“A PROJECT REPORT ON THE STUDY OF FURNANCE OIL

BASED BOILER AND RICE HUSK BOILER IN RIL BMD”

SUMMER TRAINING PROJECT REPORT
SUBMITTED TOWARDS PARTIAL FULFILLMENT
OF

MASTER OF BUSINESS ADMINISTRATION

ACADEMIC SESSION (2009 – 2011)

Reliance Industries Limited (BMD)

Under the Guidance of:
External Supervisor: Internal Supervisor:

Mr.Muralidhar Nayak MR. A. H. KHAN

General Manager (Commercial) H.O.D. MBA Dept.
UIMT, MURADNAGAR
GHAZIABAD

Submitted By:
SUTEN KUMAR
MBA IIIrd SEM
Roll No:-0907970028

ESTD.199

UNIQUE INSTITUTE OF MANAGEMENT AND

TECHNOLOGY (GHAZIABAD)
1
 DECLARATION

I hereby declare that all the information that has been collected, analyzed and documented for the
project is authentic possession of mine.

I would like to categorically mention that the work here has neither been purchased nor
acquired by any other unfair means. However, for the purpose of the project, information already
compiled in many sources has been utilized.

(SUTEN KUMAR)

MBA IIIrd SEM

Roll no :-0907970028

2
 CERTIFICATE

This is to certify that this is a summer training report on “A PROJECT REPORT ON THE
STUDY OF FURNANCE OIL BASED BOILER AND RICE HUSK BOILER IN RIL
BMD” submitted by SUTEN KUMAR as a part of the M.B.A curriculum. The work has been
undertaken and completed under the guidance of MR MURALIDHAR NAYAK and is
satisfactory.

Prof. RAKESH GOEL

Project Coordinator:

Date: 27-07-10

UNIQUE INSTITUTE OF MANAGEMENT AND

TECHNOLOGY

3
 ACKNOWLEDGEMENT

Perseverance, inspiration and motivation have always played a key role in the success of any
venture, but one ingredient which is also very important than other and at times, more important
that other is corporation and guidance of experts and experienced person. A successful and
satisfactory completion of any project is the outcome of the invaluable aggregate contribution of
different persons fully in radical direction, explicitly or implicitly.

Whereas vast, varied and valuable reading efforts leads to substantial acquisition of knowledge
via books and allied information sources. True expertise excludes from collateral practical works
and experiences.

Words have never seemed as inadequate as now, when we are endeavoring to express our
heartfelt gratitude at the culmination of the project, to all those made it possible. Even the best
effort is waste without proper guidance and advice. We highly solicit to Mr. Muralidhar
Nayak, General Manager (commercial), RIL (BMD), for his unreserved cooperation,
encouragement and sincere advice throughout the project of this training programmed.

I convey my thanks to all the employees of RIL (BMD) for their invaluable
help and cooperation in completing my project successfully.

Last but not the least; we are grateful to God, our Parents, Elders and Friends for encouraging us
to take up this challenging task.

I solely claim all responsibility for any shortcoming and limitation in this
project.

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 TABLE OF CONTENT

Serial No. Particulars Page No.

1 Title page

2 Declaration

3 Certificate

4 Certificate of college

5 Abstract

6 Acknowledgement

7 Abbreviation used

8 Introduction of Report

9 Company Profile

10 Board of Directors

11 Awards

12 Vision of Reliance

13 SWOT Analysis of RIL

14 RIL History & Achievements

15 Introduction of Reliance Group

16 Manufacturing Facilities of RIL

17 Introduction of RIL (BMD)

18 Organization Structure
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19 Theoretical Aspect

20 Boilers used in RIL BMD

21 Rice husk boiler

22 Furnace oil boiler

23 Objective of study

24 Scope of the project

25 Research methodology

26 Working note

27 Existing furnace oil boiler

28 New rice husk boiler

29 Proposed new furnace oil boiler

30 Financial Tools used

31 Net present value

32 Profitability index

33 Pay back period

34 Internal rate of return

35 Return on capital employed

36 Data Analysis

37 Summary of comparative data

38 Analysis and Interpretation

39 Conclusion

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40 Limitation

41 Bibliography

7
 EXECUTIVE SUMMARY

Reliance Industries Limited (RIL) owns and operates a polyester fibre manufacturing unit at
Barabanki, District Lucknow, Uttar Pradesh, India The unit started commercial operation in
year 1987 and is engaged in manufacturing of Polyester Staple Fibre (PSF) and Polyester Tow
Fibre. The project activity is generation of steam in a boiler using biomass residue, rice
husk as fuel and is being executed at RIL-Barabanki Manufacturing Division (RIL- The purpose
of the project activity is to install a new 14tonnes per hour boiler for supplying steam to the
adjacent process plant through the application of clean technology which will result in
reduced greenhouse gas emissions
Various options were evaluated for the new boiler and a coal based boiler was found to be
economically most attractive option. However, the CDM incentives played a major role during
the decision making and it was therefore proposed to install a boiler consuming rice husk as fuel,
even though it was not the most economically attractive alternative available
I started with the review of the literature on Reliance Industry Limited from various in-house
magazines, books and websites and then design the following strategy to do my work in an
effective manner.

To do a comparative analysis of furnace oil based boiler and rice husk based boiler in RIL
(BMD) by using financial tools and analysis to judge the viability of both the boilers.

The project activity involves the installation of an Atmospheric Fluidised Bed Combustion
(AFBC), Bi drum, water tube, natural circulation boiler with a maximum continuous rating
(MCR) of 14 TPH saturated steam at 28 kg/cm and capable of operating on rice husk or coal as
fuel. The Rice Husk Boiler
System will come complete with fuel storage, fuel preparation unit, conveying and feeding
system electrostatic precipitator (ESP) to remove fly ash, fly ash removal conveyors, boiler
feed water pumps blowers/fans and other auxiliary and control systems.
The study has been done to understand the concept of boilers used in manufacturing divisions. It
analyses the two types of boilers i.e. Rice Husk and FO based boiler. This study also covers the
financial aspects of both the boilers used in the RIL (BMD).

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In this project we analyze that the net present value of furnace oil boiler and new rice husk
boiler, pay back period of both the boilers, profitability index of both the boilers , return on
capital employed of both boilers and also analysis internal rate of return of furnace oil boiler and
new rice husk boiler.

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INRODUCTION OF REPORT

Theory without practice sterile, Practice without theory is blind.

Entering in the organization is like stepping into altogether a new world. At first everything
seems strange and unheard but as the time passes one can understand the concept and working of
the organization and thereby develops professional relationship.

No professional curriculum is considered completed without work experience. It is well evident

that work experience is an indispensible part of every professional course. In the same manner
practical work in any organization is must for each and every individual, who undergoing
himself management course. Without the practical expose one cannot consider himself as a
qualified capable manager

I started with the review of the literature on Reliance Industry Limited from various in-house
magazines, books and websites and then design the following strategy to do my work in an
effective manner.

• To do a comparative analysis of furnance oil based boiler and rice husk based boiler in
RIL (BMD) by using financial tools and analysis to judge the viability of both the boilers.
It deals with the introduction of the company i.e. company profile, products manufactured,
details about Barabanki manufacturing division and manufacturing process, finding out “THE
STUDY OF FURNANCE OIL BASED BOILER AND RICE HUSK BOILER IN RIL BMD”

COMPANY PROFILE:-
10
 Board of directors
"Between my past, the present and the future, there is one common
factor: Relationship and Trust. This is the foundation of our growth."

Shri Dhirubhai H. Ambani

Founder Chairman Reliance Group

December 28, 1932 - July 6, 2002

Shri Mukesh D. Ambani

Chairman & Managing Director

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Shri P.K.Kapil Shri
Nikhil R. Meswani

Shri PMS Prasad Shri

Hital R. Meswani

(EXECUTIVE DIRECTORS)

Shri Ramniklal H. Ambani

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 (Non-Executive, Non Independent Director)

Shri Mansingh L. Bhakta Shri Yogendra P. Trivedi Dr.

D. V. Kapur

13
 Shri M. P. Modi Prof. Ashok Misra
Prof.Dipak C Jain

AWARDS

Growth through Recognition Reliance has

merited a series of awards and recognitions for excellence for businesses and
operations Shri Mukesh Ambani was awarded the Defence India Excellence Award
2007.The Award is a salute to those who have made the country proud. Shri Mukesh
Ambani was conferred the Indian of the Year Award by NDTV. This is India’s most
prestigious award for outstanding contribution towards the betterment of the nation.
Shri Mukesh Ambani received the coveted award in the Business Category.

14
Shri Mukesh Ambani was conferred the Outstanding Business Leader of the Year
Award by CNBC TV18.

• Shri Mukesh Ambani was awarded the Business Leadership Award 2007 by NDTV
Profit.

• Shri Mukesh Ambani was conferred the Leadership Award for Global Vision by the
United States India Business Council.

• Shri Mukesh Ambani was elected to be a member of the Honorary Fellows of The
Institution of Chemical Engineers, UK.

• On invitation to Shri Mukesh Ambani, Reliance Industries Limited became a Council

Member of World Business Council for Sustainable Development (WBCSD) in July
2007. Presently, Shri Mukesh Ambani is the only Indian CEO who is Council Member of
WBCSD.Leadership Shri Mukesh Ambani received the American India Foundation's
USA, The 2008 Annual Spring Gala Award' in 2008

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 VISION OF RELIANCE

Our vision is to generate value for the nation, enhance quality of life across the entire socio-
economic spectrum and used as RIL as a spear head to establish Indian as a global leader
in the domains, where we operate. Our aim is to:

1) Strengthen the market leadership to boost shareholder value.

2) Develop globally competitive integrated manufacturing and service facilities to set new
bench marks in technology, scale, quality and costs.

3) Continual measurable performance improvement in the areas of consumer interests,

environment, operating safety, occupational health and employee welfare and community
services.

4) Access and align people skills, knowledge, creativity, funds, materials and service
providers to achieve all the above stated goals.

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 SWOT ANALYSIS OF RIL

Strengths

• Abundant raw material availability

• Low cost skilled labor
• Presence across the value-chain
• Growing domestic market

Weaknesses

• Fragmented industry
• Effect of Historical Government Policies
• Lower productivity and Cost Competitiveness
• Technological Obsolescence

Opportunities

• Research and Development and Product Development

Threats

• Competition in Domestic Market

• Ecological and Social Awareness
• Regional alliances

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Reliance Industries Ltd.: History and Achievements

HISTORY

• On 8th May 1973 Company was incorporated in Karnataka state as a public limited
company under the name Mynylon Ltd. to manufacture synthetic blended yarns and
fabrics, polyester filament yarn, polyester glass shells and colour TV picture tubes.
• On 28th June 1975 this company converted into a public limited company.
• On 11th February 1976 a company by name of Reliance Textiles Industries Pvt. Ltd. was
incorporated in Maharashtra. It established a synthetic fabric mills in the same year at
Naroda at Gujarat.
• With effect from 11th March 1977 first name of Mynylon ltd. was changed into Reliance
Textiles Industries Ltd. The company manufactures synthetic blended yarns and fabrics
polyester filament yarn, polyester staple fibre chemicals and allied products colour TV
glass shells and colour TV picture tubes. The company’s yarns are marketed under
various brand names such as Texalit, Textron, Poly dyed and Poly twist. The company’s
fabrics are marketed under the brand name “VIMAL”.

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 ACHIEVEMENTS

1999

• The company undertook the commissioning of its Jamnagar Petrochemicals complex.

• Once again Reliance Industries Ltd. is the international limelight. RIL been named as
one of the World’s 100 best- managed companies for the year 1999 by Industry
Week, a leading US based magazine.
• During 1999-2000, the company completed its integrated Jamnagar complex, in a
record period of less than 3 years.

2000

• Reliance has been ranked the second largest producer of POY and PSF in the world,
and the largest polyester manufacturer in India, with a market share of 51%.
• Reliance Industries Ltd. to sign PSC’s for exploration block in West Coast.
• Reliance Industries Ltd. to buy back shares upto Rs.1100 crore at Rs.303.
• Reliance and Malaysia's PETRONAS signed an agreement with National Iranian
Oil Co. to set up a 7.5 million-tonne per year liquefied natural gas plant in Iran
industry.
• Reliance Industries internet service brand “Only Smart” was launched in
Calcutta.
• Reliance Industries Ltd. is the first private sector Indian company to find a place
in the Forbes International list of the 800 largest non-US Companies.
• The company executive director Nikhil R Meswani has been elected as the
president of Association of Synthetic Fibre Industry.
• Reliance has formed a joint venture with Andhra Pradesh Technological Services
to set up 7500 Internet Kiosks across Andhra Pradesh to provide electronic
governance to rural areas.
• Reliance was awarded as an entertainment centre property in Mumbai’s upscale
Bandra-Kurla commercial complex

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2001

• During financial year 200-01 Reliance was in a 90:10 consortium with Nikos
resources of Canada, awarded 12 new exploration blocks by the government through
a process of competitive international bidding.
• Reliance Industries Ltd. has entered into an alliance with Bangalore- based
Indus league for the manufacture of its sole branded garment, Reliance.
• Reliance Industries Ltd. has raised its stake in Larsen & Turbo from 0.38% to
2.87%.
• It has increased its stake in equity share capital of BSES, an electric utility
company, through open offer to 27%.
• RIL obtained ISO 9002 certification from BVQI for its Patalgana and Hazira
complexes. RIL is the first private sector company in India to be rated by the
international credit rating agencies.

2002

• In January, Reliance Petro investments have become the subsidiary of the

company, while Reliance Life Insurance Company and Reliance General Insurance
Company have ceased to be subsidiaries of the company.
• Shareholders of Reliance Petroleum Ltd. on April 15 approved the merger of RPL
with Reliance Industries Ltd. at a meeting held in Jamnagar and convened under the
orders of the Gujarat high court.
• Reliance Industries Ltd. acquires 26% state and management control in Indian
Petrochemicals Corporation Ltd. (IPCL) by paying Rs. 1490.84 crore to Government
of India.
2003

• Company’s Hazira manufacturing unit gets IMC-Bajaj Quality Award.

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 • Anil Ambani appointed as BSES MD.
• Ties up with Du Pont Polyester Technologies (DPT) for the research and
development of the advanced polyester process and product technologies in India.
• Foreign Industrial Investments (FII’s) convert 24 million shares of the company into
Global Depository Receipts (GDR’s).
• Anil Ambani, Vice-Chairman and Managing Director, voted as MTV Youth Icon of
the year.
• RIL bags fourth slot among ‘Top 10’ Asia money’s corporate governance poll on
Asian companies in the energy sector and is the only Indian Private Sector Enterprise
to find a place in the ‘Top 5’ in the energy sector category.
• Reliance occupies top slot in oil exports.

2004

•Reliance Jamnagar Refinery voted best among 50 refineries worldwide.

•Gujarat gives away Gujarat Garima Awards to Tata, Ambani.
• Mukesh Ambani ranks 40th in the world business leaders.
•Reliance joins hands with Gail for INDO-IRAN natural gas pipeline project.
• RIL chairman wins Asia Society Leadership award.
•RIL gets ‘Petro Chemical Company of the Year’ award for 2004.
• Reliance Industries Ltd. wins two National Energy Conservation awards.
•Reliance Industries Ltd. bags ‘National Energy for R&D efforts in industry 2005’.
• RIL buys Malaysia based polyester firm.

2005

• RIL partners with Vivada for sale of diesel to finishing trawlers and boats.
• Reliance Industries Ltd. was awarded the ‘International Refiner of the Year’
2005 at the world refining and fuels conference’s awards ceremony.

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 • Reliance Industries Ltd. win annual ‘2005 ASTD Best Award’ from American
society for training and development.

2006

• RIL links marketing pact with Gulf Oil.

• Reliance Industries Ltd. had unveiled the much-talked about Reliance Fresh
brand, the first format of the company’s Rs.25000 crores retail initiative, on October
29.

2007

• Reliance inks JV with Yemon Oil firm for refinery.

• GAIL India Ltd. and Reliance Industries Ltd. a Memorandum of
Understanding (MoU)
• For cooperation in gas sector on 15 March, 2007.
• Reliance Industries Ltd. has appointed Dr. R A Mashelkarn as an
Additional director of the Company’s Board.

2008-2009

• Shri Mukesh Ambani was awarded the Defense India Excellence Award
2007. The Award is a salute to those who have made the country proud.

• Shri Mukesh Ambani was conferred the Indian of the Year Award by
NDTV. This is India’s most prestigious award for outstanding contribution towards
the betterment of the nation. Shri Mukesh Ambani received the coveted award in the
Business Category.

22
 • Shri Mukesh Ambani was conferred the Outstanding Business Leader of
the Year Award by CNBC TV18.

• 2007. Presently, Shri Mukesh Ambani is the only Indian CEO who is
Council Member of WBCSD.
• Shri Mukesh Ambani was awarded the Business Leadership Award
2007 by NDTV Profit.

• Shri Mukesh Ambani was conferred the Leadership Award for Global
Vision by the United States India Business Council.

• Shri Mukesh Ambani was elected to be a member of the Honorary

Fellows of The Institution of Chemical Engineers, UK.

On invitation to Shri Mukesh Ambani, Reliance Industries Limited became a Council

Member of World Business Council for Sustainable Development (WBCSD) in July

Reliance Group

The Reliance Group, founded by Shri Dhirbhai H. Ambani (1932-2002), is India’s largest private
sector enterprise, with businesses in the Energy and Materials Value Chain. Group’s annual
revenues are in excess of US$ 30 billion. The flagship company, Reliance Industries Limited, is
a Fortune Global 500 company and is the largest private sector company in India.

Backward vertical integration has been the cornerstone of the evolution and growth of
Reliance. Starting with the textiles in the late 70’s, reliance pursued a strategy of backward
vertical integration- in polyester, fiber intermediates and plastics, petrochemicals, petroleum
refining and oil gas exploration and production- to be fully integrated along the materials and
energy value chain. The group’s activities span exploration and production of oil and gas,
petroleum refining and marketing, petrochemicals (polyester, fiber intermediates, plastics and
chemicals), textiles, retails and special economic zones.

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 Reliance enjoys global leadership in its businesses, being the largest polyester yarn and
fiber producer in the world and among the top five to top ten producers in the world major
petrochemical products.

Major Group Companies are Reliance Industries Limited (including main subsidies
Reliance Petroleum limited and reliance Retail limited) and Reliance Industries Infrastructure
Limited.

The Company's operations can be classified into four segments mainly:

• Petroleum Refining and Marketing business

• Petrochemicals business
• Oil and Gas Exploration & Production business
• Others

The Company has the largest refining capacity at any single location

The Company is:

• Largest producer of Polyester Fibre and Yarn

• 4th largest producer of Polypropylene (PP) and Paraxylene (PX)
• 6th Largest producer of Purified Terephthalic Acid (PTA)
• 7th largest producer of Mono Ethylene Glycol (MEG)

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MANUFACTURING FACILITIES

Naroda

Naroda Manufacturing Division located near Ahmadabad, Gujarat, is RIL’s first manufacturing
facility and is spread over 150 acres. This synthetic textiles and fabrics manufacturing facility
manufactures and markets woven and knitted fabrics for home textiles, synthetic and worsted
suiting and shirting, ready to wear garments and automotive fabrics.

Naroda complex represents the largest investment in the textile industry at a single
location. Naroda complex is India's most modern textile complex- recognition bestowed by the
World Bank.

Patalganga

Patalganga Manufacturing Division located near Mumbai, Maharashtra, is spread over 200 acres.
It comprises of polyester, fiber intermediaries and linear alkyl benzene manufacturing plants.

Allahabad

Allahabad Manufacturing Division located in Allahabad, Uttar Pradesh, is spread over 105 acres.
It is equipped with polymerization and continuous polymerization facilities.

The plant is equipped with 80 TPD batch polymerization and 150 TPD continuous
polymerization facilities where the batch plant produces wider range of speciality polymers and
continuous plant produces both commodity and differentiated products. Both the plants are
equipped with pilot positions to produce customer specific products and for development
activities. The plant also has integrated facilities of draw twisting; draw exorcising, yarn dyeing
and twisting.

The first phase of the plant was commissioned with the batch plant in1991 with
technology from Toray Industries Inc, Japan. In the second phase, the plant was further expanded
in 1997 with technology from Toray Engineering Company, Japan. Since then, the plant has
developed indigenous technologies with its development activities to produce a large range of
speciality polymers, for different downstream processes like draw twisting, draw warping, draw
exorcing, air exorcing etc.
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Dahej

Dahej Manufacturing Division located near Bharuch, Gujarat, is spread over 1778 acres. It
comprises of an ethane/propane recovery unit, a gas cracker, a caustic chlorine plant and 4
downstream plants, which manufacture polymers and fiber intermediaries.

The complex has its own facility for separating ethane/propane from rich gas containing
recoverable amounts of ethane/propane purchased from GAIL. The lean gas from which the
ethane/propane has been extracted is returned to GAIL. The ethane/propane mixture is then used
as a feedstock for the cracker plant.

The complex was commissioned in two phases in order to rationalize cash flows and
level of borrowings. The Caustic Chlorine, VCM and PVC plants in phase one was
commissioned in 1997. After this, in phase two, HDPE plant, MEG plant, ethane/propane
recovery plant and gas cracker unit were commissioned in 2000.

Hoshiarpur

Hoshiarpur Manufacturing Division located in Hoshiarpur, Punjab, is spread over 69 acres. It

manufactures a wide range of PSF, PFF, POY and polyester chips.

Hoshiarpur Manufacturing Complex can claim to be the only producer in India for
Recron 3s, Cluster fiber and Conjugate fiber.

Hazira

Hazira Manufacturing Division located near Surat, Gujarat, is spread over 700 acres. It
comprises of a Naptha cracker feeding downstream fiber intermediates, plastics and polyester
plants.

The first phase of the complex was commissioned in 1991-92 to generate power/utility
and to manufacture Ethylene Oxide (EO), Mono Ethylene Glycol (MEG), Vinyl Chloride
Monomer (VCM), Poly Vinyl Chloride (PVC) and High Density Polyethylene (HDPE). A jetty
was built for loading and unloading operation of raw material and final products.

26
 The second of the project, started in 1995, involved commissioning of the Polyester
Complex (POY & PSF) and continued in full backward integration with commissioning of the
new Polypropylene (PP), Naptha Cracker, Purified Terephthalic Acid (PTA) plants and also
involved expansion of existing phase 1 plants.

Nagpur

Nagpur Manufacturing Division located in Nagpur, Maharashtra, is spread over 368 acres. It
manufactures Polyester filament yarn, dope-dyed specialty products of different ranges, fully
drawn yarn and polyester chips.

The plant has facilities like housing for its employees, a school affiliated to Bharti Vidya
Bhavan, a guesthouse and a Ganesha Temple. Around 200 acres of land is being developed for
horticulture to meet greenbelt requirement.

RIL- Nagpur Manufacturing Division is an ISO: 9001:2000 certified unit accredited by

BVQI, along with certification for ISO 14001:2004 and OHSAS 18001:1999 as well.

Jamnagar

Jamnagar Manufacturing Division located in Jamnagar, Gujarat, is spread over 7400 acres. It
comprises of a petroleum refinery and associated petrochemical plants. The refinery is equipped
to refine various types of crude oil (sour crude, sweet crude or a mixture of both) and
manufactures various grades of fuel from motor gasoline to aviation Turbine Fuel (ATF). The
petrochemicals plants produce plastics and fiber intermediates.

Created in a record time of less than three years, the Jamnagar Manufacturing Division
would always remain a special experience for Reliance. The project is of titanic proportion and
has taken, for its completion, millions of engineering man-hours spread over many international
engineering offices; thousands of tones in equipment and material, procured from leading
suppliers across the globe; highly advanced construction equipment of unbelievable sizes;
construction workforce of innovative techniques in project execution; and project management
expertise of Reliance acquired over the past several years.

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 With a complexity Index of 11.3 RIL’s refinery at Jamnagar is able to process heavy and
sour crude oils to produce high value products. This allows the company to benefit from the
lower input cost compared to light crude oils.

The Reliance refinery at Jamnagar was adjudged the most Energy Efficient Refinery by
Shell Global Solutions in 2004 and was awarded the International.

Refiner of the Year, 2005 by Hart Energy Publishing LP; the first Asian company to
receive the recognition.

The Jamnagar Manufacturing Division has 33- million tones per annum refinery that is
fully integrated with downstream petrochemicals units, which manufacture Naphtha-based
aromatics as well as propylene-based polymers.

The refinery has operated at near 100% utilization with minimal downtime, consistently
outperforming the average utilization rates of refineries in the Asia Pacific region, the European
Union and North America, as reported by REL Market Services, Biannual Refining Report, July
2005.

The existing refinery complex at Jamnagar has more than 50 process units, which together
process the basic feedstock, crude oil, to obtain various finished products deploying the
following major refinery processes:

• Crude oil distillation (atmospheric as well as vacuum distillation)

• Catalytic cracking (fluidized catalytic cracker)
• Catalytic reforming (plant forming)
• Delayed coking

Other Manufacturing Units are at:-

• Allahabad, Silvassa, Barabanki, Nagpur and Orissa

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 BRIEF INTRODUCTION TO THE COMPANY (RIL BMD)

Company:- Reliance Industries Limited

Barabanki Manufacturing Division

29
 Dewa Road

PO- Somaiya Nagar

Barabanki-225001

Registered Office:- Reliance Industries Limited

3rd Floor

Maker Chamber IV

222, Nariman Point,

Mumbai-400021, India

Products manufactured: - Polyester Staple Fibre

Polyester and Tow

Trade Name:- Recron (Daclene)

Installed Capacity:- 41000mt/tons per annum

Process:- World largest and renounce continuous Polymerization and direct spinning with
Technology from DU Pont, USA

Strength of Employees:- 241

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Principal Raw Material:- PTA (Poly Therypthalic acid) and

MEG (Mono Ethylene Glycol)

Fibre Production:- Fibre production maximized by process optimization Debottle necking

Fibre Type:- Super high tenacity fibre for sewing thread

Marketing:- Strategic Alliance (M/s Reliance Industries Limited)

Customer:- Leading textile mills in India and abroad

Site Head:-Shri Awinash G Belhe

Commercial Head:- Mr. Muralidhar Nayak

Journey of RIL Barabanki Manufacturing Division since its birth

Twenty-eight years old of RIL Barabanki Manufacturing Division full of youthful energies,
underlying passion and dedication. The powerhouse of confidence and dedication to achieve
qualitative success through qualitative performance set it to move ahead towards an unbelievable
series of success. Before RIL Barabanki it was incorporated on October 21, 1982 in the name of
India polyfibres limited. It is a joint venture between Philips Carbon Black Limited (PBCL) and
Pradeshiya Industrial and Investment Corporation Limited of Uttar Pradesh (PICUP), a UP state
government undertaking.

31
 The company came out with a public issue aggregating Rs. 11.6 crore in December 1985 to
part finance a project to manufacture 15000 TPA of Polyester Staple Fiber (PSF). The estimated
cost of the project was Rs. 73.48 crores.
India Polyfibres Limited was declared sick and is referred to BIFR (Board for Industrial and
Financial Reconstruction) in early 1990’s as it continued making losses. The BIFR declared a
rehabilitation scheme in March 1995, but the scheme cannot be implemented. As per the scheme
the associated companies of promoters were two bring a sum of Rs 14.50 crores as equity capital
that was paid to the financial institutions. Unsecured loans of Rs 2.2 crores brought in by such
companies, which also converted into equity. Later on BIFR sanctioned further modification to
the called scheme of rehabitation on July 2, 1999. Under this scheme interest, compound interest
and direct charges on loan and debentures were wailed off, reduction in capitals by 80%, issue of
equity share to lenders and part cash payment to them.
Reliance Petro products Pvt Ltd. as co-promoters at that time agreed to comply with the
applicable terms & conditions of the said scheme within stipulated period. Having assurance of
investing funds by co-promoters, IPL did have long-term contract with Reliance.
RIL Barabanki Manufacturing Division is situated at Barabanki 28kms from Lucknow,
Started commercial production in January, 1987.The company is engaged in manufacturing of
Polyester Staple Fiber, Polyester & TOW with technology form Du Pont , USA. RIL BMD had
an installed capacity of 15,000 MT per annum but with its own development programs, the
company has been able to enhance its capacity to 19,400 MT per annum in 1994-95,22400 in
1997-98.
In the year 1999, company developed specialty polyester Staple Fiber “dope dyed black
PSF”.
In the year 2002, it had carried out plant revamping for modernization of plant, increase
production capacity and enhancing product quality. Following benefits are derived:

 Production of Dope Dyed Black Polyester Staple Fiber of international quality on

continuous & sustained basis.

 Increase in production capacity of Dope Dyed Black Polyester Staple Fiber from 54 MT
per day to 80 MT per day.
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  Increase in production capacity of Semi Dull PSF from 64 MT per day to 90 MT per day.
In the year 2004-2005, it had developed & regularized production of Dope Dyed Super
Black PSF.
In the year 2005-06, the company had added new PSF products based on Extrusion
process. RIL BMD (Formerly IPL) obtained ISO certification in June 1994. The certification was
upgraded to ISO 9001:2000 version in May 2003 & renewed in May 2006. The company has
obtained ISO 14001:2004 certifications for EMS- Environment Management System in
September 2005.The company has also obtained OHSAS 18001:1999 certifications in June
2006.
The company was previously producing PSF under conversion agreement with Reliance
Industries Limited to convert raw material and other input supplied by RIL into PSF on job work
basis. It started producing PSF on its own from August 18, 2000.

The major changes came in the history of RIL BMD in 2005 when IPCL took over it. The
world is witnessing a powerful movement towards greater balance in the midst of an
unprecedented surge of prosperity. In this era each and every company is marching forward with
unabated self-confidence. Indian economy is growing at a sustainable rate that is around 8-9%
and achieving a higher rate is also possible 31000 in 2003-04 and to 40000 MT in 2004-05.

The successful merger of the six polyester units with IPCL provided a new platform of
growth allowing it to further integrate the value chain in its existing business and also to create
superior and sustainable shareholder value. The merger has allowed IPCL into organic pursuits
on one platform so that all these companies can further add tremendous value for its customers
and wealth for its stakeholders.

Indian Petrochemicals Limited was taken over by Reliance in 2002. The result of this
takeover can be seen in the result of company but after the amalgamation of 6 polyester units
with the IPCL the increased result even showed a great steep rise. The following six polyester
units amalgamated with IPCL with the exchange ratio of shares are: -

1. Apolo Fibers Limited (AFL) (1:25)

2. Central India Polyester Limited (1:23)

33
 3. India Polyfibres Limited (IPL) (1:28)

4. Orissa Polyfibres Limited (1:28)

5. Recron Synthetics Limited (1:34)

6. Silvassa Industries Pvt. Limited (1:38)

Shareholders of all the six companies approved the amalgamation. The appointment date of
amalgamation is April 1,2005.The scheme of amalgamation was sanctioned by the High Court of
Gujarat at Ahmedabad by its order dated in August 18,2006.The said order was filed with the
Registrar of Companies, Gujarat at Ahmadabad on September 27,2006 and has thus become
effective.

34
 ORGANIZATIONAL STRUCTURE AT RIL BMD
SITE HEAD

GM- GM-
PROD GM- GM- GM-
GM- GM- GM- PUR
UCTIO COM CES SAF
T&D QC HR CHA
N M ETY
SE

GM- GM- GM-

GM- GM- CIVIL
ELECTRICA MECHANIC INSTRUME
L AL UTILITIES
NT

35
DESCRIPTION / MANUFACTURING PROCESS OF PLANT

CONTINIOUS POLYMERISATION

• Pure Terepthalic Acid (PTA), Mono Ethylene Glycol (MEG) and carbon black are the
main raw materials for the manufacure of Dope Dyed Black Polyester Staple Fibre.

• In CP, PTA and MEG in theform of slurry react with each other in a specially designed
etherification vessel. The PTA powder is unloaded into Feed Hoppers and is
pneumatically transferred to the storage silo under nitrogen atmosphere. PTA powder
flows by gravity from the storage into the mass flow hopper, which provides a constant
supply of PTA powder to the screw feeder. The screw feeder controls the PTA feed rate
to the slurry mix tank. Glycol is also metered and added into the slurry mix tank. The
PTA slurry from the feed tank is injected into etherification reactor with the help of slurry
injection pump.

• For Semi dull production the product called oligometer is injected with delustrant TiO2
and catalyst.

• For the production of Black Fibre, Carbon Slurry is injected into Oligometer in a highly
controlled quantity.

• Further polymerisationtakes place in prepolymeriser and finisher employing high

temperature and vacuum.

CHIPS/FLAKES ROUTE

In the expanded capacity, PET Chips/ flakes and Master Batch(MB) CHIPS are used for
production of Black polyster staple fibre. Chips/Flakes &MB chips are bought from market. PET
flakes

dried in drier under vacuum using steam as heating medium. MB chips are dried in a tumble
drier.

36
 PET flakes and MB chips are melted and extruded in extruders.PET chips/flakes melt is
passed through a set of filters and MB Melt is then injected into the clean PET flakes melt. This
polymer is spun in the spinning machine.

SPINNING

The polymer is fed directly into the spinning machine by a screw pump and passed through
manifolds, blocks, metering pumps and extruded through spinnerts.This process is known as
melt spinning and the product after this is called filaments.

The spun filaments are quenced with air and spin finish is applied on the emerging
filaments. These are collected in cans. This product is called undrawn tow.

DRAW LINE: -

The undrawn tow is drawn, heat set crimped and dried. Spin finish is applied to the tow. The
emerging product is called crimpled tow. It is directly passed to cutter for staple cutting and
packed as bale or collected in cutter boxes.

For the production of polyester tow, the undrawn tow is drawn, crimped and dried. Finish
is applied and is collected in tow boxes at tow pack station at the tow baler.

CUTTER BALER/ TOW BALER: -

The crimped tow is cut to required staple strength and packed in bales and polyester tow for
worsted industry is directly packed into bales.

During processing, in all sections strict control is maintained over all parameters to
achieve product quality, material efficiency and safety requirements as detailed in procedures.

37
 BOILERS USED IN RIL BMD

A boiler is a closed vessel in which water or other fluid is heated. The heated or vaporized fluid
exits the boiler for use in various process or heating application. A boiler is an enclosed vessel
that provides a means for combustion heat to be transferred into water until it becomes heated
water or steam. The hot water or steam under pressure is then usable for transferring heat to a
process. When water is boiled into steam its volume increases about 1600 times, producing a
force that is almost as explosive as gunpowder. This causes the boiler to extremely dangerous
equipment that must be treated with utmost care.
The process of heating a liquid until it reaches its gaseous state is called evaporation.
Heat is transferred from one body to another by means of (1) radiation which is the transfer of
heat from ahot body to a cold body without conveying medium, (2) convection, the transfer of
heat by a conveying medium, (3) conduction, transfer of heat by actual physical contact,
molecule to molecule

Fuel used in boiler

The source of heat for a boiler is combustion of any of several fuels, such as wood, coal, oil,
Rice Husk or natural gas. Electric steam boilers use resistance- or immersion-type heating
elements. Nuclear fission is also used as a heat source for generating steam. Heat recovery
steam generators (HRSGs) use the heat rejected from other processes such as gas turbines.

Boiler systems

The boiler system comprises of : feed water system and fuel system. The water system provides
water to the boiler and regulates it automatically to meet the steam demand. Various valves
provide access for maintenance and repair. The steam system collects and controls the steam
produced in the boiler. Steam is directed through a piping system to the point of use. Throughout
the system, steam pressure is regulated using valves and checked with steam pressure gauges.
The fuel system includes all equipment used provide fuel to generate the necessary heat. The
equipment required in fuel system depends on the type of fuel used in the system.

38
Furnace Boiler
These boilers are easy to install as well as maintain. These boilers are robust
in construction and are engineered with attention to each and every detail so
that the best can easily be supplied to the client

Here, water partially fills a boiler barrel with a small volume left above to accommodate
the steam (steam space). This is the type of boiler used in nearly all steam locomotives. The heat
source is inside a furnace or firebox that has to be kept permanently surrounded by the water in
order to maintain the temperature of the heating surface just below boiling point. The furnace
can be situated at one end of a fire-tube which lengthens the path of the hot gases, thus
augmenting the heating surface which can be further increased by making the gases reverse
direction through a second parallel tube or a bundle of multiple tubes (two-pass or return flue
boiler); alternatively the gases may be taken along the sides and then beneath the boiler through
flues (3-pass boiler). In the case of a locomotive-type boiler, a boiler barrel extends from the
firebox and the hot gases pass through a bundle of fire tubes inside the barrel which greatly

39
increase the heating surface compared to a single tube and further improve heat transfer. Fire-
tube boilers usually have a comparatively low rate of steam production, but high steam storage
capacity. Fire-tube boilers mostly burn solid fuels, but are readily adaptable to those of the liquid
or gas variety.

TYPES OF BOILER USED IN RIL

FURNANCE OIL BASED BOILER

40
RICE HUSK BASED BOILER

SYSTEM OF RICE HUSK

BOILER

AVAILABILITY OF RICE HUSK

Rice milling generates a by product known as husk. This surrounds the paddy grain.
During milling of paddy about 78 % of weight is received as rice, broken rice and
bran .Rest 22 % of the weight of paddy is received as husk . The husk generated during
milling is mostly used as a fuel.

Rice production, processing and marketing constitute the biggest industry in the Uttar
Pradesh. Rice milling industry is the oldest and largest agro-based industry. Rice milling
in the Uttar Pradesh is carried out in small , medium and big size rice mills.

Husk is produced by two types of mills:

41
 a) Big rice mills having capacity of 500 to 1000 MT per season. They normally
run during Oct to March only on continuous basis.

b) Mini rice mills (Polisher) having capacity of around 100 to 200 MT per year,
running through out the year but not on regular basis.

c) The number of seasons of rice production in this region is as under-

Winter

Sowing Harvesting

July-Aug Nov-Dec

Running of mills is also influenced by Levy Rice procurement policy of UP Govt. The
Central Government extends price support to paddy, coarse grains and wheat through
the FCI and State Agencies. All the foodgrains conforming to the prescribed
specifications offered for sale at specified centers are bought by the public procurement
agencies at the Minimum Support Price (MSP). The producers have the option to sell
their produce to FCI/State Agencies at MSP or in the open market as is advantageous
to them. The main objectives of foodgrains procurement by Government Agencies are
to ensure that farmers get remunerative prices for their produce and do not have to
resort to distress sale & to build up buffer stocks of foodgrains to ensure foodgrain
security.

Rice is also procured by the Government through statutory levy on rice millers and rice
dealers. The percentage of levy rice is fixed by State Governments with the approval of
Central Government taking into account requirements for the Central Pool, domestic
consumption and marketable surplus. Prices of levy rice are fixed by the Government
of India before commencement of every Kharif Marketing Season.

42
 SOURCE OF RICE HUSK BOILER

Table No.1

• Production of Rice Husk (Approximate)

District wise Rice-husk Production in Tonnes

200
2003- 2004- 5-
04 05 06 Average

Sl Name of the Rice Rice Ric Rice MT Husk

No Block/District e MT
MT MT
MT

259
1 Gonda 246018 219022 712 241584 60396

174
2 Faizabad 197065 171176 109 180784 45196

939
3 Lucknow 102433 99039 64 98479 24620

443
4 Barabanki 415220 461762 060 440014 110004

Total Production 960861 240216

43
• Observation:

1. Total Production of husk in the survey districts- 240216 MT per season.

2. Rice Husk availability from Rice mills in the survey districts –

Barabanki-.

39450 MT per season

Lucknow -.
13500 MT per season

Faizabad -
439500 MT per season

Gonda -
40400 MT per season

44
 Table No.2

3. Production of husk within 50 km radius from the Site –

Districts Big Rice Mills Mini Rice Mills & Total

Others

Gonda 4000 8850 12850

Faizabad 0 2800 2800

Lucknow 11700 12920 24620

Barabanki 32900 77104 110004

Total
150274

Total production – 150274 MT per season.

Table No.3

4. Rice Husk Consumption within 50 km radius from the Site -

Districts Consumption

Gonda 0

Faizabad 0

Lucknow 38000

Barabanki 44000

RIL 30000

Total 122000

45
Total consumption – 122000 MT per season.
Findings

Round the year availability in Barabanki, Lucknow, Gonda & Faizabad -

• Since local production is substantial and there is no significant local consumption

in these districts, sufficient quantity will be available throughout the year.
• Status of Rice husk within 50 km radius from the Site –

Table No.4

Local Local Balance Availability

Production Consumption

150274 122000 28274

Procurement Channels -

• Direct from mills – Normally mills prefer to sell their total husk production on as is
where is basis, ex-mill and on advance payment.
• Through agents/traders – who get material from rice mills and sell on delivered
basis.
• Considering unorganized nature of trade it is preferred to have both sources.
Currently however, agents are preferred in order to avoid complication of trucks
arrangements, loading and weighing etc. Mills also prefer to sell through agent.
• Rates are on per MT basis based on weighing done at the Mill.
• Contract for bulk is considered with mills / agents for deferred supplies and
certain portion may be procured on spot basis.

Current Price Trend -

• Delivered prices vary between Rs.1800/- MT to Rs.3000/- depending upon

season and place.
• Peak season (least price) Oct to March.

46
 • Normal season (slightly higher prices) Apr to June.
• Off season (highest price) July to Sept.

Storage Condition and Space at Mills -

• Husk is kept in open condition by mills and being hygroscopic absorbs moisture.
• During raining season the moisture content goes upto 30%.
• It also has dust between 5 – 10%.s
• Rice mills normally keep around 400 to 500 MT husk which can be lifted in small
lots if total quantity is contracted and against part advance payment.
• Mini rice mills can store maximum 10 MT accumulated over a period of around
15 days to one month.
• Thus stocks at mills also can be maintained after contracts with them.
• Similarly agents also maintain stocks with their respective mills.
• All stock of husk to be lifted by mid Sept from mills as they need space for storing
fresh paddy. Thus additional storage at plant is needed during Sept to Nov.
• Rice Husk availability analysis for RIL Barabanki
From the table no.4 above it is established that surplus Rice Husk is available in the
region of the RIL Barabanki site which is not used for any other purpose. These can
be made available and used in Rice husk based boiler for process steam generation
in RIL Barabanki site.

The estimated consumption of Biomass for the project implemented at RIL

Barabanki is 30,000 tons per annum. The surplus quantity of biomass available
(excluding the present consumption and projected RIL Barabanki consumption) in
the region of 50 km is 28274 tons, i.e. available rice husk in the region is 150274
tones, excess than the projected consumption of rice husk by the consumers in the
RIL Barabanki region. Therefore it can be concluded that the sufficient quantity of
rice husk is available in the nearby areas to meet the RIL Barabanki requirement.

47
• Conclusion:

1. Quantity of available Rice Husk in the region (within 50 km radius of RIL

Barabanki Site) is larger than the quantity of Rice Husk that is utilised
including the RIL Barabanki project requirement.
2. Year round availability of husk from Barabanki and neighbouring districts.
TableNo.5

List of Big Rice Mills (within the 50 Km radius distance from the site)

Sr Name of Name of Production

Name of the mills
No. District Place/Blocks Capacity
( MT per
season)

1 Ram Krishan Rice Industries Gonda Karnailganj 600

2 Prabha Rice Udyog Gonda Karnailganj 500

3 Candrabhan Food Product Gonda Karnailganj 600

4 Adarsha Rice Udyog Gonda Karnailganj 500

5 Kisan Rice Mill Gonda Karnailganj 600

6 Rajput Rice Mill Gonda Karnailganj 700

7 Anup Industries Gonda Karnailganj 500

8 Vivek Industries Ltd Lucknow Lucknow City 750

9 Ms. Moolchand Rice Mill Lucknow Lucknow City 900

10 Ms. RG Udyog Lucknow Lucknow City 1000

11 Baba Rice Mill Lucknow Bakshi Ka 600

Talab

12 Kovid Enterprises Lucknow Bakshi Ka 600

48
 Talab

13 Ms Ramanand Goyal Lucknow Bakshi Ka 600

Products Talab

14 Durga Gramodyog Lucknow Bakshi Ka 500

Talab

15 Ms. Vaishali Industries Lucknow Gosaiganj 900

16 Ms. Yogesh Rice Mill Lucknow Gosaiganj 500

17 Ms. Amar Singh Rice Mill Lucknow Gosaiganj 500

18 Ms. Gangaganj Gramodyog Lucknow Gosaiganj 600

19 Ms. Indrish Rice Mill Lucknow Gosaiganj 600

20 Ms. Pappu Gramodyog Lucknow Gosaiganj 500

21 Ms. Nagraj Traders Lucknow Mohanlal 750

Ganj

22 Ms. Kumar Sachin Rice Mill Lucknow Mohanlal Ganj 600

23 Ms. Shiv Food Industry Lucknow Mohanlal Ganj 600

24 Ms. Satguru Rice Mill Lucknow Kakori 750

Sr Name of Name of Production

Name of the mills
No. District Place/Blocks Capacity
( MT per
season)

25 Ms. Kaushal Industries Lucknow Chinhat 450

26 Sunny Rice Mill -1 Barabanki 800

District HQ
27 Sunny Rice Mill -2 Barabanki District HQ 800

28 Pradumn jain Barabanki District HQ 800

20 Bansh Raj Rice Mill-1 Barabanki District HQ 800

30 Bansh Raj Rice Mill-2 Barabanki District HQ 800

31 Fateh Rice Mill Barabanki District HQ 800

49
32 Shipi Rice Mill Barabanki Banki 1000

33 Manju Rice Mill Barabanki Banki 500

34 Ms. Shan Traders Barabanki Trivediganj 500

35 Saurabh Industries Barabanki Rudauli 600

36 Sri Laxmi Rice Mill Barabanki Masuali 500

37 Sri Indira Rice Mill Barabanki Masuali 600

38 Rana Sati Rice Mill Barabanki Masuali 700

39 Bajrang Rice Mill Barabanki Masuali 1000

40 Uma Rice Mill Barabanki Deva 500

41 Mahaveer Rice Mill Barabanki Deva 1000

42 Badri Vishal Barabanki Deva 1000

43 Matarani Rice Udyog Barabanki Deva 600

44 Tiwari Rice Mill, Mathura Barabanki Deva 600

Nagar

45 Vijay Rice Mill Barabanki Banikoder 1000

46 Laxmi Rice Mill, Kotwa Road Barabanki Banikoder 600

47 Dwivedi Rice Mill, Kotwa Barabanki Banikoder 500

Road

48 L K Rice Mill Barabanki Sarauli 500

49 Ashish Rice Mill Barabanki Sarauli 600

50 Munna Hazi rice mill Barabanki Sarauli 500

51 DS Sahay Rice Mill Barabanki Sarauli 500

52 Punwasi Rice mill Barabanki Sarauli 500

53 Shri Ramsati Industries Barabanki Harakh 700

Sr Name of Name of Production

Name of the mills
No. District Place/Blocks Capacity
( MT per

50
 season)

54 D S Verma Rice Mill Barabanki Harakh 1000

55 Shree Industries Barabanki Harakh 800

56 Jai durga Modern Rice Mill Barabanki Harakh 600

57 Shri Laxmi Modern Rice Mill Barabanki Harakh 1000

58 Prem Rice Udyog, Dariyabad Barabanki Puredalai 800

Road, Tikait Nagar

59 Amar Udyog, Tikait nagar Barabanki Puredalai 800

60 Mahavir Rice Udyog, Tikait Barabanki Puredalai 800

Nagar

61 Bahubali Rice, Dariyabad Barabanki Puredalai 800

Road

62 Jambodweep Rice Udyog, Barabanki Puredalai 800

Dariyabad Road, Tikait Nagar

63 Vijay laxmi Industries, R S Barabanki Puredalai 800

Ghat

64 Jaya Industries, R S Ghat Barabanki Puredalai 800

65 Hanuman Rice Mill, R S Ghat Barabanki Puredalai 800

66 Vishal Industries, R S Ghat Barabanki Puredalai 600

67 Mahalaxmi Rice Mill, R S Barabanki Puredalai 600

Ghat

68 Mahavir Rice Industries Barabanki Fatehpur 800

69 Annapurna Rice Industries Barabanki Fatehpur 800

70 Ashok Rice Mill Barabanki Fatehpur 500

71 Shyam Industries Barabanki Fatehpur 500

/ TOTAL 48600

51
 Table No.6

• List of Mini Rice Mills & others within the 50 Km radius distance from the site)
Sr Name of the mills Name of District Name of Production
No Blocks Capacity
(MT per
season)

1 Mishra Paleshawar Mill Gonda Paraspur 150

2 Hari Prasad Pandey Gonda Paraspur 100

3 Devdhar Tiwari Paleshawar Mill Gonda Paraspur 150

4 Ramkesh Verma Mini Plant Gonda Paraspur 150

5 Budha Ram Rice Mill Gonda Paraspur 100

6 Maya Ram Paleshawar Mill Gonda Paraspur 200

7 Others Gonda Paraspur 8000

8 Gopal Rice Industries Faizabad Amaniganj 150

9 Singh Rice Mill Faizabad Amaniganj 150

10 Arti Rice Mill Faizabad Amaniganj 150

11 Jaiswal Trading Company, Faizabad Amaniganj 150

Suchitaganj

12 Ram Sumiran Paleshawar Faizabad Amaniganj 100

13 Singh Rice Plant Faizabad Amaniganj 100

14 Others Faizabad Amaniganj 2000

15 Purushotam Rice Mill Barabanki Haidergarh 200

16 Kamala Rice Mill Barabanki Deva 200

17 Akash Rice Mill Barabanki Fatehpur 300

18 Kamala Rice Mill Barabanki Fatehpur 200

19 Durga Rice Mill Barabanki Fatehpur 200

52
20 Fatehpur Rice Mill Barabanki Fatehpur 200

21 Parmeshwar Rice Barabanki Harakha 350

22 Pitambara Industries Barabanki Harakha 300

23 Sandeep Rice Mill Barabanki Dariyabad 300

24 Jamaudi Rice Mill Barabanki Dariyabad 250

25 Krishana Rice Mill Barabanki Dariyabad 350

26 Matarani Rice Udyog Barabanki Dariyabad 250

27 Tiwari Rice Mill, Mathura Nagar Barabanki Dariyabad 350

28 Jaya Rice Mill Barabanki Banikoder 300

29 Maha Laxmi Rice Mill Barabanki Banikoder 250

Sr Name of the mills Name of District Name of Production

Blocks Capacity
No
(MT per
season)

30 Vrinda Rice Mill Barabanki Banki 250

31 Sri Laxmi Rice Mill Barabanki Banki 200

32 Kusum Rice Mill Barabanki Banki 300

33 Others Barabanki Banki 72354

34 Kaushal Industries, Faizabad Lucknow City 200

Road

35 Kamalapati Rice Mill, Sitapur Lucknow City 200

Road

36 Mulchand Rice Mill, Daliganj Lucknow City 200

37 RG Udyog, Sitapur Road Lucknow City 200

38 Jitendra Mini Rice Mill, Saadat Lucknow City 200

ganj

39 Baba Rice Mill Lucknow Gudamba 200

40 Ramanand Goyal Food Products Lucknow Bakshi Ka 200

53
 Talab

41 Shiv Sharda Rice Mill Lucknow Mall 200

42 Satguru Mini Rice Mill Lucknow Kakori 200

43 Others Lucknow Kakori 11120
/ TOTAL 101670

54
 Table No.7

• List of consumers within 50 km radius from the RIL Barabanki

Sl. Name of the Mills Location Rice Husk
No. consumption
(MT per season)

1 Mohan Meakins Limited , Lucknow 6000

2 India Pesticide, Chinhat , Dewa Road Lucknow 7000

3 C P Milk, Kursi Road, Gudamba Lucknow 10000

4 Ramniwas Flour Mills, Solvent Plant, Lucknow 15000

BKT

5 Swaroop Chemicals , Lucknow Lucknow Not in operation

6 JR Agro , Barabanki Barabanki 14000

40000 (Not in full

7 JR Organic , Barabanki Barabanki operations)

/ Total 92000

CARBON CREDITS IN RIL

55
Our earth is undoubtedly warming.This warming is largely the result of emissions of carbon
dioxide and other Greenhouse Gases (GHG’s) from human activities including industrial
processes, fossil fuel combustion, and changes in land use, such as deforestation etc.
Addressing climate change is not a simple task. To protect ourselves, our economy, and
our land from the adverse effects of climate change, we must reduce emissions of carbon
dioxide and other greenhouse gases. To achieve this goal the concept of Clean Development
Mechanism (CDM) has come into vogue as a part of Kyoto Protocol. The objective is the
“stabilization of greenhouse gas concentrations in the atmosphere at a level that would
prevent dangerous anthropogenic interference with the climate system”.

56
OBJECTIVES OF THE STUDY

Primary Objective:

 To analyse the performance of Rice Husk Boiler and new F.O. based boiler with the
existing F.O. based boiler.
 Continue with existing practice and run old boilers
 New fuel oil fired boiler to replace old boilers
 New boiler with rice husk as a fuel to replace old boilers

Secondary Objectives:

 To understand the concept of the Rice Husk and F.O. based boiler.
 To find out the profitability of both the boilers.
 To find out the merits and demerits of both the boilers.
 To judge the efficiency and effectiveness of both the boilers.

NEED OF THE STUDY

The study has been done to understand the concept of boilers used in manufacturing divisions. It
analyses the two types of boilers i.e. Rice Husk and FO based boiler. This study also covers the
financial aspects of both the boilers used in the RIL (BMD).

Through this study it has been found that which boiler is more economical for the industry.

57
 SCOPE OF THE PROJECT

The project activity involves the installation of an Atmospheric Fluidized Bed Combustion
(AFBC), Bi drum, water tube, natural circulation boiler with a maximum continuous rating
(MCR) of 14 TPH saturated steam at 28 kg/cm and capable of operating on rice husk or coal as
fuel. The Rice Husk Boiler
System will come complete with fuel storage, fuel preparation unit, conveying and feeding
system electrostatic precipitator (ESP) to remove fly ash, fly ash removal conveyors, boiler
feed water pumps blowers/fans and other auxiliary and control systems. A sketch of the basic
arrangement of the rice husk
Rice husk will be manually fed to a vibrating screen, where pebbles
and lumps of mud and other solid Contaminants are eliminated. There after it will be conveyed
by a belt conveyor via a magnetic particle removing station to a storage bunker. The fuel feeding
system from the bunker to the boiler comprises of Rotary Feeders fitted with variable frequency
drives and gearbox arrangement. The fuel feed can be controlled by varying the frequency and
thereby the speed of the Rotary Feeders. These feeders dump the rice husk into the Primary Air
assisted conveying line carrying fuel to the boiler and feeding it at the bottom of the
combusting bed.
The boiler is designed to generate saturated steam at a pressure of
28 kg/cm This steam is conveyed through existing pipelines to the manufacturing process.
The project proponent intends to operate the boiler on rice husk for
approximately 8040 hrs, i.e. 335 days a year. Once a year, for a period of about one month,
the boiler is expected to be shut down for maintenance, repairs and statutory inspection At
this time the project proponent intends to run the standby fuel oil based boiler to maintain
supply of steam to the manufacturing process, for part operation. The project activity boiler has
the ability to burn coal, whilst this is not expected to occur, if coal is combusted any
emissions caused due to the usage of coal will be accounted for under project emissions There is
no transfer of technology from sources external to the host country as the technology for design
construction and operation of AFBC boilers is available within India from reputed manufacturers.

58
 RESARCH METHODOLOGY

Method of data collection:

Primary Source:
• Observation
• Interview of employees
• Discussions with employees

Secondary sources:
It is the data that has already been collected by some one or an organization for some other
purpose or research study .The data for study has been collected from various sources:
• Books
• Journals
• Magazines
• Internet sources

Time of the study:

45 Days

Statistical Tools Used:

Simple statistical tools like bar graphs and tabulation have been used.

Financial tools used:

Net Present Value, Internal Rate of Return, Payback Period, Profitability Index and
Return On Capital Employed.

COMPARATIVE DATA OF BOILERS

59
 EXISTING NEW PROPOSED
OIL RICE NEW FO
DESCRIPTION UOM FIRED HUSK BASED
BOILER BOILER BOILER

(1986) (2009) (2010)

PROJECT COST Rs. Lakh 33.75 566 170

TOTAL CAPITALISED PROJECT

Rs. Lakh 33.75 578 170
COST

ANNUAL PLANT AVAILABILITY Hrs 8000 8000

PROCESS STEAM AVAILABLE @ 10

TPH Tones 80000 80000 80000

ANNUAL FUEL COST FOR STEAM

Rs. Lakh 791 318 759
GENERATION

O&M CHARGES INCLUDING POWER Rs. Lakh 382 91 300

TOTAL OPERATING COST Rs. Lakh 1173 409 1059

UNIT COST OF STEAM Rs./ Ton 1466 511 1324

ANNUAL SAVING Rs. Lakh 764 114

WORKING NOTE

EXISTING FURNANCE OIL BASED BOILER:-

Calculation Of Annual Fuel Cost

60
Monthly fuel consumption =250 Tonnes

Average fuel cost = Rs. 26,375

Annual fuel consumption= (250* 12)Tones = 3000Tones

Annual fuel cost = (3000*26,375) =Rs. 7912500

=Rs. 791 lakh

Total Operating Cost

= Total fuel cost + O& M charges including power

=Rs 791 + 382

=Rs 1173 lakh

Unit Cost Of Steam:-

= Total operating cost / process steam available at 10 TPH

= 1173 *100000 / 80000

=Rs 1466.25

NEW RICE HUSK BASED BOILER

Calculation Of Annual Fuel Cost

61
Monthly fuel consumption =1770 Tonnes

Average fuel cost = Rs. 1500

Annual fuel consumption= (1770* 12)Tones = 21240Tones

Annual fuel cost = (21240*1500) =Rs. 31860000

=Rs. 318 lakh

Total Operating Cost

= Total fuel cost + O& M charges including power

= Rs 318 + 91

= Rs 409 lakh

Unit Cost Of Steam:-

= Total operating cost / process steam available at 10 TPH

= 409 *100000 / 80000

=Rs 511

PROPOSED NEW FURNANCE OIL BASED BOILER:-

Calculation Of Annual Fuel Cost

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Monthly fuel consumption =240 Tonnes

Average fuel cost = Rs. 26,375

Annual fuel consumption= (240* 12)Tones = 2880Tones

Annual fuel cost = (26375*2880) = Rs. 75960000

= Rs. 759 lakh

Total Operating Cost

= Total fuel cost + O& M charges including power

=Rs 759 + 300

=Rs 1059 lakh

Unit Cost Of Steam:-

= Total operating cost / process steam available at 10 TPH

= 1059 *100000 / 80000

= Rs 1323.75

ANNUAL SAVING OF NEW RICE HUSK BOILER

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 = (Total operating cost of old furnance oil based boiler) – (Total operating cost of new
rice husk based boiler)

= 1173 – 409

= Rs.764 lakh

ANNUAL SAVING OF PROPOSED NEW F.O. BASED BOILER

= (Total operating cost of old furnance oil boiler) – (Total operating cost of proposed new
F.O. based boiler)

= 1173 – 1059

= Rs. 114 lakh

FINANCIAL TOOLS USED

NET PRESENT VALUE:

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 It is a discounted cash flow technique that explicitly recognizes the time value of money.
It correctly postulates that cash flows arising at different time periods differ in value and are
comparable only when their equivalent present values are found out.

The following steps are involved in the calculation of NPV—

1) Cash flows of the investment project should be forecasted based on realistic assumption.

2) Appropriate discount rate should be identified to discount the forecasted cash flows.

3) Present value of cash flows should be calculated using the opportunity cost of capital as the
discount rate.

4) Net present value should be found out by subtracting present values of cash outflows from
present value of cash inflows.

The NPV acceptance rules are;

A) Accept the project when NPV is positive. NPV > 0

B) Reject the project when NPV is negative. NPV < 0

C) May accept the project when NPV is zero. NPV =0

PROFIBILITY INDEX:-

The benefit cost ratio or profitability index is the ratio of the present values of cash
inflows, at the required rate of return, to the initial cash outflows of the investment.

It also recognizes the time value of money.

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The PI acceptance rule is:-

A) Accept the project when PI is greater then one. PI >1

B) Reject the project when PI is less than one. PI < 1

C) May accept the project when PI is equal to one. PI=1

PAYBACK PERIOD:-

Payback is the number of years required to recover the original cash outlay invested in
the project. If the project generates constant annual cash inflows, the payback period can be
computed by dividing cash outlay by the annual cash inflow. In case of unequal inflows, the
payback period can be found out by adding up the cash inflows until the total is equal to the
initial cash outlay.

The Payback acceptance rule are:-

A) The firm compare the project payback with a pre-determined, standard payback. The project
would be accepted if its payback period is less than the standard payback period set by
management. As a ranking method, it gives highest ranking to the project, which has the shortest
payback period and lowest ranking to the project with highest payback period.

INTERNAL RATE OF RETURN:-

The internal rate of return method is another discounted cash flow technique, which takes
into account of the magnitude and timing of cash flows. The internal rate of return is the rate that

66
equates the investment outlay with the present value of the cash inflow received after one period.
This also implies that the rate of return is the discount rate which implies makes NPV=0.

RETURN ON CAPITAL EMPLOYED

The return on capital employed, also called ROCE, is a corporate finance formula that
determines the efficiency and profitability of capital investments. Capital investments often
represent the purchase or acquisition of major assets used in business operations. Buildings,
production facilities, equipment or other fixed assets are usually purchased by companies
through the use of bank financing. In order to determine how well the company has used its
capital to make these investments, companies use the return on capital employed formula
calculation to compare this percentage against the interest rate on the bank loans used to make
the capital investments. The formula consists of three parts: earnings before income in taxes
(EBIT), total assets and current liabilities

A measurement of return on the investment needed for a business to function, otherwise

known as capital employed, expressed as a dollar amount or a percentage. It is used to show a
business' health, specifically by showing how efficiently its investments are used to create a
profit. A good ROCE is one that is greater than the rate at which the company borrows.
Because capital employed has no set definition, there are different ways to calculate ROCE. Two
common ways are:

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ROCE = (Operating Profit Before Tax) / (Total Assets - Current Liabilities)

ROCE = ((Profit before Tax) / (Capital Employed)) * 100.

One limitation to ROCE is the fact that it does not account for depreciation of the capital
employed. Because capital employed is in the denominator, a company with depreciated assets
may find its ROCE increases without an actual increase in profit. It also neglects inflation, which
might depress ROCE unnecessarily. See also: Return on Average Capital Employed (ROACE),
required return

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DATA ANALYSIS OF FURNANCE OIL BASED BOILER

NET PRESENT VALUE :-

On Profit after Tax basis:-

Present value of forecasted cash flows from year 1 to 10

66/(1.12)1 = 58.92

68/(1.12)2 = 54.4

70/(1.12)3 = 50

72/(1.12)4 = 45.85

74/(1.12)5 = 42.04

75/(1.12)6 = 38.07

77/(1.12)7 = 34.84

78/(1.12)8 = 31.57

78/(1.12)9 = 28.15

78/(1.12)10 = 25.16

Adding all this 409

NPV = (Present values of cash inflows)—(Initial cash outlay)

= 409—180

= Rs.229 lakh

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On Profit before interest & tax basis:-

Present value of cash-flows from year 1 to 10 are-

= 103* (PVFA10years,0.12 discount rate )

= 103* 5.650

= Rs.581.95 lakh

PAYBACK PERIOD

It is equal to = (Initial Investment) / (Annual cash inflow)

On Profit after tax basis-

Initial Investment = 170 lakh

Cash inflow in year1 = 66 lakh

Cash inflow in year2 = 68 lakh

Cash inflow in year3 = 70 lakh

On adding cash inflows of year 1 and 2 we get 134 lakh

It means it is less than 36 lakh so in year 3,month required to recover

=36/70*12

=6.12 months

This means it takes 2years 6.12 month to recover the initial investment.

So Payback Period is equal to 31 months.

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On Profit before interest & tax basis-

Initial investment = 170 lakh

Cash inflow in year1= 114 lakh

Cash inflow in year2= 114 lakh

It means it takes less than 2 years to recover initial investment

In year2 there is cash inflow of 114 lakh which is more than the required amount of 56(170-114)
lakh.

So in year 2, month required to recover = 56/114*12

=5.89 months.

This means it takes 1year5.89month to recover the initial investment. So Payback period is equal
to 17.26 month or 18 months.

PROFIBILITY INDEX:-

P.I. = Present values of cash flows/Initial cash outlay

On Profit after tax basis

= 229/170

= 1.34

On Profit before interest and tax basis

= 581.95/170

= 3.42

RETURN ON CAPITAL EMPLOYED:-

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 It is equal to = Annual saving/Total cost of the project *100

In case of new FO boiler annual saving is 114 lakh.

Total cost of the project is 170 lakh.

R.O.C.E = 114/170*100

= 67 %

INTERNAL RATE OF RETURN:-

YEA CASH PVF AT PV AT PVF AT PV AT PVF AT PV AT

R FLOW 35% 35% 40% 40% 45% 45%

1 66 0.74 48.84 0.714 47.124 0.689 45.474

2 68 0.549 37.332 0.51 34.68 0.476 32.368

3 70 0.406 28.42 0.37 25.9 0.333 23.31

4 72 0.303 21.816 0.263 18.936 0.226 16.272

5 74 0.223 16.502 0.1886 13.9564 0.2173 16.0802

6 75 0.166 12.45 0.1333 9.9975 0.108 8.1

7 77 0.123 9.471 0.096 7.392 0.0746 5.7442

8 78 0.0909 7.0902 0.068 5.304 0.0512 3.9936

9 78 0.0675 5.265 0.0485 3.783 0.0353 2.7534

10 78 0.049 3.822 0.0346 2.6988 0.0243 1.8954

TOT
A 191.0082 169.7717 155.9908

The internal rate of return is the discount rate which implies makes NPV=0.

Initial investment of the project is Rs 170 lakh. At 40% NPV is zero. So the internal rate of
return is 40%.

DATA ANALYSIS OF RICE HUSK BASED BOILER

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NET PRESENT VALUE:-

On Profit after Tax basis-

Present value of forecasted cash flows from year 1 to 10

470(1.12)1 = 419

476/(1.12)2 = 380.8

482/(1.12)3 = 422.80

488/(1.12)4 = 310.82

494/(1.12)5 = 280.68

500/(1.12)6 = 253.80

506/(1.12)7 = 228.95

509/(1.12)8 = 206.07

509/(1.12)9 = 224.22

509/(1.12)10 = 164.19

Adding all this 2727.33

NPV = (Present values of cash inflows)— (Initial cash outlay)

= 2727.33 — 565.33

= Rs.2162 lakh

On Profit before interest & tax basis

Present values of cash-flows from year 1 to 10 are

= 764*(PVFA10years, 0.12 discount rate)

= 764*5.650

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 = Rs.4316 lakh

PAYBACK PERIOD :-

It is equal to = (Initial Investment) / (Annual cash inflow)

On Profit after tax basis-

Initial Investment = 565 lakh

Cash inflow in year1 = 470 lakh

Cash inflow in year2 = 470 lakh

It means it takes less than 2 years to recover initial investment

In year2 there is cash inflow of 470 lakh which is more than the required amount of =95(565-
470)

= 95/470*12

= 2.28 months

This means it takes 1 year & 2.28 month to recover the initial investment.

So Payback Period is equal to 15 months.

On Profit before interest & tax basis-

Initial investment = 565 lakh

Cash inflow in year1 = 764 lakh

It means it takes less than1years to recover initial investment

In year1 there is cash inflow of 764 lakh which is more than the required amount of 565 lakh.

So in year 1 month required to recover = 565/764*12 = 8.87 months.

This means it takes 9 month to recover the initial investment. So Payback period is equal to 9
month.
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PROFIBILITY INDEX:-

P.I. = (Present values of cash flows) / (Initial cash outlay)

On Profit after tax basis-

= 2727.33 / 565

= 4.827

On Profit before interest and tax basis-

= 4316/565

= 7.63

RETURN ON CAPITAL EMPLOYED:-

It is equal to = (Annual saving) / (Total cost of the project) *100

In case of Rice husk boiler annual saving is 764 crore.

Total cost of the project is 565 crores.

R.O.C.E = 764 / 565*100

= 135.22 %

INTERNAL RATE OF RETURN:-

CASH PVF AT PV AT PVF AT

YEAR FLOW PVF AT 80% PV AT 80% 84% 84% 85% PVF AT 85%

1 470 0.555 260.85 0.543 255.21 0.54 253.8

2 476 0.3086 146.8936 0.295 140.42 0.292 138.992

3 482 0.171 82.422 0.16 77.12 0.157 75.674

4 488 0.0953 46.5064 0.0877 42.7976 0.0844 41.1872

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5 494 0.0531 26.2314 0.047 23.218 0.0462 22.8228

6 500 0.02941 14.705 0.025 12.5 0.025 12.5

7 506 0.0163 8.2478 0.014 7.084 0.0134 6.7804

8 509 0.00909 4.62681 0.00753 3.83277 0.0072 3.6648

9 509 0.00505 2.57045 0.00414 2.10726 0.0039 1.9851

10 509 0.0028 1.4252 0.00265 1.34885 0.002 1.018

TOTAL 594.47866 565.63848 558.4243

Internal rate of return is rate at which NPV is zero. Initial investment of the project is Rs 566
lakh which is equal to present value of cash inflows at 84%. So the internal rate of return is 84%.

SUMMARY OF COMPARATIVE DATA

PARTICULARS NEW FO BOILER RICE HUSK BOILER

NPV( Rs. Lakh)

On PAT Basis 229 2162

On PBIT Basis 581.95 4316

Payback Period (months)

On PAT Basis 31 15

On PBIT Basis 18 9
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P.I.

On PAT Basis 1.34 4.827

On PBIT Basis 3.42 7.63

ROCE (%) 66 135.22

IRR (PAT Basis) % 40 84

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 ANAYSIS AND INTERPRETATION

On the basis of Financial analysis and Interpretation of various data of furnace oil based boiler
and Rice husk boiler with the standard existing furnace oil based boiler in Reliance Industries
Limited (Barabanki manufacturing division).

In this project we analyze that the net present value of furnace oil boiler and new rice husk
boiler, pay back period of both the boilers, profitability index of both the boilers, return on
capital employed of both boilers and also analysis internal rate of return of furnace oil boiler and
new rice husk boiler.

And analyze the which investment proposal is suitable for the reliance industries limited and
evaluate the profitability of both the boilers by using of net present value, pay back period
profitability index, return on capital employed, and internal rate of return .

After evaluating and other criteria are finally approved to be include in the capital expenditure.
In this project we analyze that net present value of furnace oil boiler is equal to Rs.229 (PAT
Basis) and Rs 581.95 (PBIT Basis) and net present value of rice husk boiler is Rs2162 (PAT
Basis) and Rs4316 (PBIT Basis) it means the net present value of rice husk boiler is more than
the furnace oil boiler.

The pay back period represent the number of years or months required to recover the original
cash out lay invested in a project. It is based on the principle that every capital expenditure pays
it self back over a number of years or months. So the pay back period of furnace oil boiler is 31
months (PAT Basis) and 18 months (PBIT Basis) and the pay back period of rice husk boiler is
15 months (PAT Basis) and 9 months (PBIT Basis).

The profitability index is the relationship between present value of cash inflow and the present
value of cash out flow. So the profitability index of new furnace oil boiler is 1.34 (PAT Basis)
and 3.42 (PBIT Basis) and the profitability index of rice husk boiler is 4.827 (PAT Basis) and 7
(PBIT Basis) .Than profitability index of rice husk boiler is higher than new furnace oil boiler.

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The return on capital employed. A ratio that indicates the efficiency and profitability of a
company's capital investments. ROCE should always be higher than the rate at which the
company borrows; otherwise any increase in borrowing will reduce shareholders' earnings. So
the ROCE of new furnace oil boiler is 66% and the ROCE of rice husk boiler is 135.22% .Than
ROCE of rice husk boiler is higher than new furnace oil boiler.

Internal rate of return calculate will be compared with required rate of return. In event of several
alternatives, projects may ranked according to their internal rates of return .the internal rate of
return of new furnace oil boiler is 40% on PAT Basis and the internal rate of return of rice husk
boiler is 84%on PAT Basis. So rice husk boiler is highest internal rate is ranked first.

CONCLUSION

The rice husk boiler is more profitable than furnace oil boiler because the net present value of
rice husk boiler is most positive than furnace oil boiler so we choose the rice husk boiler.

The benchmark for pay back is the maximum number of years required by the enterprise for the
complete recovery of the investment in a project. Both the boilers may also be ranked in order of
payback periods the shorter the period, the higher the ranking. The payback period of rice husk
boiler is less than the furnace oil boiler. So the rice husk boiler is accepted.

Profitability index of rice husk boiler is higher than the furnace oil boiler. So we choose rice
husk boiler because higher profitability index is ranked higher than the other furnace oil boiler
with lower profitability index.

ROCE of rice husk boiler is more than the furnace oil boiler. We choose rice husk boiler
because. It is used to show a business' health, specifically by showing how efficiently its
investments are used to create a profit. A good ROCE is one that is greater than the rate at which
the company borrows.

The internal rate of return of rice husk boiler is more than furnace oil boiler than we choose the
rice husk boiler because the highest internal rate is ranked first and, so on. Acceptance of the
more than one may follow in order of priority.

So the rice husk boiler is more profitable than other new furnace oil boiler

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 LIMITATIONS

The study was confined to the resource provided by the organization. An effort was made to the
collect information from out side source also, which was successful to some extent. The report
had to be drafted carefully so as not to deteriorate the goodwill of the organization and the
sentiments of its employees. It was my duty to point out any short comings to the organization if
affecting there functioning of the organization .But at the same time it also become my duty to
utilize the resource provided by the organization in the best possible manner and give fruitful
result.

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 BIBLIOGRAPHY

Books

• Financial Management ( I M Panday )

• Cost & Management Accounting( )

• Financial Accounting( )

Websites

• www.google.com

• www.ril.com

• www.about.com

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