Financial Feasibility For SSP Factory

RITURAJ PRIYADARSHI DAS

Faculty Guide: KHR2009PGDMF147
Ms. RAKHI SHRIVASTAVA
FINANCE
Agenda

Step 1 Industry Profile & About The Company

Step 2 Financial Feasibility

Step 3 Project Description - Glance

Step 4 Objective

Step 5 Detailed Study

Step 6 Recommendations & Conclusion

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Industry Profile
PUBLIC SECTOR COMPANY
•National Fertilizers Limited
•Fertilizers & Chemicals Travancore Limited
•Rashtriya Chemicals & Fertilizers Limited

PRIVATE SECTOR COMPANY

•Deepak Fertilizer and Petrochemicals
Corporation Limited
•Bharat Fertilizer Industries Limited
•Gujarat Narmada Valley Fertilizer Co. Limited

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

Start-Up Capital Start-Up Capital Potential Returns

Requirements Sources for Investors

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Project At A Glance
Name of the project : Single Super Phosphate fertilizer
Project.
Location : Thal
Stream Days : 300
Project Time Schedule : 12 Months
Total Project Cost : ` 51.51 Crores
Realization
: MRP ……..3200 `/MT
Subsidy...… 4400 `/MT
Total……....7600 `/MT

Annual Production : 3,00,000 MTPA @ 100% load

Cost of Production : 5859.98 `/MT
Manpower : 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
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

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Manpower Requirement
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.

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Project Capital Cost
Sr. Description Total Cost
No. (` Crore)
1. Plant 22
2. Offsite and infrastructure 15.75
Facility
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 9.47
capital
Total Project Cost 51.51
Debt: Equity= 2:1
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Working Capital , IDC , Contingency

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.

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Cost of Production

Items Units `/Unit

Rock Phosphate MT 6000.43

Capacity of SSP to be produced : 1000MTPD
Sulphuric Acid MT 3004.95
Water M3 40
Power KWh 6 Stream Days : 300
Bags No. 14

Items `/MT
Variable Cost 5352.23
Fixed Cost 507.75
Total 5859.98

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Net Realization , IRR, Payback Period

Items `/MT
Realization : Breakdown of the total cost of SSP

MRP 3200 IRR : Rate of return , 50.17%

Subsidy 4400

Total 7600 Pay back Period : 2.29 years

Less Freight 700

Net Realization 6900

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

sensitivity.xls
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.

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Links

Excel File: Sheets1.xls

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Recommendations & Conclusions

•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 company
should decrease the Cost of Production which would ultimately lead to
better reserves of the company

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THANK YOU

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