Financial Feasibility for SSP

Financial Feasibility For SSP Factory

RITURAJ PRIYADARSHI DAS

KHR2009PGDMF147

FINANCE

Faculty Guide:Ms. RAKHI SHRIVASTAVA

Agenda

Industry Profile & About The Company

Financial Feasibility

Objective

Detailed Study

Recommendations & Conclusion

Project Description - Glance

Step 1

Step 2

Step 3

Step 4

Step 5

Step 6

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Industry Profile

•National Fertilizers Limited

•Fertilizers & Chemicals Travancore Limited

•Rashtriya Chemicals & Fertilizers Limited

PUBLIC SECTOR COMPANY

•Deepak Fertilizer and Petrochemicals

Corporation Limited

•Bharat Fertilizer Industries Limited

•Gujarat Narmada Valley Fertilizer Co. Limited

PRIVATE SECTOR COMPANY

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Rashtriya Chemical and Fertilizers Ltd.

•Incorporated in 1978 with the re-organisation of erstwhile FCI

•Authorised Capital ` 800 crore

•Paid Up Capital ` 551.69 crore

•ISO-14000, ISO- 9002 & OHSAS 18000 accredition for Thal & Trombay

•Rated amongst Top 10 PSU’s on the basis of MOU performance for the year 2004-05, 2005-06, 2006-07, 2007-08

•Takes part in various Socio – economic activities , CSR activities etc.

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A View of Thal Plants

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Community Service : Sewage Treatment Plant

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Start-Up Capital Requirements

Start-Up Capital Sources

Potential Returns for Investors

Financial Feasibility

Assessment of the financial aspects of a Venture/Plan or Project.

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Project At A GlanceName of the project : Single Super Phosphate fertilizer Project.Location : ThalStream Days : 300Project Time Schedule : 12 MonthsTotal Project Cost : ` 51.51 CroresRealization

: MRP ……..3200 `/MT Subsidy...… 4400 `/MT

Total……....7600 `/MT

Annual Production : 3,00,000 MTPA @ 100% loadCost of Production : 5859.98 `/MTManpower : 70 Nos.IRR : 50.17%Payback Period : 2.29 years

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Objective

•To analyze the Financial Feasibility for setting up of a new factory/Venture.

•To study the constituents of the cost sheet viz.; Variable cost, Fixed cost, Capital cost, IDC, Contribution, Working Capital Management etc. for the factory perspective.

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Product Description

SSP Fertilizer : Single Super Phosphate

Molecular formula : Ca(H20P4)2.H2O  Molecular Weight : 234.05 g Moisture per cent by weight : maximum 12.0

Pack : in 50kg bag with inner poly bag.

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Detailed Study

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Manufacturing Process

Ca10(PO4)6F2 + 7H2SO4 + 3H2O 3Ca(H2PO4)2.H2O + 7 CaSO4 + 2HF

Major Raw Materials and their availability

Rock Phosphate : 0.58 MT

Sulphuric Acid (98%) : 0.40 MT

Power : 25 KW

Manpower Requirement

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Designation Strength

Workers/Majdoors 28

Operators 20

Technicians 12

Supervisor 8

Manager 1

General Manager 1

The Overall Time Schedule is 12 months with a workforce of 70 employees.

Project Capital Cost

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Sr.

No.

Description Total Cost

(` Crore)

1. Plant 22

2. Offsite and infrastructure

Facility

15.75

3. Pre-operative expenses 0.1

4. Contingencies 1.89

5. Commissioning expenses 0.5

6. Financing charges 1.79

7. Margin money on working

capital

9.47

Total Project Cost 51.51Debt: Equity= 2:1

Working Capital , IDC , Contingency

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Working Capital : The short term requirement of the company. Margin money(30%)+ Loan component(70%).

Contingency : Cover up of any unforeseen expenditure.

IDC : Interest incurred during the construction period.

Cost of Production

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Items Units `/Unit

Rock Phosphate MT 6000.43

Sulphuric Acid MT 3004.95

Water M3 40

Power KWh 6

Bags No. 14

Items `/MT

Variable Cost 5352.23

Fixed Cost 507.75Total 5859.98

Capacity of SSP to be produced : 1000MTPD

Stream Days : 300

Net Realization , IRR, Payback Period

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Items `/MT

MRP 3200

Subsidy 4400

Total 7600

Less Freight 700

Net Realization 6900

Realization : Breakdown of the total cost of SSP

IRR : Rate of return , 50.17%

Pay back Period : 2.29 years

Sensitivity Analysis

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Analysis of the parameters when there is a deviation from theoriginal value so as to note down the difference in the values,if the scenario was different.

The trends in the sensitivity table show us :Increase in the price, Cost of production increases with decrease in IRR and increase in the payback time & Vice Versa.

sensitivity.xls

Links

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Excel File: Sheets1.xls

Recommendations & Conclusions

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•Average PAT/year: `24.02 Crore Positive revenue

•Internal Rate of Return: 50.17% Beneficial

•Payback time: 2.29 years Increase in Reserves

Hence, it can be said that in order to increase the returns, the companyshould decrease the Cost of Production which would ultimately lead to better reserves of the company

THANK YOU

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