Traditionally cotton canvas tarpaulins have been used in many of the above uses but due to some of its
inherent drawbacks, HDPE tarpaulins have already captured market share in all above end use sectors.
This market share is presently small but is expanding and growing fast. In developed countries, HDPE
tarpaulins enjoy the largest market share among all types of tarpaulins.

Among large users of covers are Food Corporation of India’s (FCI) warehouses which instead of using
HDPE tarpaulins in large quantities, use fumigation covers manufactured from HDPE woven fabric
coated or laminated with low density polyethylene with no rope hemming, rope lashing, eyeleting etc.
These HDPE sheets are cheaper than HDPE tarpaulins and serve their purpose of covers for food
stocks. FCI also consumes cotton canvas tarpaulins and small quantities of HDPE tarpaulins.

In the transportation sector, trucks largely use cotton canvas tarpaulins. How ever, for truck liner
applications, they are now employing HDPE tarpaulin sheets. Defence authorities also regularly use
tarpaulins of heavier range but presently the use of HDPE tarpaulins is limited in this sector. Cement,
fertiliser and sugar manufacturing industries are also using HDPE tarpaulins which are witnessing
impressive growth trends.

22.3 Plant Capacity

Same plant and machinery can produce HDPE tarpaulins of different weights (gsm). The difference in
gsm is achieved by

• Different deniers of tapes used in weaving

• Different weave mesh expressed as Tapes per square inch

• Different lamination thicknesses

The envisaged plant shall produce HDPE Tarpaulins and sheets rolls (covers) in the gsm of
100,125,150,180,200 and 250 with the flexibility to produce varying quantities of any grade. The unit
price per square meter of tarpaulin in each case will vary and increase as the gsm increases. However,
the price in terms of per kg weight of tarpaulins will remain the same and also the overall production
quantity will remain the same.

The installed capacity is 3500 Tonnes per annum.

22.4 Process, Plant & Machinery (Details & List of Machinery Suppliers)

(i) Manufacturing Process

The process of manufacturing is divided into the following stages:

• Manufacturing of tapes from HDPE granules on extrusion tape plant

• Weaving of tapes into fabric

• Lamination of LLDPE extrusion coating on fabric

• Cutting, welding (heat sealing) and hemming

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• Eyelet punching

• Marking and Printing

• Bailing and Packing

They are briefly described below:

• Manufacture of tapes

HDPE granules of Raffia grade, the main raw material for tape manufacturing are mixed in the doser
with the required quantities of master batches for colouration and stabilisation and then extruded by a
screw configuration for metering, mixing, sheering, melting and final mixing to develop high pressure
to enable plastic material to have more oriented grain structure locked in the cast film by cold water.

The film is slitted by means of a multislitter for required tape width. The orientation of the tapes is
then done by stretching through hot air oven to adopt a chain structure. The tape is then annealed by
heating and cooling arrangement before winding to get adequately tight wound bobbin for use on
circular looms. The tape with different deniers and strength are produced on the same extruder by
suitable changes in the operating parameters of the extruder.

• Weaving of tapes into fabric

The extruded tapes as available above on the bobbins and arranged on creel are fed to the circular
weaving machines for weaving the desired type of fabric. The circular weaving machines (looms) are
4 shuttle or 6 shuttle looms. The output of these looms is in the tubular form is continuously cut
through a cutter placed at the circular machine discharge and then single flat fabric is wound on the
roll form. Each roll containing approx 1000 metre fabric is formed which is then sent to the lamination
machine.

• Lamination of LLDPE extrusion coating on fabric

The rolls obtained from circular weaving machine above are fed to the lamination plant which has an
extruder and laminator. The LLDPE granules along with coloured master batches are fed to the
extruder where the LLDPE film is extruded and is laminated on both sides of the fabric directly, thus
offering better and uniform laminations on fabric surface. Here exact thickness of lamination is to be
done to give the fabric a preset weight and achieve waterproofness. In order for tarpaulins to be 100%
waterproof, the lamination has to be defect-free i.e. without any pinholes.

• Cutting, welding (heat sealing) and hemming

The coloured laminated rolls of HDPE woven fabric are welded together to make the desired width of
fabric by the use of automatic central welding machine working on heat sealing principle. While the
central welding of the rolls is in progress, the side welding is also carried out simultaneously with the
PP or PE rope inserted in sides to give tarpaulin of desired strength. The tarpaulin is then cut into
desired length and again the process of side welding along the cut side is carried out with PP/PE rope
insertions. The individual panels if required additionally are added one after another along with the
width to produce the desired dimensions of tarpaulin and covers.

• Eyelet punching

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After welding, the eyelets are punched on all the four sides of the tarpaulin at a distance of 1 meter or
upto 1.5 meter as agreed to between the buyer and seller. Eyeletting will be done only in the case of
tarpaulins.

• Marking and Printing

After the tarpaulin or cover is manufactured, it is printed at one corner on one side with the
manufacturer’s name, trade mark, if any, year of manufacture and the size. It can also be IS marked
040-23076461

• Bailing and Packing

Tarpaulins and covers made above are folded as per client’s instructions and individual tarpaulin is
then placed into the polyethylene bags. These individually packed tarpaulins are then bailed in suitable
packing size.

(ii) Plant and Machinery

Critical plant and equipment for the tarpaulin manufacture involve the following equipment:

• Extrusion Tape Lines for Raffia Tape Manufacture

• Circular Weaving Machines

• Laminating Machines

• Welding Machines

(iii) Plant and Machinery Suppliers

The following table gives the name and address of suppliers along with the machinery type suitable for
the process and product.
Sl No Name Communication Address
1 Lohia Starlinger Ltd D-3/A, Panki Industrial Estate,
Kanpur - 208 022, INDIA
2 DGP Windsor India Ltd 5403, Phase IV, G. I. D. C. Industrial Area,
Vatva, Ahmedabad 380 44, Gujarat
3 J.P.Industries 1701, G.I.D.C. Industrial Estate
Ankleshwar - 393 002,
Dist. Bharuch, Gujarat, India.
4 Brimco Plastic Machinery (P) Ltd Brimco House, 55 Govt. Indl. Estate,Charkop,
Kandivli (W), Mumbai -
400067 ,Maharashtra, India

22.5 Raw Material & Utilities Requirement

The major raw material required for the project is as follows:

• Raffia grade high density polyethylene (HDPE)

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• Lamination grade linear low density Polyethylene (LLDPE)

• Master batches

• Polyethylene or Polypropylene Rope

The consumption ratio of HDPE to LDPE has been taken at 60:40. The raw material required would
be around 3887 MT at 100% capacity utilisation.

The unit has been assumed to operate at 70%, 80% and 90% of its installed capacity in the first,
second and third year and 100% capacity from 4th year onwards.

The main utilities required are power and water. The power requirement is 1365 KW and water is
6000 KLPA.

22.6 Land & Built-up Area Requirement

The total land area is 6000 sq metres and the built up area is 4000 sq mt.

22.7 Manpower Requirement

Total manpower required would be 212 nos of which management and administrative is 29 and
factory staff is 183.
Staff Nos
Management Staff
General Manager 1
Production Manager 1
Finance Manager 1
Marketing Manager 1
Purchase manager 1
Personnel Manager 1
Account Staff 3
Marketing Staff 4
Personnel Staff 3
Security officer 3
Stores keeper 3
Computer operator 4
Peons 3
Sub Total 29
Factory
Supervisory 39
Skilled 60
Unskilled 84
Sub Total 183
Total 212

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22.8 Project Cost/ Fixed Capital Requirement & Means of Finance
Land has not been considered as a part of the project cost because it has been considered to be taken
on lease (as applicable in Assam). One time Land Development Charges have been taken as part of the
Project Cost. Also, Special Maintenance Charges and an Annual Service Charge have been considered
as part of operating cost. The total project cost is estimated at Rs 2016.69 lakhs as follows.

Sl No Particulars Rs in Lakhs
1 Site Development Cost 12.00
2 Building 320.00
3 Plant and Machinery 1239.77
4 Miscellaneous Fixed Assets 61.24
5 Preliminary and Pre-Operative Expenses 37.66
6 Margin Money on Working Capital 249.99
7 Contingencies 96.03
Total 2016.69

The project cost may be financed with a debt equity ratio of 3:1 as under:
Means of Finance Rs in lakhs
Promoter’s contribution 504.17
Term Loan 1512.51
Total 2016.69

22.9 Working Capital Requirement

The working capital requirement is given below.

Sl No. Particulars Years of Operation
1 2 3 4 5
1 Net Working Capital 999.94 1142.79 1285.64 1428.49 1428.49
2 Available Bank Finance 749.96 857.09 964.23 1071.37 1071.37
3 Margin Money 249.99 285.70 321.41 357.12 357.12

22.10 Operating Expenses

The annual operating expenses estimated at Rs 2882.93 lakhs (70% capacity utilization) is given
below:
Sl No Particulars Rs in lakhs
1 Land Lease Rental 1.38
2 Raw materials 1969.78
3 Utilities 70.65
4 Wages & Salaries 199.58
5 Overheads 34.83
6 Selling expenses 101.06
7 Packing expenses 101.06
8 Interest on term loan 226.88
9 Interest on Bank Finance for Working Capital 112.49

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10 Depreciation 65.23
Total 2882.93

22.11 Profitability Estimates

Sl No Particulars Year
Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Production/Sales
Installed Capacity in MT 3500 3500 3500 3500 3500
Capacity Utilization 70% 80% 90% 100% 100%
Estimated Production in MT 2450 2800 3150 3500 3500
Gross Sales Revenue 4043 4620 5198 5775 5775
Expenses
Raw Material Consumption 1970 2251 2533 2814 2814
Utilities 71 71 71 71 71
Administrative Overheads 35 35 35 35 35
Salaries 200 200 200 200 200
Sales Expenses 101 116 130 144 144
Packing Expenses 101 116 130 144 144
Loan Repayment 0 303 303 303 303
Lease Rentals 1 1 1 1 1
Total 2478 3091 3401 3712 3712
Gross Profit 1564 1529 1796 2063 2063
Financial Expenses
Interest On Term Loan 227 227 182 136 91
Interest On Working Capital 112 129 145 161 161
Sub Total 339 355 326 297 251
Depreciation 65 65 65 65 65
Profit Before Tax 1,160 1,108 1,405 1,701 1,747
Provision For Tax 388 371 471 570 585
Profit After Tax 771 737 934 1,131 1,162

22.12 Financial Indicators

The Average Break Even Point for the project is 40%.

Particulars Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Sales Realisation 4043 4620 5198 5775 5775
Fixed Costs
Salaries 200 200 200 200 200
Fixed Selling Expenses 101 116 130 144 144
Depreciation (SLM) 65 65 65 65 65
Repairs & Maintenance 26 26 26 26 26
Utilities (Fixed) 71 71 71 71 71
Admin. Overheads 35 35 35 35 35

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Interest On L.T. Loan 227 227 182 136 91
Loan Repayment - 303 303 303 303
Total Fixed Costs 725 1,042 1,011 980 934
Variable Cost
Raw Materials 1970 2251 2533 2814 2814
Packing 101 116 130 144 144
Interest On Working Capital Loans 112.49 128.56 144.63 160.70 160.70
Total Variable Costs 2183 2495 2807 3119 3119
Contribution 1,859 2,125 2,390 2,656 2,656
Breakeven In % 39% 49% 42% 37% 35%
Average Breakeven In % 40%

The IRR for the project is 24.8% , average ROI is 82% and average DSCR is 3.09.
Particulars Year of Operation
1 2 3 4 5
Revenue 4043 4620 5198 5775 5775
Profit Before Tax 1159.57 1108.22 1404.75 1701.29 1746.66
Profit After Tax 771.11 736.97 934.16 1131.36 1161.53
LT Interest 226.88 226.88 181.50 136.13 90.75
Interest on Deposits 0.00 0.00 0.00 0.00 0.00
Depreciation 65.23 65.23 65.23 65.23 65.23
LT Loan Repayment 0.00 302.50 302.50 302.50 302.50
Deposit Repayment 0.00 0.00 0.00 0.00 0.00
Return on Investment (%) 72% 69% 82% 94% 94%
Average ROI 82%
Debt-Service Coverage Ratio
- Debt Service 226.88 529.38 484.00 438.63 393.25
- Coverage 1063.22 1029.07 1180.89 1332.71 1317.51
DSCR 4.69 1.94 2.44 3.04 3.35
Average DSCR 3.09

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23 Bi-Axially Oriented Polypropylene (BOPP) Films

23.1 Introduction

The packaging format is influenced by a wide range of factors such as product composition, logistics,
legal & regulatory compulsions, end usage etc. Its primary purpose is to retain the quantity &
characteristics of the packaged product as well as enhance the shelf life (especially in case of edible
products).

Flexible packaging is an integral part of the packaging segment and includes packaging for FMCG
products, ready to eat foods, confectionery items, over- wraps for various applications etc. Flexible
packaging has several key use segments viz. retail and institutional food & non-food products, medical
& pharmaceutical packaging, industrial applications and consumer products which involve the usage
of different types of film.

BOPP films serve as a raw material for the flexible packaging industry and also find application in
industrial products (capacitors & adhesive tapes). They are also cost-effective and available in sizes of
nine microns and above. BOPP films are moisture-resistant and increase the life of products by almost
2–3 times.

These films can be further segregated into the following categories:

• Commodity Films (Transparent Films)

These films are in the lowest band of the BOPP film spectrum and are classified as a commodity
product. They account for over 70% of the total BOPP film consumed globally. On account of the
commodity nature of this film, this segment is characterised by low margins and is extremely price
sensitive.

• Intermediaries (Metallised BOPP films)

Films in this segment are customised and come in the following forms viz. opaque, pearlised,
capacitor grade, adhesive label grade, high barrier metallised etc. These are films which are either
treated (with chemicals, adhesives, processes viz. carona treatment, for better printability) or laminated
so as to meet the specific requirements of the packaged product. Over the last 5 years, the off take of
these films has witnessed the highest growth rate of 10.8%p.a. and the trend is expected to gather
momentum going forward, on account of cost effectiveness and other properties viz. barrier to oxygen,
moisture, UV light barrier properties & suitability for attractive presentation of snacks and
confectionery.

• Specialty Films (Thermal laminated films)

Films such as ‘Thermal Laminated’, special shrink, in mould labels, thin & rough capacitor grades fall
under this segment. These films necessitate high degree of customization in comparison to
‘Intermediaries’ and are largely consumed in mature markets like USA, Western Europe and Japan. In
this segment, the demand for ‘Thermal laminated’ films is estimated at approx Rs18Billion (with USA
accounting for about Rs8bn). The growth in demand for this film over the past few years has been
exponential and the same is expected to sustain, considering its application in stationery products as
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well as cost benefits (No adhesive & curing time required). Moreover, the environment friendly nature
of these films is contributing to their increasing usage in mature markets and consequently leading to
higher off take from these geographies.

These films are available in various thicknesses ranging from 10 to 50 microns, which are used for
various applications described later. BOPP film is classified in the “clear” film category along with
cellophane, polyester film, PPTQ Films and UPPVC films, which have many applications in common
and hence, are competing within.

23.2 Market Potential

The market leaders in India in the BOPP film segment are Cosmo Films Pvt Ltd, Jindal Polyfilms Ltd.,
Uflex, Max India , Xpro India etc.

The factors which would lead to the demand growth of BOPP Films are:

Growth in packaging industry

Additional growth based on replacement trends (i.e. Switching over to BOPP) being observed
in end-use segments

New emerging application areas like labels, etc.

23.3 Plant Capacity

For manufacturing BOPP films, we have considered the plant having an installed capacity of 30,000
MT per annum. This capacity has been considered because this is the least capacity at which the plant
will be viable. The plant is expected to run on a continuous basis (i.e. 24 hours) for a total 300 days
per annum.

23.4 Process, Plant & Machinery (Details & List of Machinery Suppliers)

(i) Manufacturing Process

BOPP film can be manufactured using any of the following 2 techniques viz. Tubular Bubble process
or Cast Stenter process.

The first technique is more suited for small scale operators and not widely used due to the lower
compressive and tensile strength of the film produced. The second method is more widely used and
preferred by most large scale BOPP manufacturers across the globe.

The process consists of the following steps:

• Dosing & mixing: For each of the core layers depending on the film construction (3 layer or 5
layer), granulated PP resin is dosed and mixed with additives and the scrap film from the edge of the
finished BOPP film is trimmed, in order to give the film desired characteristics & achieve minimum
wastage.

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• Extrusion: The mixed material for each of the layers is melted and plasticised to achieve the required
homogenous state and is then filtered and transported to the die unit.

• Die Casting: The melted mixed material of each of the layers is cast to produce a flat layered cast
sheet, which is then cooled.

• Machine Direction Orientation (vertical stretching): The cast sheet is then heated up by preheating
the rolls & is vertically stretched before annealing (heat setting to stabilise the stretched sheet).

• Transversal Direction Orientation (horizontal stretching): The cast sheet is horizontally stretched and
then annealed again to determine the width and other properties of the film.

• Pull Roll Station: The film is trimmed, measured for thickness and surface treated by the carona
treatment unit (which makes it receptive to printing)

• Winding & Slitting: The film is then wound onto metal rolls, allowed to cool and unwound from the
metal rolls, slit to the requisite width and wound again for despatch.

(ii) Plant and Machinery

The list of major plant and machinery for the BOPP Project is given below:
• Extrusion Plant with multilayer die
• Casting Unit
• Machine Direction Orientation Unit
• Transverse Direction Orientation Unit
• Corona Treatment Unit
• Edge Trimming Unit
• Slitter
• Material Handling Equipments
• Storage Systems for Rolls
• Pneumatic Conveyors
• Material Handling Equipments
• Water Softening Plant
• Primary and Secondary Rewinders
• Scrap winders
• Regranulation System
• Air Cooling System
• Chilling Plant
• DG Sets

(iii) Plant and Machinery Suppliers

The following is the list of plant and machinery suppliers of the above equipments.

1 Bruckner AG India, 03, Business Avenue, Sanghvi Nagar, Parihar Chowk, Aundh, Pune-
411007
Middle East India Office, Mumbai 400104

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2 Kerkrade
3 Mitsubishi, Japan

23.5 Raw Material & Utilities Requirement

The key raw materials used for BOPP film manufacture are:

• Polypropylene (Homo-polymer / Copolymer)

• Additives and Fillers (Calcium Carbonate, Mica, Chalk, etc)

The raw material required would be around 30000 MT at 100% capacity utilisation. The unit has been
assumed to operate at 80% and 90% of its installed capacity in the first & second year and at 100%
capacity from the third year and onwards of its operation.
The utilities required are power and water. Around 7500 KW of Power and 3000 KLPA of water are
required.

23.6 Land & Built-up Area Requirement

The land required would be approx 7000 sq.m with a built-up area of approx 5000 sq. m.

23.7 Manpower Requirement

Total manpower required would be as detailed out below. A margin of 25% has been considered for
other benefits for the staff.
Staff Nos
General Manager 1
Works Manager 3
Accountant-cum-Store Keeper 4
Assistant Accountant 2
Administrative Manager 1
Administrative Assistant 1
Clerk 5
Skilled Workers 10
Semi Skilled Workers 8
Unskilled Workers 20
Peon/Watchman 10
Total 64

23.8 Project Cost/ Fixed Capital Requirement & Means of Finance

Land has not been considered as a part of the project cost because it has been considered to be taken
on lease (as applicable in Assam). One time Land Development Charges have been taken as part of the
Project Cost. Also, Special Maintenance Charges and an Annual Service Charge have been considered

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as part of operating cost. The total project cost is estimated at Rs 13704.83 Lakhs (Rs.137.04 Crores)
as follows.

Sl No Particulars Rs in Lakhs
1 Site Development Cost 14.00
2 Building 400.00
3 Plant and Machinery 10450.14
4 Miscellaneous Fixed Assets 39.85
5 Preliminary and Pre-Operative Expenses 255.93
6 Margin Money on Working Capital 1892.30
7 Contingencies 652.61
Total 13704.83

This project cost may be financed at a debt equity ratio of 3:1 as follows.

Means of Finance Rs in lakhs

Equity 3426.21
Debt 10278.62
Total 13704.83

23.9 Working Capital Requirement

The total working capital requirement is given below:

Particulars Year 1 Year 2 Year 3 Year 4 Year 5
Net WC 7569.21 8515.36 9461.51 9461.51 9461.51
Available Bank Finance 5676.90 6386.52 7096.13 7096.13 7096.13
Margin Money 1892.30 2128.84 2365.38 2365.38 2365.38

23.10 Operating Expenses

The annual operating expenses estimated at Rs 21463.60 lakhs (80% capacity utilization) is given
below:

Sl No Particulars Rs in lakhs
1 Annual Land Charges 1.61
2 Raw materials 16554.20
3 Utilities 373.20
4 Wages & Salaries 28.28
5 Overheads 128.50
6 Selling expenses 750.01
7 Packing expenses 750.01
8 Interest on term loan 1593.19

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9 Interest on Bank Finance for Working Capital 851.54
10 Depreciation 434.69
Total 21463.60

23.11 Profitability Estimates

(Rs. in Lakhs)
Sl No Particulars Year
Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Production/Sales
Installed Capacity 30000 30000 30000 30000 30000
Capacity Utilization 80% 90% 100% 100% 100%
Estimated Production 24000 27000 30000 30000 30000
Gross Sales Revenue 30000 33750 37500 37500 37500
Expenses
Raw Material Consumption 16554 18623 20693 20693 20693
Utilities 373 373 373 373 373
Administrative Overheads 128 128 128 128 128
Salaries 28 28 28 28 28
Sales Expenses 750 844 938 938 938
Packing Expenses 750 844 938 938 938
Loan Repayment 0 2570 2570 2570 2570
Lease Rentals 1.61 1.61 1.61 1.61 1.61
Total 18213 23412 25669 25669 25669
Gross Profit 11788 10338 11831 11831 11831
Financial Expenses
Interest On Term Loan 1593 1593 1195 797 398
Interest On Working Capital 852 958 1064 1064 1064
Sub Total 2445 2551 2259 1861 1463
Depreciation 435 435 435 435 435
Profit Before Tax 8908 7352 9137 9536 9934
Provision For Tax 2984 2463 3061 3194 3328
Profit After Tax 5924 4889 6076 6341 6606

23.12 Financial Indicators

The Average Break Even Point for the project is 37%.

Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Sales Realisation 30000 33750 37500 37500 37500
Fixed Costs
Salaries 28 28 28 28 28
Fixed Selling Expenses 750 844 938 938 938
Depreciation (SLM) 435 435 435 435 435

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Repairs & Maintenance 167 167 167 167 167
Utilities (Fixed) 373 373 373 373 373
Admin. Overheads Incl 128 128 128 128 128
Interest On L.T. Loan 1,593 1,593 1,195 797 398
Loan Repayment - 2,570 2,570 2,570 2,570
Total Fixed Costs 3,475 6,138 5,834 5,436 5,037
Variable Cost
Raw Materials 16554 18623 20693 20693 20693
Packing 750 844 938 938 938
Interest On Working Capital Loans 851.54 957.98 1064.42 1064.42 1064.42
Total Variable Costs 18156 20425 22695 22695 22695
Contribution 11844 13325 14806 14806 14806
Breakeven In % 29% 46% 39% 37% 34%
Average Breakeven 37%

The IRR for the project is 18.6%, Average ROI is 77% and average DSCR is 2.69.
Particulars Year of Operation
1 2 3 4 5
Revenue 30000 33750 37500 37500 37500
Profit Before Tax 8908.23 7352.18 9137.29 9535.59 9933.88
Profit After Tax 5923.97 4889.20 6076.30 6341.16 6606.03
LT Interest 1593.19 1593.19 1194.89 796.59 398.30
Interest on Deposits 0.00 0.00 0.00 0.00 0.00
Depreciation 434.69 434.69 434.69 434.69 434.69
LT Loan Repayment 0.00 2569.66 2569.66 2569.66 2569.66
Deposit Repayment 0.00 0.00 0.00 0.00 0.00
Return on Investment (%) 80% 68% 79% 79% 79%
Average ROI 77%
Debt-Service Coverage Ratio
- Debt Service 1593.19 4162.84 3764.55 3366.25 2967.95
- Coverage 7951.85 6917.08 7705.88 7572.45 7439.02
DSCR 4.99 1.66 2.05 2.25 2.51
Average DSCR 2.69

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24 Leno Bags

24.1 Introduction

Leno bags can be used in bulk packaging of various produce like onion, garlic, potato, peas, citrus
fruits and many other horticultural and agricultural produce. Leno bags are being increasingly used the
world over. In India too, the trend of using Leno bags has started and its use has picked up in UP,
Gujarat, Maharashtra, Karnataka and Tamil Nadu.

24.2 Market Potential

The advantages of using leno bags in place of the conventional jute bags are:

• Facilitates excellent aeration of the packed produce which helps storage in the open as well as in cold
storages.

• Facilitates easy visual inspection of contents packed.

• Resistant to fungal and insect damage.

• Resistant to moisture and chemicals.

• Does not impart any odour to the packed produce, and is a food grade material.

• Reusable and washable, easy to handle and store.

• Light in weight, as compared to jute and hence cost effective.

24.3 Plant Capacity

The typical size of the project for manufacture of PP leno bags could have an installed capacity of 144
MT per annum. This would mean that approx 2571 bales of PP leno mesh could be manufactured at
100% capacity utilisation.

24.4 Process, Plant & Machinery (Details & List of Machinery Suppliers)

(i) Manufacturing Process

The raw material, Poly Propylene granules / pellets is fed into an extruder and the resultant tape is
winded by plastic tape winding machine. These adjacent warp tapes are twisted around consecutive
weft tapes to form a spiral pair, effectively locking each weft in place by the leno circular loom. This
mesh is sewed by sewing machine and baled.

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(ii) Plant and Machinery

The following are the required plant and machinery:

• Extruder
• Plastic Tape winding machine
• PP Leno Circular Loom
• Sewing machine complete set with all fittings
• Scissor, Scale, Tape and accessories

(iii) Plant and Machinery Suppliers

The following is the list of plant and machinery suppliers of the above equipments.

Sl No Name Communication Address

1 Exzakta Meccanica 1706/2, GIDC Estate,Ankleshwar – 393 002,
Gujarat, INDIA
2 Europack Machines (India) Pvt. Ltd. 52, Bindal Industrial Estate, Sakinaka, Andheri
(East), Mumbai 72, India

24.5 Raw Material & Utilities Requirement

The major raw material required for the project would be polypropylene. In addition, master batches
are added to add colour. The raw material including PP and master batches would be around 144 MT
at 100% capacity utilisation.

The unit has been assumed to operate at 80% and 90% of its installed capacity in the first & second
year and at 100% capacity from the third year and onwards of its operation.

The utilities required are power and water. Around 50 KW of Power and 600 KLPA of water are
required.

24.6 Land & Built-up Area Requirement

The total land area is 1500 sq metres and the built up area is 1000 sq mt.

24.7 Manpower Requirement

Total manpower required would be 27 Nos of which administrative is 4 and factory staff is 23.
Additional benefits at the rate of 25% have been considered.

Personnel Nos
Works Manager 1
Accountant-cum-Store Keeper 1
Administrative Assistant 1
Clerk 1

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Skilled Workers 12
Semi Skilled Workers 6
Unskilled Workers 4
Peon/Watchman 1
Total 27

24.8 Project Cost/ Fixed Capital Requirement & Means of Finance

Land has not been considered as a part of the project cost because it has been considered to be taken
on lease (as applicable in Assam). One time Land Development Charges have been taken as part of the
Project Cost. Also, Special Maintenance Charges and an Annual Service Charge have been considered
as part of operating cost. The total project cost is estimated at Rs 204.46 lakhs as follows.
Sl No Project Cost Rs in Lakhs
1 Site Development Cost 3.00
2 Building 80.00
3 Plant and Machinery 83.44
4 Miscellaneous Fixed Assets 7.57
5 Preliminary and Pre-Operative Expenses 3.82
6 Margin Money on Working Capital 16.90
7 Contingencies 9.74
Total 204.46

This project cost may be financed at a debt equity ratio of 3:1 as follows.
Means of Finance Rs in lakhs
Equity 51.12
Debt 153.35
Total 204.46

24.9 Working Capital Requirement

The working capital requirement is given below.

Sl No Particulars Years of Operation
1 2 3 4 5
1 Net Working Capital 67.61 76.06 84.51 84.51 84.51
2 Available Bank Finance 50.71 57.04 63.38 63.38 63.38
3 Margin Money 16.90 19.01 21.13 21.13 21.13

24.10 Operating Expenses

The Annual Operating Expenses estimated at Rs 159.38 lakhs (80% capacity utilization) is given
below.
Sl No Particulars Rs in lakhs
1 Annual Land Charges 0.35
2 Raw materials 85.90
3 Utilities 2.90
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4 Wages & Salaries 13.02
5 Overheads 5.36
6 Selling expenses 7.26
7 Packing expenses 7.26
8 Interest on Term Loan 23.00
9 Interest on Bank Finance for Working Capital 7.61
10 Depreciation 6.71
Total 159.38

24.11 Profitability Estimates

Sl No Particulars Year
Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Production/Sales
Installed Capacity 144 144 144 144 144
Capacity Utilization 80% 90% 100% 100% 100%
Estimated Production 115 130 144 144 144
Gross Sales Revenue 291 327 363 363 363
Expenses
Raw Material Consumption 86 97 107 107 107
Utilities 3 3 3 3 3
Administrative Overheads 5 5 5 5 5
Salaries 16 16 16 16 16
Sales Expenses 7 8 9 9 9
Packing Expenses 7 8 9 9 9
Loan Repayment 0 38 38 38 38
Lease Rentals 0 0 0 0 0
Total 125 176 189 189 189
Gross Profit 165 151 175 175 175
Financial Expenses
Interest On Term Loan 23 23 17 12 6
Interest On Working Capital 8 8 9 9 9
Sub Total 31 31 27 21 15
Depreciation 7 7 7 7 7
Profit Before Tax 128 113 141 147 153
Provision For Tax 43 38 47 49 51
Profit After Tax 85 75 94 98 102

24.12 Financial Indicators

The Average Break Even Point for the project is 40%.

Particulars Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Sales Realisation 291 327 363 363 363
Fixed Costs

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Salaries 16 16 16 16 16
Fixed Selling Expenses 7 8 9 9 9
Depreciation (SLM) 7 7 7 7 7
Repairs & Maintenance 3 3 3 3 3
Utilities (Fixed) 3 3 3 3 3
Admin. Overheads Incl Insurance 5 5 5 5 5
Loan Repayment - 38 38 38 38
Interest On L.T. Loan 23 23 17 12 6
Total Fixed Costs 65 104 99 93 87
Variable Cost
Raw Materials 86 97 107 107 107
Packing 7 8 9 9 9
Interest On Working Capital Loans 7.54 8.48 9.43 9.43 9.43
Total Variable Costs 101 113 126 126 126
Contribution 190 214 237 237 237
Breakeven In % 34% 49% 42% 39% 37%
Average Breakeven In % 40%

The IRR for the project is 19.6%, Average ROI is 78% and average DSCR is 2.75.
Particulars Year of Operation
1 2 3 4 5
Revenue 291 327 363 363 363
Profit Before Tax 128.07 112.56 141.15 146.90 152.65
Profit After Tax 85.16 74.85 93.86 97.69 101.51
LT Interest 23.00 23.00 17.25 11.50 5.75
Interest on Deposits 0.00 0.00 0.00 0.00 0.00
Depreciation 6.71 6.71 6.71 6.71 6.71
LT Loan Repayment 0.00 38.34 38.34 38.34 38.34
Deposit Repayment 0.00 0.00 0.00 0.00 0.00
Return on Investment (%) 77% 70% 81% 81% 81%
Average ROI 78%
Debt-Service Coverage Ratio
- Debt Service 23.00 61.34 55.59 49.84 44.09
- Coverage 114.88 104.57 117.82 115.90 113.97
DSCR 4.99 1.70 2.12 2.33 2.59
Average DSCR 2.75

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25 Ropes

25.1 Introduction

Poly Propylene is the easiest material to fibrillate and thus has been used in most of the commercial
products. The major advantages of PP fibrillated ropes are

• They are resistant to the corrosive effects of salt water and mildew.

• They have high abrasion resistance and are comparatively inert to chemicals.

• They have low specific gravity which makes them buoyant.

• They have long shelf life without deterioration in strength and do not twist or rotate and hence
remain tangle free.

25.2 Market Potential

PP Fibrillated ropes are used in ports and ship building yards in towing, mooring, dry docking and
other applications. It is used in Electricity Boards for the purpose of tower erection, transformer
hoisting and for material handling.

In defence, PP fibrillated ropes are used for several applications in the armed forces such as towing of
gunny surface targets, rope drags for recovery of vehicles, arrester barriers,pantoon
bridges,tentage,repelling etc. In the transportation industry, PP ropes are used for fastening loads on
trucks and wagons, towing vehicles etc. In steel pipe industry, PP ropes are used in picking and
anodising operation.

PP ropes finds applications in sugar factories, engineering, construction and oil exploration industries
for material handling. Since ropes made by the fibrillating technique are easy to grip and are stronger
than conventional ropes, they find ready acceptance as substitutes for ropes made from natural
material.

25.3 Plant Capacity

The typical size of the project for manufacture of PP Ropes could have an installed capacity of 294
MT per annum.

25.4 Process, Plant & Machinery (Details & List of Machinery Suppliers)

(i) Manufacturing Process

The manufacturing process for fibrillated ropes and twines is a two stage process. At first stage
fibrillated tapes are manufactured and in the second stage the ropes and twines are made.

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PP granules of the suitable grade and additives like UV-stabiliser, etc. are fed into the dosing, mixing
and feeding hopper and blended thoroughly. The charge thus prepared is fed into the extruder where it
is melted, filtered and then pressed through the flat die. The extruded film is then cooled by a chill roll
system. To decrease the concentration of thermo plastic primary film from the die to the chill roll and
to avoid trapped air between film and chill roll air is blown by a fan on to the film through an air knife.
Then cooled primary film is fed over chill roll via the transfer unit into the holding and cutting device,
the film is cut into tapes. Subsequently, the tapes are brought to the required stretching temperature on
a heating plate and are stretched by means of pulling and stabilizing unit. Then the tapes are wound on
bobbins.

The unstretched and stretched edge trims are aspirated after the holding, cutting and stretching, cut
into chip by the edge trim recovery system and conveyed automatically back into the mixing and
metering unit, resulting in nil wastage. The films thus extruded are subjected to a fibrillator unit. Here
the fibrillation is affected by pins and cutters making a series of slots in sheet of film. Then these tapes
are wound on winders for further use.

The degree of fibrillation depends on the frequency of the slots along the film, the length of slots and
the pitch of the slots across the films. The aspirator unit removes the dust and fibres from the
fibrillator and collects broken tapes from the fibrillator.

The packages of fibrillated tapes are kept on the creel and fed to the 2-for-1 twister. The twisted yarn
is then led to the cross laying take up unit where the yarn is laid in criss-cross fashion and wound. The
packages thus cross wound are fed to rope making unit via the stranding section where it is twisted and
fed to the coil winding machine.

(ii) Plant and Machinery

Major plant and machineries required for the PP Ropes project are:

Horizontal extruder 90 mm dia L/D ratio = 26:1

Extrusion head with flat die – 1000 mm

Stretching unit

Fibrillation unit

Stabilising and holding unit

Edge trim recover system

Winding system

Two for one twister

Take up unit

Control cabinets

Stranding unit

Rope making unit

Mixing and dosing unit

Chilling plant and cooling tower

Air compressor

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Coil winding unit

25.5 Raw Material & Utilities Requirement

The major raw material required is box strapping grade poly propylene. Certain additives and
plasticisers have to be added to manufacture ropes and twines.

The raw material required would be around 294 MT at 100% capacity utilisation. The unit has been
assumed to operate at 80% and 90% of its installed capacity in the first and second year and at 100%
capacity from the third year and onwards of its operation.
The utilities required are power and water. Around 110 KW of Power and 450 KLPA of water are
required.

25.6 Land & Built-up Area Requirement

The land area required would be approx 750 sq.m with a build up area of 500 sq.mtr.

25.7 Manpower Requirement

Total manpower required would be 16 Nos of which administrative is 4 and factory staff is 12.

Personnel Nos
Works Manager 1
Accountant-cum-Store Keeper 1
Administrative Assistant 1
Clerk 1
Skilled Workers 6
Semi Skilled Workers 3
Unskilled Workers 2
Peon/Watchman 1
Total 16

25.8 Project Cost/ Fixed Capital Requirement & Means of Finance

Land has not been considered as a part of the project cost because it has been considered to be taken
on lease (as applicable in Assam). One time Land Development Charges have been taken as part of the
Project Cost. Also, Special Maintenance Charges and an Annual Service Charge have been considered
as part of operating cost. The total project cost of Rs 144.34 Lakhs is as follows.
Sl No Project Cost Rs in Lakhs
1 Site Development Cost 1.50
2 Building 30.00
3 Plant and Machinery 75.00
4 Miscellaneous Fixed Assets 8.12
5 Preliminary and Pre-Operative Expenses 2.70

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6 Margin Money on Working Capital 20.15
7 Contingencies 6.87
Total 144.34

The project cost may be financed with a debt: equity ratio of 3: 1 as follows.

Means of Finance Rs in lakhs

Equity 36.08
Debt 108.25
Total 144.34

25.9 Working Capital Requirement

The working capital requirement is given below.

Sl No Particulars Years of Operation
1 2 3 4 5
1 Net Working Capital 80.58 90.66 100.73 100.73 100.73
2 Available Bank Finance 60.44 67.99 75.55 75.55 75.55
3 Margin Money 20.15 22.66 25.18 25.18 25.18

25.10 Operating Expenses

The annual operating expenses estimated at Rs 236.27 lakhs (80% capacity utilization) is given below:
Sl No Particulars Rs in lakhs
1 Annual Land Charges 0.17
2 Raw materials 167.57
3 Utilities 6.22
4 Wages & Salaries 10.58
5 Administrative Overheads 4.80
6 Selling Expenses 8.06
7 Packing Expenses 8.06
8 Interest on term loan 16.24
9 Interest on Bank Finance for Working Capital 9.07
10 Depreciation 5.51
Total 236.27

25.11 Profitability Estimates

Sl No Particulars Year
Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Production/Sales
Installed Capacity 288 288 288 288 288
Capacity Utilization 80% 90% 100% 100% 100%
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Estimated Production 230 259 288 288 288
Gross Sales Revenue 323 363 403 403 403
Expenses
Raw Material Consumption 168 189 209 209 209
Utilities 6 6 6 6 6
Administrative Overheads 5 5 5 5 5
Salaries 8 8 8 8 8
Sales Expenses 8 9 10 10 10
Packing Expenses 8 9 10 10 10
Loan Repayment 0 22 22 22 22
Lease Rentals 0.17 0.17 0.17 0.17 0.17
Total 203 248 271 271 271
Gross Profit 119 115 132 132 132
Financial Expenses
Interest On Term Loan 16 16 13 10 6
Interest On Working Capital 9 10 11 11 11
Sub Total 25 26 24 21 18
Depreciation 6 6 6 6 6
Profit Before Tax 88 83 102 106 109
Provision For Tax 30 28 34 35 36
Profit After Tax 59 55 68 70 72

25.12 Financial Indicators

The Average Break Even Point for the project is 41%.

Particulars Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Sales Realisation 323 363 403 403 403
Fixed Costs
Salaries 8 8 8 8 8
Fixed Selling Expenses 8 9 10 10 10
Depreciation (SLM) 6 6 6 6 6
Repairs & Maintenance 2 2 2 2 2
Utilities (Fixed) 6 6 6 6 6
Admin. Overheads Incl Insurance 5 5 5 5 5
Interest On L.T. Loan 16 16 13 10 6
Loan Repayment - 22 22 22 22
Total Fixed Costs 52 74 72 69 65
Variable Cost
Raw Materials 168 189 209 209 209
Packing 8 9 10 10 10
Interest On Working Capital Loans 9.07 10.20 11.33 11.33 11.33
Total Variable Costs 185 208 231 231 231
Contribution 138 155 172 172 172

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Breakeven In % 37% 48% 42% 40% 38%
Average Breakeven In % 41%

The IRR for the project is 25.2%, Average ROI is 80% and average DSCR is 3.04.
Particulars Year of Operation
1 2 3 4 5
Revenue 323 363 403 403 403
Profit Before Tax 88 83 102 106 109
Profit After Tax 59 55 68 70 72
LT Interest 16 16 13 10 6
Interest on Deposits 0 0 0 0 0
Depreciation 6 6 6 6 6
LT Loan Repayment 0 22 22 22 22
Deposit Repayment 0 0 0 0 0
Return on Investment (%) 76% 73% 84% 84% 84%
Average ROI 80%
Debt-Service Coverage Ratio
- Debt Service 16 38 35 31 28
- Coverage 81 77 87 86 84
DSCR 4.96 2.03 2.50 2.72 3.00
Average DSCR 3.04

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26 PP Disposable Plastic Cups/ Glasses

26.1 Introduction

Disposable cups are now fast replacing conventional cups. Ice-cream and other dairy products are
packed in disposable cups. Besides Ice-cream industry, hotels, restaurants, canteens etc. have been
increasingly using disposable cups as against conventional glass-wares or ceramic cups. Disposable
cups are mainly used for food items and are made out of polypropylene or polystyrene sheets. The
disposable cups are gaining popularity due to attractive look, low weight for container, ease of
transportation and low impermeability. Organizations like Railways, Airlines are using disposable
cups for serving coffee, tea etc. now-a-days.

26.2 Market Potential

With the changing lifestyles and attitudes, there has been an increased market for the thermoformed
products. The following are the major sectors in which these find application.

• Food Industry

Food Industry is one of the largest users of Thermoformed packaging. Their main application is for
processed food and take away serving packaging.

• Pharmaceutical/Medical Industry

Products like Ampoules, Diagnostic Kits etc., are packed in thermoformed packaging.

• Electronics Industry

The miniature components can be individually form packed and protected against damage due to
handling.

• Horticulture Industry

There are many applications to pack fruits and vegetables for bulk and consumer pack. The
thermoformed articles are used for green house as seed trays and flower pots etc.

• Personal Care Products. & Cosmetics Industry

Changing vogues imply shorter life span of products. Costly tooling is needed for injection moulded
container/ packaging. Thermoforming packs are cheaper, faster to make and the process has higher
output rates making quick changes in design economically feasible.

• Construction Industry

Sheets and rolls of appropriate material can be formed and used as an excellent barrier against water
seepage in tunnels etc. Many other products like bathroom accessories, domes, panelling, ceiling etc
can be made.

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• Automobile Industry

Large sized thick walled thermoformed products like door liners, dash boards, front grills are widely
used in the automobile sector.

Thermoforming differs from injection molding, blow molding, rotational molding, and other forms of
processing plastics. Thin-gauge thermoforming is primarily the manufacture of disposable cups,
containers, lids, trays, blisters, clamshells, and other products for the food, medical, and general retail
industries. Thick-gauge thermoforming includes parts as diverse as vehicle door and dash panels,
refrigerator liners, utility vehicle beds, and plastic pallets.

The following are the advantages of thermoformed products in packing

• Hygienic.

• Protection to the product packed.

• Precise and convenient placement of the product due to contoured forming.

• Reduced cost of packing.

• Light weight packing.

• Easy visual inspection without opening the whole package.

• Tamper proof packaging.

• Microwavable moisture Resistant packaging.

• Inert to many chemicals.

• Can be formed as transparent, Printed, Opaque etc.

• Development costs are comparatively lower and high volumes can be produced within a very short
time.

Some of the reasons for thermoformed PP packaging's immense popularity are

• Easily recyclability.

• Choice of Rigidity / flexibility in packing.

• Storage at sub-zero temperatures.

• Good moisture barrier properties.

• These are suitable for micro-wave ovens.

• Excellent contact clarity (Clarified PP).

• Economical.

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26.3 Plant Capacity

The proposed production is estimated to be of two types, tea/coffee cups of 65 -80 ml and water/juice
glasses of 180 ml. The following table details the production plan.
Sl No Particulars Per Hour Estimated Working Total Annual
Production Days of Prodn hours / day Production
1 65-80 ml of tea / 70,000 150 8 hours
coffee cups 84000000
2 180 ml of water / 70,000 150 8 hours
juice glasses 84000000
Total 168,000,000
The unit has been assumed to operate at 80%, 90% and 100% of its installed capacity in the first,
second and third year and onwards of its operation with 8 working hours/day i.e.1 shift and 300
working days in a year.

26.4 Process, Plant & Machinery (Details & List of Machinery Suppliers)

(i) Manufacturing Process

In the most common method of high-volume, continuous thermoforming of thin-gauge products,

plastic sheet is fed from a roll or from an extruder into a set of indexing chains that incorporate pins,
or spikes, that pierce the sheet and transport it through an oven for heating to forming temperature.
The heated sheet then indexes into a form station where a mating mold and pressure-box close on the
sheet, with vacuum then applied to remove trapped air and to pull the material into or onto the mold
along with pressurized air to form the plastic to the detailed shape of the mold. (Plug-assists are
typically used in addition to vacuum in the case of taller, deeper-draw formed parts in order to provide
the needed material distribution and thicknesses in the finished parts.)

After a short form cycle, a burst of reverse air pressure is actuated from the vacuum side of the mold
as the form tooling opens, commonly referred to as air-eject, to break the vacuum and assist the
formed parts off of, or out of, the mold. A stripper plate may also be utilized on the mold as it opens
for ejection of more detailed parts or those with negative-draft, undercut areas. The sheet containing
the formed parts then indexes into a trim station on the same machine, where a die cuts the parts from
the remaining sheet web, or indexes into a separate trim press where the formed parts are trimmed.
The sheet web remaining after the formed parts are trimmed is typically wound onto a take-up reel or
fed into an inline granulator for recycling.

Most thermoforming companies recycle their scrap and waste plastic, either by compressing in a
baling machine or by feeding into a granulator (grinder) and producing ground flake, for sale to
reprocessing companies or re-use in their own facility. Frequently, scrap and waste plastic from the
thermoforming process is converted back into extruded sheet for forming again.

(ii) Plant and Machinery

The major equipment required by the unit for manufacturing plastic disposable cups are as follows:

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• Automatic thermoforming machine

• Die Punch for cups

• Other accessories (Air compressor)

• Sheet extruder and scrap grinder

• Testing equipment

(iii) Plant and Machinery Suppliers

The following are the plant and machinery suppliers for the project.
Sl No Name Communication Address
1 M/s Klockner Windsor India Ltd. E-6 – UZ Road, Thane Industrial Estate,
Thane – 400 604
2 M/s Wonderpack Industries P.Ltd. 72, Ist floor, Shivalaya Mansion,
Hamington Road, Mumbai- 400 008
3 M/s Isimat India Screen Printing 29, Apurva Industrial Estate,
Machinery Pvt. Ltd. Makvana Road, Andheri Kurla Road,
Andheri (East),Mumbai – 400 059
4 M/s Solex Machines C, 1/510, GIDC, Gundlav,
Distt. Valsad, Gujarat-396 035

26.5 Raw Material & Utilities Requirement

The major raw material required for the project would be polypropylene which is as follows.
Raw Material Requirement Milli litre Wt in gms Total in MT
65-80 ml tea/coffee cups 80 1.032 74.30
180 -200 ml water / juice cups 200 2.58 108.36
Total Raw Material Reqd including 3% wastage 188.14

The unit has been assumed to operate at 80% and 90% of its installed capacity in the first and second
year and at 100% capacity from third year and onwards of its operation.
The utilities required are power and water. Around 220 KW of Power and 450 KLPA of water are
required.

26.6 Land & Built-up Area Requirement

The total land area is 500 sq metres and the built up area is 300 sq mt.

26.7 Manpower Requirement

Total manpower required would be 13 Nos of which administrative is 4 and factory staff is 9.
Personnel Nos
Works Manager 1
Accountant-cum-Store Keeper 1

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Administrative Assistant 1
Clerk 1
Skilled Workers 5
Semi Skilled Workers 3
Peon/Watchman 1
Total 13

26.8 Project Cost/ Fixed Capital Requirement & Means of Finance

Land has not been considered as a part of the project cost because it has been considered to be taken
on lease (as applicable in Assam). One time Land Development Charges have been taken as part of the
Project Cost. Also, Special Maintenance Charges and an Annual Service Charge have been considered
as part of operating cost. The project cost of Rs 199.87 lakhs is as follows.
Sl No Particulars Rs in Lakhs
1 Site Development Cost 1.00
2 Building 24.00
3 Plant and Machinery 135.21
4 Miscellaneous Fixed Assets 9.15
5 Preliminary and Pre-Operative Expenses 2.00
6 Margin Money on Working Capital 19.00
7 Contingencies 9.52
Total 199.87

This project cost may be financed at a debt equity ratio of 3:1 as follows.
Means of Finance Rs in lakhs
Equity 49.97
Debt 149.90
Total 199.87

26.9 Working Capital Requirement

The working capital requirement is given below:

Sl No Particulars Years of Operation
1 2 3 4 5
1 Net Working Capital 76.00 85.50 95.00 95.00 95.00
2 Available Bank Finance 57.00 64.12 71.25 71.25 71.25
3 Margin Money 19.00 21.37 23.75 23.75 23.75

26.10 Operating Expenses

The annual operating expenses estimated at Rs 177.02 lakhs (80% capacity utilization) is given below:
Sl No Particulars Rs in Lakhs
1 Annual Land Charges 0.12
2 Raw materials 107.73
3 Utilities 11.13
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4 Wages & Salaries 9.00
5 Overheads 3.53
6 Selling expenses 0.67
7 Packing expenses 8.06
8 Interest on term loan 22.49
9 Interest on Bank Finance for Working Capital 8.55
10 Depreciation 5.74
Total 177.02

26.11 Profitability Estimates

Sl No Particulars Year
Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Production/Sales
Installed Capacity(in lakh nos) 1680 1680 1680 1680 1680
Capacity Utilization 80% 90% 100% 100% 100%
Estimated Production (in lakh 1344 1512 1680 1680 1680
nos)
Gross Sales Revenue 323 363 403 403 403
Expenses
Raw Material Consumption 108 121 135 135 135
Utilities 11 11 11 11 11
Administrative Overheads 4 4 4 4 4
Salaries 7 7 7 7 7
Sales Expenses 8 9 10 10 10
Packing Expenses 8 9 10 10 10
Loan Repayment 0 37 37 37 37
Lease Rentals 0.12 0.12 0.12 0.12 0.12
Total 146 199 214 214 214
Gross Profit 177 164 189 189 189
Financial Expenses
Interest On Term Loan 22 22 17 11 6
Interest On Working Capital 9 10 11 11 11
Sub Total 31 32 28 22 16
Depreciation 5.7 5.7 5.7 5.7 5.7
Profit Before Tax 140 126 156 161 167
Provision For Tax 46 42 51 53 55
Profit After Tax 94 85 104 108 112

26.12 Financial Indicators

The Average Break Even Point for the project is 36%.

Yr -1 Yr-2 Yr -3 Yr -4 Yr-5
Sales Realisation 323 363 403 403 403

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Fixed Costs
Salaries 7 7 7 7 7
Fixed Selling Expenses 8 9 10 10 10
Depreciation (SLM) 6 6 6 6 6
Repairs & Maintenance 2 2 2 2 2
Utilities (Fixed) 11 11 11 11 11
Admin. Overheads Incl Insurance 4 4 4 4 4
Interest On L.T. Loan 22 22 17 11 6
Loan Repayment - 37 37 37 37
Total Fixed Costs 60 99 94 89 83
Variable Cost
Raw Materials 108 121 135 135 135
Packing 8 9 10 10 10
Interest On Working Capital Loans 9 10 11 11 11
Total Variable Costs 124 140 155 155 155
Contribution 198 223 248 248 248
Breakeven In % 30% 44% 38% 36% 34%
Average Breakeven In % 36%

The IRR for the project is 27.4%, Average ROI is 86% and average DSCR is 3.01.
Particulars Year of Operation
1 2 3 4 5
Revenue 323 363 403 403 403
Profit Before Tax 139.95 126.24 155.64 161.26 166.88
Profit After Tax 93.77 84.58 104.28 108.04 111.81
LT Interest 22.49 22.49 16.86 11.24 5.62
Depreciation 5.74 5.74 5.74 5.74 5.74
LT Loan Repayment 0.00 37.48 37.48 37.48 37.48
Return on Investment (%) 84% 77% 89% 89% 89%
Average ROI 86%
Debt-Service Coverage Ratio
- Debt Service 22.49 59.96 54.34 48.72 43.10
- Coverage 121.99 112.81 126.88 125.03 123.17
DSCR 5.43 1.88 2.33 2.57 2.86
Average DSCR 3.01

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