A Project on the Feasibility analysis of JBF Industries Ltd.

At Dalal Mott Mac Donald

(In partial fulfilment of MBA Programme)

Submitted to: N. R. Institute Of Business Management

Submitted By : Parul Gupta (03028)

Shikha Jalan (03030)

Year : 2003:2005
 Table of contents PAGE

SUMMARY
The Proposed Project 5
Project Highlights 5
Overall Project Prospects 6

1 Introduction 7
1.1 Introduction to JBF Industries Limited 7
1.2 About Dalal Mott MacDonald 8
Services 8
1.3 About the Proposed Project 10
1.4 Objective 11
1.5 Scope of work 11
1.6 Approach and Methodology 13

2 Overview of Product and Market 18

2.1 Product Description 18
2.2 Domestic Polyester POY Industry Structure 19
2.3 Demand – Supply Scenario 21

3 Demand Supply Scenario 25

3.1 Polyester Filament Yarn (POY / FDY) 25
3.1.1 Projected demand 25
3.1.2 Projected Supply 26
3.1.3 Projected Demand – Supply Scenario 27
3.2 PET Chips 28
3.2.1 Projected demand 28
3.2.2 Projected Supply 29
3.2.3 Projected Demand – Supply Scenario 30
3.3 Price Projection 31
3.4 Market Prospects for the proposed project 31

4 Marketing Plan 32
4.1 Competition Analysis 32
4.2 JBFIL’s Strengths 33
4.3 Current Marketing Arrangement and JBFIL’s Future Marketing Plan 33

5 Project Progress – Implementation & Approvals 35

Project Implementation Schedule 35

 Government Approvals 35

6 Technical Analysis 37
6.1 Raw Material- Sourcing and Availability 38
6.1.1 Purified Terephthalic Acid (PTA) 38
6.1.2 Mono Ethylene Glycol (MEG) 42

7 Estimates of Project Cost & Operating Cost 46

7.1 Capital Investment 46
7.1.1 Land & Site Development Cost 46
7.1.2 Buildings & Civil Works 47
7.1.3 Plant & Machinery 47
(i) Imported Components 47
(ii) Indigenous Component 48
7.1.4 Furniture, Fixtures & Vehicles 50
7.1.5 Miscellaneous Fixed Assets 50
7.1.6 Preliminary & Pre-operative Expenses 50
7.1.7 Contingency Provision 50
7.1.8 Margin Money 50
7.1.9 Total Project Cost 51
7.2 Proposed Means of Finance 51

8 Assessment of Financial Viability 53

8.1 Introduction 53
8.2 Basis and Assumptions 53
8.2.1 Financing Structure 53
8.2.2 Operating Days & Shifts 53
8.2.3 Installed Capacity & Utilisation 53
8.2.4 PET Chips Selling Price 53
8.2.5 Exchange Rates 54
8.2.6 Operating Norms 55
8.2.7 Financing Terms – Repayment & Interest 55
8.2.8 Depreciation Rates 55
8.2.9 Working Capital Norms 57
8.2.10 Income Tax Rates 57
o Feasibility Analysis -Projections 58
8.3 Measures of Profitability 58
8.4 Sensitivity Analysis (CONCLUSION) 75
 ACKNOWLEDGEMENT

On the onset, we would like to take this opportunity to express our gratitude to all those great
minds and hearts that have touched this project in the path of its success.
This project has proved to be a wonderful opportunity to execute some of the skills acquired
during the MBA programme. It was fortunate for us to do this project under the guidance of
Mr. Aldrin (Project Manager) and shall even remain indebted to him for his assistance and
sustained encouragement throughout the training. His practical insight and individual support
from the beginning of the training was extremely encouraging to us.
Summary

The Proposed Project

JBF Industries Limited has proposed to set up a Polyester Chips Plant having capacity of 600
tons per day on a 40-acre land already earmarked for the proposed project near Silvassa.
Polyester chips thus produced would be of grades capable of being consumed by the Textile
Industry and the film producing industry. JBF Industries limited is already engaged in POY
and batch PET polymerisation business at Silvassa but the proposed manufacturing facility
would be a continuous PET polymerisation plant incorporating latest technology and at a
different location than its existing set up.

Project Highlights

 The polyester chips produced by this technology are supposed to be of consistent

quality and based on lower cost inputs.
 The availability of raw material for producing polyester chips (i.e. PTA/DMT and
MEG) is ensured due to major expansion plans by existing players and some new players
entering the market. JBF is already consuming PTA/DMT and MEG from the large
manufacturers for the existing set up.
 JBFIL already has available infrastructure for marketing polyester chips, which can be
leveraged by the proposed project.
 The proposed project is expected to have cost advantage as it is near to major end
users and raw material source.
 JBFIL has selected a technology, which is flexible. This would enable it to change the
product mix (i.e. Production of Film and Bottle Grade Chips) as per the market
requirements in case of any fall back due to declining demand of textile grade chips.
 Proximity to all local extruder based POY units would enable JBFIL to sense the
market movements and this would be certainly a competitive edge over other polyester
chips manufacturers.
 Many new POY plants are being installed at Silvassa and they would be the
prospective customers for polyester chips in the near future due to proximity to the
proposed set up.
Overall Project Prospects

The overall prospects for the proposed project appear promising in view of:
 The sales volume (i.e. Capacity Utilization levels) envisaged in the projections appear
quite attainable considering following favourable factors:
Positive demand supply gap emerging due to demand growth of POY/PFY and
supply remaining more or less stagnant (due to expansion in downstream by few
existing PET Chips suppliers like Reliance, Century Enka, Indo Rama & Flex and
addition of new capacity by Garden Silk)
Number of POY projects is slated to come in the close vicinity of JBFILs’
proposed plant. Collective demand by these small-medium POY producers would be
tune of 600 TPD. It is expected that JBFIL would garner major share of this demand.
 JBFIL has selected a technology, which is flexible. This would enable it to change the
product mix (i.e. Production of Film and Bottle Grade Chips) as per the market
requirements in case of any fall back due to declining demand of textile grade chips.
 JBFIL has further plans to expand downstream capacity (after 2-3 years), which would
ensure full utilization of capacity as well as further enhance overall profitability of the
group.
 All the projected financials suggest the project to be viable on stand-alone basis and
will be a net contributor to JBFIL.
1 Introduction

1.1 Introduction to JBF Industries Limited

JBF Industries Ltd. (hereafter referred as JBFIL) is a leader in the Indian textile industry with
particular strength in polyester filament yarn and chips. The company’s history dates back to
the 1982 as a private company under the name “JBF Synthetics”. It became a public limited
company in the year 1986, and in the year 1989 the name was changed to JBF Industries
Limited.

JBFIL has established itself as a quality producer of POY and Polyester chips in the polyester
filament yarn industry. The company is one of the top 3 players in polyester partially oriented
yarn (POY). So far the company has preferred the chips (batch polymerisation) route (as
compared to the continuous polymerisation route) of POY production to enable quick product
changes, enhance differentiation and provide flexibility.

JBFIL has shown consistent growth since inception. The company has a record of
uninterrupted dividend payment from beginning till 1999. However, there was some set back
during 1999 to 2002 as the overall polyester filament yarn industry was not doing well, but
company has made impressive turn around during 2002-03.
1.2 About Dalal Mott MacDonald

Dalal Mott MacDonald – incorporating Dalal Consultants and Engineers Limited – is a

leading multi-disciplinary management and engineering consultancy based in India, with
offices nationwide.
As part of the Mott MacDonald Group, DMM is able to draw on world-class technical and
managerial resources comprising over 5000 staff in more than 50 strategic centre world-wide.
DMM is engaged in planning and development touching many aspects of everyday life –
from water, energy, industry, environment and transport to building, healthcare, tourism and
social development. Across these sectors DMM works for national and local governments,
public and private utilities, industrial and commercial companies, investors, developers, banks
and financial institutions, international and bilateral funding agencies and private
entrepreneurs. DMMs’ strengths enable our clients to realize their projects optimally from
concept to commissioning. With 750 professionals we take care of the entire process –
including providing advice on the best procurement route and the optimum approach for
maintaining the project once it enters service.

Services

Management Consultancy
Dalal Mott MacDonald provides business planning and project management for a wide
spectrum of clients in industry, infrastructure and social development, including international
development banks and funding agencies. DMM also help clients such as accountancy
practices, financial institutions and industrial companies in making a realistic appraisal of
their fixed assets, and in preparing for disinvestment, mergers or de-mergers, acquisitions,
take-overs, insurance or liquidation, collaborations and joint ventures.

Social Solutions
DMM has undertaken numerous studies and advisory roles for leading development banks
and funding agencies. Projects range from implementing vital AIDS eradication programmes
and pro-poor initiatives to studies for institutional strengthening, sector reform and impact
evaluation. DMM also offers specialist expertise in assisting with public consultation.
Engineering Services
DMMs’ range of engineering services enables clients to realize optimal implementation of
projects. DMM takes care of every stage – site evaluation, basic and detailed engineering,
contract preparation, project management, procurement, equipment inspection and testing, site
supervision and commissioning.

Infrastructure
One of the key strengths of DMM lies in large-scale integrated urban infrastructure
development, encompassing water supply, drainage, solid waste, roads, sanitation and
community buildings. Here our services range from planning and advisory assistance to
detailed engineering and construction management.

Industry
DMMs’ skills and experience have earned it a leading reputation – especially in chemicals,
textiles, oil and gas, food processing and life sciences, as well as bulk drugs, pharmaceuticals
and biotechnology. DMM is known particularly for its expertise in process engineering and
licensing for specialty chemical production based on laboratory/pilot plant know-how
developed by R&D centers.

Buildings
DMMs’ business covers all sectors from commercial and leisure to industry, education and
healthcare. DMM provides the full range of architectural, structural, mechanical and electrical
design skills, along with planning and project management expertise. Building services are a
special capability, notably building management systems, vertical transportation,
telecommunications and security.

HVAC
Providing turnkey packages in heating, ventilation, air-conditioning and refrigeration is also
DMMs’ forte – DMMs’ track record includes systems for auditoriums, public buildings,
industrial facilities, hospitals and research laboratories.
 1.3 About the Proposed Project

The proposed 600 tons per day polyester chips plant will be set up near Silvassa on a 40-acre
land already earmarked for this project. The acquired land is located within 12 Km. from the
existing JBFIL plant facilities and hence it is envisaged that the proposed project need not
create elaborate infrastructure support.
A number of medium size POY industries are located in and around Silvassa, which again
consolidates the fact that the proximity to end users would make the proposed project more
ideal in terms of technical servicing to the end users and a considerable savings in
transportation cost, etc.
The proposed plant would be a continuous polymerisation plant incorporating latest
technology. The polyester chips produced by this technology would be of consistent quality
and based on lowest cost inputs. The technology has flexibility in terms of grade of chips
produced, which would be consumed both by the textile industry and also the polyester film
industry.
The block diagram shown in figure 1.1 provides details of the proposed project.

Figure 1.1: Proposed Project Details

Purified Terepthalic Acid (PTA)

Mono-Ethylne Glycol (MEG)

Continuous Polymerisation Plant

Capacity : 600 TPD (2,16,000 TPA)
Number of chippers : 42

PET Chips for Sale in the

Market to POY Spinners
(Extruder spinning)
 1.4 Objective

The broad objective of the assignment is to prepare a bankable project feasibility report to
fulfill following specific requirements of bankers for term loan approval purpose:
 Suitability of Technology
 Correctness of list of Plant and Machinery
 Reasonableness of the cost of project

1.5 Scope of work

Though the broad objectives of this assignment are related to assessment of this project on
technical grounds, we feel that other aspects like market justification and comprehensive
viability should also be looked into. Having this view, we have formulated following scope of
work :
 Overview of Product (PET Chips) & Product Market covering:
Product Description & Applications

Domestic & Export Market (current and future outlook)

Prices & pricing trend

Competition Analysis

Trade Practices

 Raw Materials –Sourcing Aspects

Various Raw Material Required

Availability of Raw Material

Prices of Raw Material

 Assessment of Technology and Plant & Machinery

Salient Features of Technology

Assessment of technology and Plant & Machinery for its appropriateness and
completeness
 Incentives and Regulations

Statutory Taxes & Levies

Any other Regulations

Incentives Available

 Assessment of Operating Cost

Raw material cost

Utility consumption (power, water, etc.)

Manpower Cost, etc

Maintenance cost, etc.

 Assessment of Project Cost

Land & site development

Civil construction

Interiors, furniture, and furnishings

Equipments

Utilities like electrification, plumbing, sanitation, etc.

Preliminary & Pre-operative cost

Contingencies

 Implementation Schedule

This will include;

Estimated implementation time for all major tasks of project execution

Estimated implementation schedule and time for project

 Financial Analysis

The financial analysis will include the following:

 Estimated operating cost

Estimated revenue

Profitability projections

Projected cash flow & balance sheet

Suggested means / options of finance.

Estimates of base indicators for: ROI, ROE, BEP, IRR, etc.

All financial projections will be done with 8-10 years perspective, depending upon the
repayment period of the loan.
 Sensitivity Analysis

Sensitivity of the project for major factors such as project cost, selling price, raw
material cost, market share, interest costs, incentives, etc.

Sensitivity analysis will project various scenarios considering the critical variables.

Conclusions & Recommendations

Overall prospects of the project in view of techno-commercial feasibility exercise

Critical Success Factors for the project

1.6 Approach and Methodology

DMM adopted an approach addressing the specific requirements of bankers for term loan
approval, which includes:

 Justification of project on market ground

 Suitability of technology and appropriateness of plant and machinery required for the
project

 Validation of cost of project and overall viability of the project

In short, the project needs to be justified from all possible angles, i.e. Market, Technology and
Financial parameters. The study involved an intensive desk research for obtaining relevant
secondary data. The objectives of desk research are:

 Enhanced understanding on the latest market perspective.

 Broad assessment of level of competition, i.e. major players and their approach

 Collect secondary/published information useful for analysing the project.

Secondary/Desk Research involved collection of information from various sources, like:

 Information already available with JBFIL

 DMM’s internal database

 International trade and industry journals

 Internet Search

we did not envisage intensive field research as enough industry-updated data was available
with the consultant due to lots of similar assignments had been carried out in the recent past.
However, a selective verbal enquiry has been conducted among prominent manufacturers of
PET chips, raw material suppliers, POY manufacturers, technology and plant & machinery
suppliers to get crucial information/data not availed through intensive desk research.
Justification of project on market demand has been estimated based on the overall demand
supply scenario and analysis of competition. We validated the following:
 The target market size for the client

 The flexibility in manufacturing various grades of chips i.e. Textile grade or film
grade

 The assessment of suitability of selected technology for the project has been done on
the basis of evaluation against certain pre-determined criteria like:

 Analysis of technical parameters to justify compliance to proposed capacity, product

quality and compliance to local environment and safety norms

 Assessment of technology levels and its operation/maintenance ease

 Economic parameters like capital costs and operating costs

 Other general parameters like guarantee/performance figures, delivery/commissioning
schedule and technical service support

Financial feasibility analysis includes estimation of operating and capital cost of the project,
revenue model and sensitivity analysis. Estimation of operating cost involves estimation of
following important cost components:

 Utilities and Consumable cost (based on consumption norms provided by technology

suppliers)

 Man-power cost (based on the level of automation offered by the technology suppliers
and our own experience as per industry practice)

 Repair and maintenance cost, etc. as indicated by technology suppliers

 Cost of depreciation, interests, tax provisions, etc. as per the prevailing norms

Revenue estimates based on the following parameters:

 Realistic capacity utilisation and sales programme based on client’s capability utilising
existing business to tap contestable market

 Realistic price realisation estimated on the basis of current industry best average

Total project cost includes following cost components:

 Land and site development

 Buildings and civil construction

 Plant and machinery

 Utilities like power, fuel, water, compressed air, etc.

 Preliminary & Pre-operative cost

 Contingencies

The project financial feasibility analysis is given in the format desired by banks and includes
following:

 Estimated operating cost

 Estimated Revenue
 Profitability analysis

 Projected cash flow and balance sheet

 Suggested means of finance

 Estimates of base indicators for: ROI, ROE, BEP, IRR, etc.

All financial projections have been done with 10 years perspective, depending upon
repayment of loan.

The approach adopted by DMM as described above is indicated in the figure 1.2 given below

MARKET ASSESSMENT

PET Condensation Capacity

Captive PET Chips Demand External Sales

Factors Considered
Existing Captive Demand Demand-Supply scenario
(Extruder Spinning) Competition Analysis
Price trends

TECHNICAL ASSESSMENT
Potential Market Economies of Scale

Selection of Technology
& Plant Supplier Proposed Plant Size

Conversion cost
Investment requirements
Performance Guarantees
FINANCIAL ANALYSIS

Revenue Stream Cost Stream Investments

Financial Feasibility &

Sensitivity Analysis
2 Overview of Product and Market

2.1 Product Description

Polyester Chips is the main intermediate raw material to manufacture polyester filament yarn
(PFY) through extruder spinning. PFY includes both Partially Oriented Yarn (POY) and Fully
Drawn Yarn (FDY). Polyester chips are of three types viz., textile grade, film grade and bottle
grade. Polyester chips can be produced either by continuous polymerisation or batch
polymerisation. Figure 2.1 represents the complete value chain in the polyester industry
starting from basic raw material of polyester i.e. DMT or PTA and MEG to fabrics through
intermediate raw material i.e. polyester chips production.

Figure 2.1: Polyester Filament Yarn (PFY) Value Chain

DMT or PTA / MEG

Polymerisation
(BatchorContinuous
PET Chips Polymerisation

Batch Spinning Direct Spinning

Yarns POY FDY POY FDY

Processed Yarns Yarn Processing

Fabrics Fabric Weaving

2.2 Domestic Polyester POY Industry Structure
Polyester filament yarn (PFY) industry comprises of both partially oriented yarn (POY) and
fully drawn yarn (FDY). The domestic POY industry comprises of around 28 active players,
which includes small (4,000-15,000 TPA), medium (15,000 – 30,000 TPA) and large (30,000
TPA and above) units. The production capacity of Polyester Filament Yarn (PFY) stands at
1,321,483 TPA as on 31st March 2003. Capacity details of some of the major domestic
manufacturers of PFY are given in table 2.1.

Table 2.1: Major Indian PFY Manufacturers

Year ofInstalled Capacity

Manufacturer
Commissioning (TPA)
15,20
Baroda Rayon Corporation Ltd.* 1976
0
80,00
Century Enka Ltd. (incl. Rajshree Polymers) 1977
0
40,00
Central India Polyesters Ltd.** 1989
0
15,20
Filatex India Ltd. 1997
0
Garden Silk Mills Ltd. 1994 ***32,200
Surat Textile Mills Ltd. 1996 5,000
151,21
Indo Rama Synthetic (I) Ltd. 1995
8
32,50
Jindal Polyester Ltd. 1985
0
60,25
JBF Industries Ltd. 1996
0
52,50
Modern Petrofils Ltd. 1996
0
19,40
Microsynth Fabrics (India) Ltd. 1997
0
37,00
Nova Petrochemicals Ltd. 1996
0
30,00
Orkay Industries Ltd.* 1982
0
Parasrampuria Synthetics Ltd. 1986 23,50
 0
21,00
Petrofils Co-operative Ltd.* 1977
0
25,00
Prag Bosmi Synthetics Ltd. 1994
0
76,00
Raymonds Synthetics Ltd.** 1991
0
330,00
Reliance Industries Ltd. (Patalganga & Hazira) 1982, 1986
0
61,00
Sanghi Polyesters Ltd. 1992
0
48,00
Welspun Syntex Ltd. 1996
0
Apollo Fibres Ltd. ** 2001 14400
** Reliance Group *Currently not operational *** from November
2002 onwards
Source: 2002-03Handbook of Statistics on Man Made Synthetic Fibre/Yarn Industry –
Association of Synthetic Fibre Industry

From the above table, it can be observed that Reliance Industries Limited (RIL), Indo Rama
Synthetics, Century Enka, Sanghi Polyester and JBF Industries Ltd. (JBFIL) together account
for about 59% of the total industry capacity. Further, about 50% of the industry capacity is
located in the western region due to the proximity of raw material suppliers and downstream
weaving units at Surat, Bhiwandi.

The installed capacity of the industry has grown from a mere 178,000 TPA in 1990 to about
1,018,150 TPA by 31st March 2002 at a CAGR of 16%. Both the existing players as well as
new entrants have made investments during the last decade. The growth in investments was
more during 1996-99 as can be observed from the figure 2.2. The industry has witnessed
some acquisitions during the last few years with RIL taking over DCL Polyesters Ltd. and
Raymond Synthetics Ltd. The consolidation in the industry could be attributed to non-
economic size at the plant and operational advantage of producers with backward integrated
plants (PTA and MEG) or forward integrated plants (Draw warping, Draw texturising, etc.) as
compared to standalone producers.
Figure 2.2: Capacity Addition Trend of PFY

250,000 1200000
Capacity Addition (TPA)

Total Capacity (TPA)

200,000 1000000

800000
150,000
600000
100,000
400000
50,000 200000

0 0
1995 1996 1997 1998 1999 2000 2001 2002

PFY Capacity Addition Cum. Capacity

Source: 2002-03Handbook of Statistics on Man Made Synthetic Fibre/Yarn Industry –

Association of Synthetic Fibre Industry

2.3 Demand – Supply Scenario

PFY production grew from about 195,385 TPA in 1991 to about 954,634 TPA in 2002
indicating a CAGR of 16 %. The y-o-y incremental production along with y-o-y growth rate
is given in figure 2.3 below. The figure indicates that the y-o-y growth and the incremental
growth in production declined during the period 1998-01indicating slowdown in the industry.
The production and capacity utilisation trend for the industry is shown in figure 2.4 below.
From the figure it can be observed that the industry has maintained its capacity utilisation at
over 90% since 1995. The average capacity utilisation between 1995-02 was about 92%.
 Table 2.2: Import and Export of Polyester Filament Yarn

(Million kg per annum)

Year Import Export Production

1990-91 26.81 1.29 195.4
1991-92 3.86 3.05 246.4
1992-93 3.20 7.20 273.4
1993-94 20.72 7.79 296.0
1994-95 35.92 14.17 337.7
1995-96 19.72 14.76 472.1
1996-97 14.46 25.56 642.2
1997-98 2.92 50.01 717.2
1998-99 28.66 36.70 786.6
1999-00 75.25 49.18 831.8
2000-01 57.64 92.09 846.8
2001-02 80.96 66.75 954.6
Source: Compendium of International Textile Statistics, 2002
The overall domestic demand – supply scenario is indicated in table 2.3 below. From the table
it can be observed that the industry has met its demand primarily from the domestic
production. The pattern of capacity addition in the PFY industry is in line with growth in
demand, which indicates that the industry is matured and professionally managed.

Table 2.3: PFY Domestic Demand

Year Production Import Exports Demand

1991 195,385 26,810 1,290 220,905
1992 246,350 3,860 3,050 247,160
1993 273,433 3,200 7,200 269,433
1994 295,958 20,720 7,790 308,888
1995 337,743 35,920 14,170 359,493
1996 472,137 19,720 14,760 477,097
1997 642,190 14,460 25,560 631,090
1998 717,184 2,920 50,010 670,094
1999 786,616 28,660 36,700 778,576
2000 831,827 75,250 49,180 857,897
2001 846,846 57,640 92,090 812,396
2002 954,634 80,960 66,750 968,844
Source: Industry & CRIS INFAC, Oct 2002

67
POY constitutes about 85% of the total PFY production, while FDY contributes the
balance production.

67
3 Demand Supply Scenario

3.1 Polyester Filament Yarn (POY / FDY)

3.1.1 Projected demand

The PFY industry has grown at a rate of about 16% p.a. during 1991-02. Industry analysis
indicates that the growth rate is declining. However, it is estimated that the industry would
sustain a growth of about 8% p.a. during 2003-2012 based on the following factors –

 Globally polyester has 50% shares in fabrics. Whereas in India, polyester has a share
of just 17% indicating the growth potential.

 Low per capita consumption (China – 5 kg; Indonesia – 5 kg; Pakistan – 3 kg, India -
1.4 kg)

 Growing non-apparel applications (23% global demand but negligible in India)

 Polyester making inroads as Fashion Fabric – Polyester Denim

 PSF – emerging deficit over next 3-4 years

 WTO-End of quota regime and MFA phase out in Jan, 2005 will benefit India

 The Planning Commission projects a growth of 8% for PFY industry during the tenth
plan (2001-07).

 Capacity addition by major PTA manufacturers like RIL, Indian Oil Corporation and
Mitsubishi, indicate growth envisaged in the downstream PFY industry.

The major demand drivers for Indian PFY industry during the next decade would include –

 Growth in automobile sector would lead to an increase in demand for automotive

textiles like floor mats, carpets, steering wheel covers, headliners, seat covers, seat belts,
air bags etc.

 Growth in housing sector would lead to an increase in demand from upholstery

segment for home furnishings.

67
 Increase in disposable income will propel growth in textile apparels

 Demand for industrial stitching threads, fire retardant yarns, non-woven fabrics and
other technical yarns.
Historically, the yarn export from India has been insignificant. The large domestic base is one
of the prime reasons for the low export base. In future, it is anticipated that the local yarn
manufacturers would continue to focus on the growing domestic market and thus, exports
would continue to be insignificant.
The projected demand for PFY (POY + FDY) during the project plan period i.e. 2005-2012 is
given in Figure 3.1 below.

Figure 3.1: Projected Demand – POY & FDY

Projected Demand (TPA)

2,000,000

1,500,000

1,000,000

500,000

0
2005 2006 2007 2008 2009 2010 2011 2012

POY FDY

Source: DMM Analysis

3.1.2 Projected Supply

The installed capacity of PFY industry as on March 2002 is about 1,018,150 TPA with an
average capacity utilisation at 92%. Imports of PFY have been limited during the last decade
due to preference given to local yarn manufacturers by local weavers and yarn processing
units. The major reasons for giving preference includes -

 The quality of yarn manufactured by local players is close to international standards

 The price at which the local yarn manufacturers are able to sell their products is at par
with landed cost of imports. Further freight and packaging cost would add to the cost of
imports making it less competitive.

 The local manufacturers are able to provide better reliability than imported yarns
67
 Procurement from local manufacturer decreases the inventory requirements

Imports, in future would continue to be lower as long as the domestic yarn producers are able
to serve the demand. Thus, imports would only be used to bridge the demand-supply gap in
domestic market if any.

The availability of PFY in the domestic market considering 95% capacity utilisation of the
existing plants (installed capacity as on March 2002) during the project plan period i.e. 2005-
2012 is about 968,000 TPA.

3.1.3 Projected Demand – Supply Scenario

The projected demand – supply scenario in the PFY industry during 2005-2012 is given in
figure 3.2 below. From the figure it can be observed that the industry would face a marginal
shortfall in supply from the year 2005 onwards. This demand – supply gap can either be met
by imports or by fresh investments in domestic PFY capacity. Looking at the overall industry
behaviour during the last decade and the preference shown towards local manufacturers, it is
eminent that fresh investments in domestic PFY capacity would come up soon.

Figure 3.2: Projected Demand Supply - PFY

2,500,000
Demand Supply (TPA)

2,000,000

1,500,000

1,000,000

500,000

0
2005 2006 2007 2008 2009 2010 2011 2012

PFY Projected Supply PFY Projeted Demand

Source: DMM Analysis

67
3.2 PET Chips

3.2.1 Projected demand

PET chips are procured by batch process units and are later spun into PFY. These batch units
largely do not have the advantage of economies of scale and have higher operating costs (as
the number of stages in conversion is more). However, there is no direct competition with
large direct spinning processors as they cater to requirements of niche markets. These batch-
process units account for almost 20% of the total PFY production in India. It is expected that
the batch process units would maintain their share in overall PFY production. Thus, the
demand for PET chips would be driven by the increase in demand for PFY and consequent
fresh investments in PFY units. The projected demand for PET chips during the project plan
i.e. 2005-2012 is given in Figure 3.3 below.

Figure 3.3: Projected Demand – PET Chips

Projected Demand (TPA)

500000
400000
300000
200000
100000
0
2005 2006 2007 2008 2009 2010 2011 2012

PET Chips

Source: DMM Analysis

3.2.2 Projected Supply

PET chips available in open market from the major domestic suppliers are about 208,800
TPA as on 2002. It is observed that the batch process units give preference to the local
suppliers of chips due to the following reasons –

 High quality standards observed by local PET manufacturers

67
 Local PET chips prices comparable to landed import costs.

 Higher reliability of local suppliers

 Improvement in inventory management

The projected availability of PET chips in domestic market during the project evaluation
period i.e. 2005-2012 is expected to be as per the estimates given below:
2005 2006 2007 2008 2009 2010 2011 2012
PET Chips
208800 161700 161700 161700 161700 161700 161700 161700
Supply
Current Capacity 208800 208800 208800 208800 208800 208800 208800 208800
Capacity likely
to be consumed 108000 108000 108000 108000 108000 108000 108000 108000
captively@
New Capacity
0 60900 60900 60900 60900 60900 60900 60900
Addition#
PET Chips
208800 161700 161700 161700 161700 161700 161700 161700
Supply
@ Capacity to be consumed captively : RIL – 2000 TPM, Century – 3500 TPM, Indo Rama –
2000 TPM, Flex – 1500 TPM
# Garden Silk Mills – 60,900 TPA in April 2005

3.2.3 Projected Demand – Supply Scenario

The projected demand – supply scenario for PET chips during 2005-2012 is given in figure
3.4 below. From the figure it can be observed that the industry would face a shortfall in
supply from the year 2005 onwards. This demand – supply gap can either be met by imports
or by fresh investments in Polycondensation capacity.

67
Figure 3.4: Projected Demand Supply – PET Chips

450000
400000
Demand - Supply (TAP)

350000
300000
250000
200000
150000
100000
50000
0
2005 2006 2007 2008 2009 2010 2011 2012

PET Chips Demand PET Chips Supply D-S Gap

Source: DMM Analysis

3.3 Price Projection

The prices of PET chips is expected to remain stable in long run due to the following reasons
–

 The PTA prices are expected to remain stable on account of new capacity addition by
major domestic players in near future.

 Free imports of PTA, PET chips and PFY and corresponding reduction in customs
duty have ensured that the end users get raw material at internationally competitive prices.
Thus, the prices of PTA, and PET chips are expected to remain stable in line with
international prices.

 The lowering of customs duty for imported equipments and lower interest rates have
resulted in lower investment costs. This would ensure that new capacities are able to
manufacture PET chips at internationally competitive costs.

67
3.4 Market Prospects for the proposed project

It can be positively concluded that the proposed project has excellent market prospects for the
following reasons:

 Positive demand supply gap emerging due to demand growth of POY/PFY and supply
remaining more or less stagnant (due to expansion in downstream by few existing PET
Chips suppliers like Reliance, Century Enka, Indo Rama & Flex and addition of new
capacity by Garden Silk)

 Number of POY projects is slated to come in the close vicinity of JBFILs’ proposed
plant. Collective demand by these small-medium POY producers would be tune of 600
TPD. It is expected that JBFIL would garner major share of this demand. These units
would have economic as well as other benefits in sourcing PET chips from JBFIL, like:

Savings in transportation cost

Low inventory levels for PET Chips

Quick Technical Assistance in the event of technical problem

67
4 Marketing Plan

4.1 Competition Analysis

Organized players dominate the PFY industry. Further, vertically integrated units with
significant presence in PET chips and yarn business (including processing) have a better
chance to compete in global markets and manage with the price fluctuations. Reliance
Industries Limited and Indo Rama Synthetic (I) Ltd. are having major dominance in domestic
market. Analysis of these players is given in the table 4.1 below.

Table 4.1: Major Competitors

Name of the Company Current Supply Level & Present Status

Current supply level is 2200 MT per month. Shifting
POY machines from Orissa plant to Nagpur plant so
Reliance Industries Limited will cut down PET chips by 2000 MT. Focus more
towards infrastructure sectors like Oil & Gas,
Telecom and Power.
Current supply level is 2000 MT per month. Planning
Indo Rama Synthetic (I) Ltd.
expansion in PTA and PSF (Staple Fibre).
Current supply level is 3500 MT per month.
Century Enka Expanding POY capacity and hence will be out of
chips market by end of 2004.
Current supply level is 2000 MT per month.
Flex Increasing film capacity by 1500 MT per month. Will
be left with surplus 500 MT per month only

4.2 JBFIL’s Strengths

JBFIL is one of the leading players in the domestic textile market and their strengths are:

67
 JBFIL’s proposed project is to be located near Silvassa. This would ensure that the
plant is close to the end users (10 km from the polyester extruder spinners) and also close
to raw material source i.e. PTA and MEG from RIL. This would give it a cost advantage
of about Rs. 2 per kg for the yarn processors ensuring easy acceptability of JBFIL’s
products.

 About 67% of the PET production would be consumed in-house for yarn
manufacturing.

 JBFIL has selected a technology, which is flexible. This would enable it to change the
product mix (modified, bright and regular chips) and also film grade chips as per the
market requirements.

 JBFIL’s strong performance would ensure that they borrow money at competitive
rates. Further, reduction in customs duty on imported equipments would enable JBFIL to
build a state-of-art plant with relatively lower capital investment. Thus, they would have
lower fixed costs and would be in a better position to price their products.

4.3 Current Marketing Arrangement and JBFIL’s Future Marketing Plan

Polyester chips account for the single largest intermediate raw material comprising nearly 60-
70% of the finished product cost. Generally owners/directors of POY spinners directly handle
the purchase of polyester chips on the basis of strong liaison with the chips suppliers.
Consequently, the marketing of chips is normally done on the basis of interaction with top
executives of the supplier and end user and no intermediary such as brokers or commission
agents play a role except in few cases.

The pricing terms are generally based by bench marking the landed price as based on
international prices of polyester chips. The payments are normally on advance payments basis
with cheques being deposited on the day the consumer gets polyester chips.

Polyester chips consuming companies tie up quantities on a monthly basis and a day-wise
schedule is given, according to which chips are dispatched. A strong customer technical
service team, who would give certain guidelines to the customers, will back the supply of the
chips. A constant co-ordination would be maintained between the technical service team and

67
the buyer so as to ensure that the quality of chips being produced is acceptable and also to
find ways and means of further improvement in quality and other matters with reference to
logistics. It is expected that a number of polyester chips customers would be located at
Silvassa, Surat and Ahmedabad regions JBFIL’s strength coupled with shift in focus of major
players and overall demand-supply scenario in Polyester chips industry it is likely that JBFIL
would sell its products in the market.

67
5 Project Progress – Implementation & Approvals

Project Implementation Schedule

The following tentative schedule has been decided for the project so as to start the production by end
of first quarter of 2005:
Schedule Expected by
Procurement of Land Done
Completion of plant design, lay out etc. Done
Selection of machinery and negotiation with the suppliers Done
Placement of orders for all the machinery selected as above May/June 2004
Arrival of all the equipments December 2004
Erection of various equipments January / February 2005
Start up of trial runs March 2005
Commercial Production March / April 2005

Government Approvals

The following Government Approvals will be taken in due course of time:

Approvals Expected by
Acquisition and registration of land Done / In-process
Construction Permission from Collector June 2004
Pollution Control Board June 2004
Dept. of Industries June 2004
Factories Act July 2004
Electricity Act July 2004
Industrial Boiler Act No Required
Indian Explosive Act Not Required
Excise Act July 2004
Sales Tax Act July 2004
Provident Fund Act July 2004
Contract Labour Regulations July 2004
Solvent Storage Licence Sept. 2004

67
6 Technical Analysis

JBFIL has decided to source technology and plant from China Textile Industrial
Engineering Institute (CTIEI). CTIEI was founded in 1952, and is one of the largest design
and investigation unit to China National Textile Council (CNTC, formerly known as Ministry
of Textile Industry). It is also a member of China National Technical Import and Export
Corporation. It is the partner of China Foreign Construction Corporation.

CTIEI is able to supply process technology, engineering design and complete equipment, and
performance test in accordance with international practice. CTIEI is an ISO 9001 certified
company. It has also achieved Class A certificate for the design of textile, finishing, chemical
fibre, petrochemical and civil and also other project engineering related certificates.
The factors favouring CTIEI Technology includes:

 Proven track record of CTIEI (CTIEI has supplied Continuous Polymerisation

technology and plant to more than 40 units in China, some of which are large and
important players in PFY market.

 The process for reduction of Polyethylene Terephthalate (PET) with PTA/DMT and
MEG as developed by CTIEI is characterised with up to date technology having more
operation flexibility, high automation and less waste emissions.

 Because of adoption of process column with high efficiency, anti-blockage, more

operation flexibility and effective waste emissions treatment, the quality of the products is
excellent and all technical indexes are superior to or not lower than stipulation of polyester
company in the world.

 Various consumption indexes of raw materials and utilities are comparable to the
stipulation of other leading polyester companies in the world and the design can be
suitably tailor-made to suit the requirement of the customers.

 The overall cost economics (i.e. Capital and Operating Cost) based on CTIEI
technology is very favourable.

67
 6.1 Raw Material- Sourcing and Availability
Raw materials required for the proposed project are PTA and MEG. About 0.34 tonnes of
MEG and about 0.86 tonnes of PTA are required for producing 1 tonnes of PET resin; which
is converted into yarn. A detailed analysis of PTA and MEG for future availability and prices
is covered in the subsequent section.

6.1.1 Purified Terephthalic Acid (PTA)

PTA is used in the production of polyesters both staple fibre and filament yarn. The major
raw material for the production of PTA is paraxylene. In India, Reliance Industries and
Mitsubishi Chemicals are two major producers of PTA. The production capacity of PTA
stands at about 1.8 million TPA as on 2002-03. Some of the major manufacturers are given in
table 5.1.

Table 6.1: Indian PTA Manufacturers

Production
Year of
Capacity
Sr Company Commencing
(Tonnes /
Production
annum)
Reliance Industries Ltd. (Patalganga &
1 Hazira) 1988 12,80,000
2 SVC Superchem Ltd. * 1998 1,20,000
3 MCC PTA (I) Corporation Ltd. 2000 4,25,000
Total 18,25,000
*Currently not operational

Source: 2002-03Handbook of Statistics on Man Made Synthetic Fibre/Yarn Industry –

Association of Synthetic Fibre Industry

The installed capacity of the PTA industry grew from about 1.28 million TPA in 1996 to
about 1.8 million TPA by 2002. This growth was inline with the increase in demand of
polyester industry (both staple fibre and filament yarn). Year-wise capacity trend is given in
figure 5.1

67
Figure 6.1: Capacity Trend of PTA

2,000,000
PTA Capcity (Tonnes)

1,600,000

1,200,000

800,000

400,000

0
1995 1996 1997 1998 1999 2000 2001 2002
Year

Source: 2002-03Handbook of Statistics on Man Made Synthetic Fibre/Yarn Industry –

Association of Synthetic Fibre Industry

The PTA production grew from about 0.2 million TPA in the year 1988-1989 to about
1.7million TPA in the year 2002-2003, indicating a CAGR of 31 %. Year wise production, y-
o-y growth in production and capacity utilisation is given in figure 5.2 & figure 5.3
respectively. From the figures 5.2 and 5.3 it can be observed that the domestic industry is
operating at high utilization levels and would require an expansion to meet future needs of
downstream players

To meet the future demand from the downstream polyester industry the domestic PTA
industry would require fresh investments. As per published information, by 2005 additional
capacity of about 1.3 million TPA would be commissioned indicating an increase of 70%
over the existing capacities. Further Indo Rama Group is setting up a green field project at
Thailand and would source its requirements (about 200,000 TPA) from the captive facility.
This would create a surplus capacity of about 200,000 TPA in the domestic market. The
details of the proposed investments in PTA industry are given in table 5.3. From the table it
can be observed that the share of RIL in PTA market would come down from over 70% in
2002 to about 50% by 2005. Taking into consideration the large expansion in PTA capacity;
sourcing of PTA in domestic market would not be difficult for the downstream manufacturers.
67
Table 6.2: Proposed Investments – PTA Industry

Proposed Capacity
Sr. Company Year
Addition
1 M/s Indo Rama (in Thailand) 6,00,000 2003
2 M/s MCC PTA (I) Corporation Ltd. 4,25,000 N.A
3 Panipat Refinery, IOCL 5,25,000 2004-2005
4 Reliance Industries Ltd. 3,50,000 2003-2004
Source: Industry & DMM Analysis

The prices of PTA in domestic market is finalised based on the landed cost of imports,
thereby ensuring that the prices are globally competitive. It is expected that PTA
manufacturers would continue to use the market driven approach to fix domestic PTA prices.
Analysis indicates that the PTA prices depends on the following factors –

 International freight & insurance charges

 Crude prices

 Customs duty

 Availability of PTA
In India, the customs duty on PTA decreased from a high of 60% in 1994-95 to a low of 20%
from 2001 onwards. This has assisted in decreasing the domestic prices of PTA. However,
further decrease in customs duty during near future is not anticipated and thus customs duty is
not expected to play a major role in dictating domestic prices.

With fresh investments in the PTA industry the availability of PTA will not be a major factor
for the downstream players. Further, since imports are free, the downstream players can
always resort to imports. JBFIL has an advantage of being located near two major ports.
While international freight charges depend on the crude oil prices, the insurance charges
largely depend on international peace. Both these factors are difficult to predict and would
continue to play major role in determining PTA prices.

The raw material prices of PTA are dependent on crude prices. Crude prices are difficult to
predict and would continue to play major role in determining PTA prices.

67
However, looking at the international scenario, demand-supply situation, it is predicted that
the PTA prices would remain stable during 2005-12.

67
 6.1.2 Mono Ethylene Glycol (MEG)

Mono ethylene glycol (MEG) is used as an input in the production of polyesters (staple fibres,
films and filament yarns), explosives, cosmetics, printing inks, anti-freeze and as coolant in
automobiles. In India the turnover of the MEG market was at over Rs. 18 billion in 2000-
2001.

The domestic MEG industry comprises of 5 players with total production capacity of 638,900
TPA. Around 88% of the MEG capacity is based on the petrochemical route, while the
balance capacity is based on alcohol route. The table 5.4 provides details of major players in
domestic MEG industry. From the table it can be observed that Reliance Industries Limited
(RIL) is the market leader with about 85% share.

Table 6.3: Indian MEG Manufacturers

Production
Year of
Capacity
Sr. Name of the Unit Commencing Percentage
Tonnes/
Production
Annum

1 India Glycols Ltd. 1989 25,000 3.91 %

Indian Petrochemicals
2 Corporation Ltd.** (Baroda, 1973 183,900 28.78 %
Nagothane & Gandhar)

3 National Organic Chemicals Ltd. 1976 10,000 1.57 %

4 Reliance Industries Ltd. 1992 360,000 56.35 %

5 S.M. Dyechem Ltd. * 1993 60,000 9.39 %

Total 638,900

* Not in Operation from 2000-2001 ** Reliance Group

67
Source: 2002-03 Handbook of Statistics on Man Made Synthetic Fibre/Yarn Industry –
Association of Synthetic Fibre Industry

Domestic MEG capacities increased between 1991-94, with IPCL, RIL and SM Dyechem
putting up new plants. Further, it is observed that the MEG capacities are concentrated in the
western region. Since, freight charges are significant, those downstream units located near the
raw materials have a cost advantage. The figure 5.4 below provides details of capacity
addition in the MEG industry.

Figure 6.2: Capacity Trend of MEG

700,000
600,000
Capacity (TPA)

500,000
400,000
300,000
200,000
100,000
0
1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-2002 2002-2003

MEG Capacity

Source: 2002-03Handbook of Statistics on Man Made Synthetic Fibre/Yarn Industry –

Association of Synthetic Fibre Industry

MEG production grew at an annual rate of 34% between 1991-03. The overall production as
on 2002-03 stands at about 611233 tonnes. The demand from polyester industry during 1991-
03 contributed significantly towards growth in MEG. Year wise production, y-o-y growth and
capacity utilisation of the industry is shown in figure 5.5 and 5.6. From the figures it can be
observed that the industry is operating at almost 100% capacity utilization and thus is
observing low growth during the last four years.

67
Figure 6.3: Imports - MEG

140,000 20000
Import Volumme (TPA)

120,000
100,000 15000

Rs. (Lacs)
80,000
10000
60,000
40,000 5000
20,000
0 0
1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-20022002-2003

MEG Import Volume Import Value

Source: 2002-03Handbook of Statistics on Man Made Synthetic Fibre/Yarn Industry –

Association of Synthetic Fibre Industry

Fresh investments in MEG industry would be required to meet the future demand from the
downstream polyester industry. RIL has already indicated that they would be expanding MEG
capacity by 240,000 TPA. This would result in an increase in industry capacity by about 38%
thereby improving availability of MEG in domestic market.

The prices of MEG in domestic market is finalised based on the landed cost of imports,
thereby ensuring that the prices are globally competitive. It is expected that MEG
manufacturers would continue to use the market driven approach to fix domestic MEG prices.
Analysis indicates that the MEG prices depend on factors similar to PTA.

Reduction in customs duty from a high of 60% in 1994-95 to a low of 20% from 2001
onwards has assisted in decreasing the domestic prices of MEG. However, further decrease in
customs duty during near future is not anticipated and thus customs duty is not expected to
play a major role in dictating domestic prices.

Availability of MEG in domestic market will not be a major problem as the industry leader is
adding capacities to meet the domestic demand. JBFIL would have location advantage of
having the project near RIL’s manufacturing facility.

67
International crude prices would be key determinant of MEG prices as majority manufacturers
use the petrochemical route. Further crude prices also determine the international freight
charges. Thus, crude prices would hold key to fluctuation in MEG prices.

However, looking at the international scenario, demand-supply situation, it is predicted that

the MEG prices would remain stable during long term.

67
7 Estimates of Project Cost & Operating Cost

7.1 Capital Investment

The estimation of capital investments have been done based on information collected from the
following sources –

 Imported Plant and Machineries as per the data provided by the client.

 Cost of Indigenous component of the project has been made on the basis of :

Cross-checking the cost with cost considered in similar projects

Data obtained from JBFIL on recent expansion works undertaken

Quick cross-checking with equipment suppliers

Cost information available with DMMs’ database

7.1.1 Land & Site Development Cost

The total available land area earmarked for the project is about 125,000 Sq.Mtr. The estimates of Land
and Land Development cost is given in the table below:

Table 7.1: Land & Site Development Cost

Amount
Sr. Particulars
(Rs. Lakhs)
A. Land Cost (Area 1.25 Lac sq.mt. @ Rs. 480/- / sq.mtr.) 600.00
B. Land & Site Development Cost
Compound wall (10ft height)
1. (Stone masonary + Brick masonary + cooping beam + 60.00
wire fencing with steel polls)

Fencing along survey boundary ; 6’ ft height

2. 30.00
(RCC pole & chain link fencing)

RCC roads & approach roads

3. 150th RCC + 230 MM TH WBM + moorum 80.00
filling / cutting + RCC pipe laying etc.

4. Rain water drains PCC + B/walls + waterproof plastering 30.00

5. Sub Total (B) 200.00

Total Land & Development 800.00

67
7.1.2 Buildings & Civil Works
The details of various building and civil works requirements of the proposed project alongwith their
cost estimates have been given in the table below:

Table 7.2: Buildings & Civil Works Details

Sr Buildings / Civil Works Cost (Rs.Lakhs)

1. Godown for raw materials & finished goods 186.00

2. Main Process Plant 546.00

Chip Packing & Dispatch Godown
3. 90.0
Area : 60 x 50 m (Rs. 3000 per sq.mtr)

4. Utilities 143.00

5. Others 100.00
6. Architect’s Fees @ 4% 35.00
Total Building & Civil Works (rounded off) 1100.00

7.1.3 Plant & Machinery

(i) Imported Components

The details of imported component of plant and machinery have been provided by JBFIL based on
their discussions with the technology and plant supplier. The landed cost of imported component of
plant and machinery (including know-how, erection & Installation and duties) have been estimated at
Rs. 5270 Lakhs (i.e. US$ 9.45 Million + Customs Duties and Clearance Charges). The cost considered
here appears reasonable considering:

 Its country of origin (i.e. China which is known for its cost competitiveness)

 Large part to be sourced indigenously

67
(ii) Indigenous Component
The list of Indigenous equipments alongwith their cost estimates is given in the table below.

Table 7.4: Indigenous Machinery List

Main Specification &

Sr Material Qty Cost Supplier
Content
A. Main Process Equipment
Praj Inds. Ltd/.
A1. PTA Conveying System 450 Phils Engineers/
Standard Engg
A2. Paste Preparation 285
Praj Inds. Ltd/.
Esterification-II &
A3. 335 Phils Engineers/
Proc. Column
Standard Engg
Praj Inds. Ltd/.
A4. Pre-Polycondesation 325 Phils Engineers/
Standard Engg
Praj Inds. Ltd/.
A5. Final Polycondensation 375 Phils Engineers/
Standard Engg
Polymer Filtration &
A6. 150
Distribution
Praj Inds. Ltd.
A7. Chip Production 205 Phils Engineers
Standard Engg
Chip Conveying & Bagging
A8. 175
System
Praj Inds. Ltd/.
A9. CATALYST PREPARATION 175 Phils Engineers/
Standard Engg
A10
Delusterant Preparation 100
.
A11
HTM Drain & Vent System 125
.
A12
Off-gas cleaning system 100
.
A13
Filter cleaning 100 Multitex Filters Ltd.
.
A14
HTM Station 150 Thermax
.
A15
Tank Farm 300
.
A16
Analysis and Test 150
.
B. INSTRUMENT & AUTO 85 M/s. Redix Sensor /

67
 Main Specification &
Sr Material Qty Cost Supplier
Content
CONTROL Framros Marketing
C. ELECTRICAL 150
Voltemp Transformers
SUBSTATION
M/s. Polycab / Cable
D. POWER 200
Corporation
E. Lighting 50 M/s. Redicon Engg
Instalalaram
F. OTHERS 50 Instruments
Pvt.Ltd.
OTHER EQUIPMENT AND
G.
MATERIALS
G1. HVAC IN POLY-BUILDING 25
Reliable Steel
PIPING, FITTINGS AND ETC.
G2. 200 Distributors/ Flow Line
ISBL
Eng
M/s. S S Engineers /
G3. ERECTION MATERIAL ISBL 100
M/s. KPA Engineers
G4. SPARE PARTS 200
G5. Special Tools 15
M/s. Punj Lloyd /
G6. Insulation Work 200
Excel Insultech
G7 N2 Plant 150 M/s. Airox Nigen
Elgi Equipments /
G8. Air Compressor 75
Atlas Copco
Total Indigenous Equipments 5000
Apart from above, JBFIL intends to set up 3.5 MVA captive power plant (HFO based DG Set), cost of
which has been estimated at Rs.1000.00 Lakhs.

67
7.1.4 Furniture, Fixtures & Vehicles
The total cost for Furniture and Fixtures have been estimated at Rs. 60 Lacs

7.1.5 Miscellaneous Fixed Assets

Miscellaneous Fixed Assets have been estimated at Rs.50 Lakhs.

7.1.6 Preliminary & Pre-operative Expenses

Preliminary & Preoperative Costs include all preliminary and pre-operative costs before
commencement of production. This includes costs towards establishment, travel and communication,
interest during construction, detailed engineering fees, training and trial run cost, etc.

Table 7.5: Cost Estimates - Pre-Production Cost

Amount
Particulars
(Rs.Lacs)
Interest During Construction 290
Documentation Expenses 30
Upfront Fee 100
Arrangers Fee 110
Detailed Engineering, Project Management Fees 175
Expenditure During Construction (Travel, Communication etc) 30
Others 90
Total 825

7.1.7 Contingency Provision

The contingency provision at roughly 5% works out to Rs.700 Lakhs.

7.1.8 Margin Money

Estimates of working capital requirements have been worked out on the basis of expenditure involving
cash liabilities and other recurring requirements considering the norms mentioned below:

Table 7.6: Inventory Norms

Particulars Inventory Norms

Raw Materials 0.23 Month
Packing Material 0.50 Month
Stores / Spares / Consumables 0.50 Month
Work in Progress 0.06 Month

67
 Finished Goods 0.10 Month
Receivables ( Debtors) 0.33 Month
Sundry Creditors 0.23 Month
The available bank finance for working capital has been considered as 80% of working capital
requirement and based on this, the requirement of margin money for working capital works out to
Rs.2188 Lakhs

7.1.9 Total Project Cost

The total project cost for this project in Oman has been estimated as given below:

Table 7.7: Total Project Cost

Particulars Rs. Lakhs

Land & Site Development 800
Factory Building 1100
Plant and Machineries  
Imported Machineries 5270
Indigenous Machineries 5000
Power Plant 1000
Miscellaneous Fixed Assets 60
Furniture & Fixtures 50
Preliminary & Pre-Operative Exp. 825
Provision for Contingencies 700
Total Capital Cost of Project 14805
Margin Money for Working Capital 2188
Total Cost of Project 16993

7.2 Proposed Means of Finance

Considering Debt Equity Ratio of 1.5:1, the means of finance for the project has been proposed as
shown in the table below:

Table 7.8: Proposed Means of Finance

Particulars Total
Equity 6993
Total Long Term Borrowings 10000
Total Means of Finance 16993

67
8 Assessment of Financial Viability

8.1 Introduction
This chapter deals with the economic viability of the proposed PET Chips project.

A spreadsheet model has been developed for financial analysis with a view to assess impact of
changes in project parameters like project cost, capacity utilisation levels, input costs and other
parameters like to see changes in the course of operation.

8.2 Basis and Assumptions

The important basis & assumptions, which are considered for the analysis are enlisted below:

8.2.1 Financing Structure

 Debt Equity Ratio : 1.4

8.2.2 Operating Days & Shifts

 No. of Working Days : 360 Days

 Shift of Operation : Three Shifts

8.2.3 Installed Capacity & Utilisation

 Installed Capacity : 600 MTPD

 Capacity Utilisation Levels :

Year 2006 2007 2008 2009
Capacity Utilization 85% 90% 95% 100%
Production (TPA) 183600 194400 205200 216000

8.2.4 PET Chips Selling Price

 Rs. 48 /Kg + Excise @ 16%

8.2.5 Exchange Rates

 I US $ : Rs. 45

67
8.2.6 Operating Norms
Operating Norms outlined below have been arrived at after analysis of guaranteed norms provided by
CIETI and actual norms collected from similar PET Chips producers:
 Raw Materials Consumption : PTA – 0.855 Tonne; MEG – 0.345
Tonne
 Stores / Spares & Consumables : Rs.300 / Tonne
 Power & Fuel : Rs.1100 / Tonne
 Packing Material : Rs.100 / Tonne
 Salaries & Wages : Rs.100 / Tonne
 Other Manufacturing Overheads : Rs.200 / Tonne
 Administrative Expenses : Rs. 50 / Tonne
 Selling Expenses : Rs.200 / Tonne
 Repairs & Maintenance : 2.5% of Fixed Assets

8.2.7 Financing Terms – Repayment & Interest

 Interest on Term Loan : 7.10% per annum.

 Repayment Terms :
Year 2006 2007 2008 2009 2010
Repayment 10% 20% 28% 28% 14%
 Interest on Working Capital Loan : 11 % per annum.

 Bank Finance Available : 80 % of Working Capital

8.2.8 Depreciation Rates

SLM WDV

 Land and Site Development : 0% 0%

 Building and Civil Works : 3.34% 10%

 Main Plant and Equipment : 5.28% 15.33%

 Furniture & Fixture : 6.33% 18.10%

 Misc. Fixed Assets : 4.75% 25.00%

67
8.2.9 Working Capital Norms

 Raw Materials : 0.23 month

 Packing Material : 0.50 month

 Stores / Spares & Consumables : 0.50 month

 Work in Progress : 0.06 month

 Finished Goods : 0.10 month

 Receivables (debtors) : 0.33 month

 Sundry Creditors : 0.23 month

8.2.10 Income Tax Rates

The rate of tax has been computed on following basis:

 Corporate Tax : 35.9%

 MAT : 7.35%

67
 8.3 Feasibility Analysis -Projections
Feasibility analysis for 10 years operation has been worked out considering basis mentioned above and
results are presented in the form of following exhibits (Exhibits enclosed at the end of this chapter):
Exhibit Description
8.1 Project Cost & Means of Finance
8.2 Working Capital
8.3 Term Loan Repayment & Interest
8.4 Fixed Cost Allocation
8.5 SLM Depreciation
8.6 WDV Depreciation
8.7 Income Tax Calculation
8.8 Profitability Statement
8.9 Projected Cashflow Statement
8.10 Projected Balance Sheet

8.4 Measures of Profitability

The various measures for project profitability derived from the feasibility analysis are presented in the
form of following exhibits (Exhibits enclosed at the end of this chapter).
Exhibit Description
8.11 Debt Service Coverage Ratio
8.12 Pay back Period and IRR

67
EXHIBIT-8.1
JBF Industries Limited
Project Cost & Means of Finance
(Rs.Lacs)
Particulars Total
Land  
Land & Site Development  
Total Land & Site Development 800
Factory Building 1100
Plant and Machineries  
Imported Machineries 5270
Indigenous Machineries 5000
Power Plant 1000
Miscellaneous Fixed Assets 60
Furniture & Fixtures 50
Preliminary & Pre-Operative Exp. 825
Provision for Contingencies 700
Total Capital Cost of Project 14805
Margin Money for Working Capital 2188
Total Cost of Project 16993

Means of Finance (Rs.Lacs)

Particulars Total
Equity 6993
Total Long Term Borrowings 10000
Deposits 0
Total Means of Finance 16993

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EXHIBIT-8.2

JBF Industries Limited

Working Capital Statement

Years of Operation              
No. Particulars
2006 2007 2008 2009 2010 2011 2012 2
A Working Capital                
1 Raw Material 1479.96 1567.02 1654.07 1741.13 1741.13 1741.13 1741.13 174
2 Consumables & Stores 22.95 24.30 25.65 27.00 27.00 27.00 27.00 2
3 Packing Material 7.65 8.10 8.55 9.00 9.00 9.00 9.00
4 Work in Progress 407.70 431.38 455.07 478.75 478.75 478.75 478.75 47
5 Finished Goods 679.50 718.97 758.44 797.92 797.92 797.92 797.92 79
6 Receivables ( Debtors) 2423.52 2566.08 2708.64 2851.20 2851.20 2851.20 2851.20 285
  Total Working Capital 5021.28 5315.85 5610.42 5904.99 5904.99 5904.99 5904.99 590
  Less: Sundry Creditors 1479.96 1567.02 1654.07 1741.13 1741.13 1741.13 1741.13 174
  Net Working Capital 3541.33 3748.84 3956.35 4163.86 4163.86 4163.86 4163.86 416
B Available Bank Finance 2833.06 2999.07 3165.08 3331.09 3331.09 3331.09 3331.09 333
C Margin Money 2188.22 2316.78 2445.34 2573.90 2573.90 2573.90 2573.90 257
D WC Loan Interest @ 11 % PA 311.64 329.90 348.16 366.42 366.42 366.42 366.42 36

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EXHIBIT-8.3
JBF Industries Limited
Long Term Loan - Repayment & Interest
Term Loan Amount 10000.00
Interest rate 7.10%
(Rs.Lacs)
Year Quarter Repayment Outstanding   Quarterly Yearly Yearly
Loan Interest Interest Repayment
Start of quarter End of quarter
2006 I 250 10000 9750 178    
II 250 9750 9500 173    
III 250 9500 9250 169    
IV 250 9250 9000 164 683 1000
2007 I 500 9000 8500 160    
II 500 8500 8000 151    
III 500 8000 7500 142    
IV 500 7500 7000 133 586 2000
2008 I 700 7000 6300 124    
II 700 6300 5600 112    
III 700 5600 4900 99    
IV 700 4900 4200 87 422 2800
2009 I 700 4200 3500 75    
II 700 3500 2800 62    
III 700 2800 2100 50    
IV 700 2100 1400 37 224 2800
2010 I 350 1400 1050 25    
II 350 1050 700 19    
III 350 700 350 12    
IV 350 350 0 6 62 1400
2011 I 0 0 0 0    
II 0 0 0 0    
III 0 0 0 0    
IV 0 0 0 0 0 0
2012 I 0 0 0 0    
II 0 0 0 0    
III 0 0 0 0    
IV 0 0 0 0 0 0
2013 I 0 0 0 0    
II 0 0 0 0    
III 0 0 0 0    
IV 0 0 0 0 0 0
2014 I 0 0 0 0    
II 0 0 0 0    
III 0 0 0 0    
IV 0 0 0 0 0 0
2015 I 0 0 0 0    
II 0 0 0 0    
III 0 0 0 0    
IV 0 0 0 0 0 0

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EXHIBIT-8.4

JBF Industries Limited

Fixed Assets with Allocation of Contingency & POP Cost

(Rs.Lacs)
Cost with pre-
Cost with
No. Item Cost operative
Contingency
allocation

1 Land & Site Development 800 840 892

2 Buildings & Civil Works 1100 1155 1226

3 Plant & Machinery      

  -Imported 5270 5532 5875
6000
  - Indigenous 6298 6689

  Total Plant & machinery 11270 11829 12564

4 Furniture & Fixtures 50 52 56

5 Miscellaneous Fixed Assets 60 63 67

6 Preliminary & Pre-Operative Expenses 825 866  

  Total Allocated Cost 14105 14805 14805

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67
EXHIBIT-8.5

JBF Industries Limited

SLM Depreciation
(Rs.Lacs)

No. Item 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

1 Land & Site Development 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

2 Buildings & Civil Works 40.96 40.96 40.96 40.96 40.96 40.96 40.96 40.96 40.96 40.96

3 Plant & Machinery                    

  -Imported 310.21 310.21 310.21 310.21 310.21 310.21 310.21 310.21 310.21 310.21

  - Indigenous 353.18 353.18 353.18 353.18 353.18 353.18 353.18 353.18 353.18 353.18

  Total Plant & machinery 663.39 663.39 663.39 663.39 663.39 663.39 663.39 663.39 663.39 663.39

4 Furniture & Fixtures 3.53 3.53 3.53 3.53 3.53 3.53 3.53 3.53 3.53 3.53

5 Miscellaneous Fixed Assets 3.18 3.18 3.18 3.18 3.18 3.18 3.18 3.18 3.18 3.18

  Total 711.05 711.05 711.05 711.05 711.05 711.05 711.05 711.05 711.05 711.05

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67
EXHIBIT-8.6
JBF Industries Limited
WDV Depreciation
(Rs.Lacs)

No. Item 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

1 Site Development 0 0 0 0 0 0 0 0 0 0

2 Buildings & Civil Works 123 110 99 89 80 72 65 59 53 48

3 Plant & Machinery                    

  -Imported 901 763 646 547 463 392 332 281 238 201

  - Indigenous 1211 1025 735 622 527 446 378 320 271 229

  Total Plant & Machinery 2111 1788 1381 1169 990 838 710 601 509 431

4 Furniture & Fixtures 10 8 7 6 5 4 3 2 2 2

5 Miscellaneous Fixed Assets 17 13 9 7 5 4 3 2 2 1

  TOTAL 2261 1919 1496 1271 1080 918 781 664 565 481

  NET BLOCK 12544 10625 9129 7858 6777 5859 5078 4414 3849 3368

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67
67
EXHIBIT-8.7
JBF Industries Limited
Income-Tax Statement
(Rs.Lacs)
Years of Operation
No. Particulars
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
1 Profit Before Tax 5134 5633 6199 6800 6962 7024 7024 7024 7024 7024
2 Add : SLM Depreciation 711 711 711 711 711 711 711 711 711 711
3 Less : WDV Depreciation 2261 1919 1496 1271 1080 918 781 664 565 481
4 Income / Loss 3584 4425 5414 6240 6593 6817 6954 7071 7170 7254
5 Unabsorbed Depreciation / Losses 0 0 0 0 0 0 0      
6 Gross Taxable Income 3584 4425 5414 6240 6593 6817 6954 7071 7170 7254
7 Deduction Under Section : 80 - IA 0 0 0 0 0 0 0 0 0 0
8 Net Taxable Income 3584 4425 5414 6240 6593 6817 6954 7071 7170 7254
9 Income Tax 1286 1588 1942 2239 2365 2446 2495 2537 2572 2603

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67
EXHIBIT-8.8
JBF Industries Limited
Profitability Statement
(Rs. In lakhs)
Year
Particulars
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Production/Sales                    
Installed Capacity (TPA) 216000 216000 216000 216000 216000 216000 216000 216000 216000 216000
Capacity Utilization (%) 85% 90% 95% 100% 100% 100% 100% 100% 100% 100%
Estimated Production / Sales 183600 194400 205200 216000 216000 216000 216000 216000 216000 216000
Gross Sale 102228 108242 114255 120269 120269 120269 120269 120269 120269 120269
Excise Duty 14100 14930 15759 16589 16589 16589 16589 16589 16589 16589
Net Sales 88128 93312 98496 103680 103680 103680 103680 103680 103680 103680
                     
Expenses                    
Raw Material Consumption 77215 81757 86299 90842 90842 90842 90842 90842 90842 90842
Consumables,Stores,etc 551 583 616 648 648 648 648 648 648 648
Power & Fuel 2020 2138 2257 2376 2376 2376 2376 2376 2376 2376
Packing Expenses 184 194 205 216 216 216 216 216 216 216
Employees Expenses 184 194 205 216 216 216 216 216 216 216
Depreciation 711 711 711 711 711 711 711 711 711 711
Repairs & Maintenance Exp. 309 309 309 309 309 309 309 309 309 309
Other Mfg. Expenses 367 389 410 432 432 432 432 432 432 432
Total Cost of Manufacture 81540 86277 91013 95750 95750 95750 95750 95750 95750 95750
                     
Gross Profit 6588 7035 7483 7930 7930 7930 7930 7930 7930 7930
Gross Profit Margin(%) 7.5% 7.5% 7.6% 7.6% 7.6% 7.6% 7.6% 7.6% 7.6% 7.6%
Administration Expenses 91.80 97.20 102.60 108.00 108.00 108.00 108.00 108.00 108.00 108.00
Selling Expenses 367.20 388.80 410.40 432.00 432.00 432.00 432.00 432.00 432.00 432.00

67
 (Rs. In lakhs)
Particulars Year
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Financial Charges                    
Long Term Borrowings 683.38 585.75 422.45 223.65 62.13          
Working Capital Interest 311.64 329.90 348.16 366.42 366.42 366.42 366.42 366.42 366.42 366.42
Total Financial Charges 995 916 771 590 429 366 366 366 366 366
                     
                     
Total Cost of Sales 82994 87679 92297 96880 96718 96656 96656 96656 96656 96656
                     
Net Profit Before Taxes 5134 5633 6199 6800 6962 7024 7024 7024 7024 7024
Tax on Profit 1286 1588 1942 2239 2365 2446 2495 2537 2572 2603
Net Profit After Taxes 3848 4046 4257 4561 4596 4578 4529 4487 4451 4421
Net Profit Margin (%) 4.37% 4.34% 4.32% 4.40% 4.43% 4.42% 4.37% 4.33% 4.29% 4.26%

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67
EXHIBIT-8.9
JBF Industries Limited
Cashflow Statement
(Rs.Lacs)
  Years of Operation
No. Particulars
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
  Sources of Funds :                      
1 Promoter's Contribution 6993                    
2 Deposits 0                    
3 Increase in Long Term Loan 10000                    
4 Increase in Working Capital Borrowing   2833 166 166 166 0 0 0 0 0 0
5 Depreciation   711 711 711 711 711 711 711 711 711 711
6 Net Profit Before Tax & Interest   6129 6549 6970 7390 7390 7390 7390 7390 7390 7390
  Sub- Total (A) 16993 9673 7426 7847 8267 8101 8101 8101 8101 8101 8101
  Disposition of Funds :                      
1 Capital Expenditure 14805                    
2 Increase in Current Assets   3541 208 208 208 0 0 0 0 0 0
3 Interest on Term Loan   683 586 422 224 62 0 0 0 0 0
4 Repayment of Long Term Loan   1000 2000 2800 2800 1400 0 0 0 0 0
5 Interest on Deposits   0 0 0 0 0 0 0 0 0 0
6 Repayment of Deposits   0 0 0 0 0 0 0 0 0 0
7 Interest on Working Capital   312 330 348 366 366 366 366 366 366 366
8 Income-Tax   1286 1588 1942 2239 2365 2446 2495 2537 2572 2603
9 Dividend                      
  Sub-Total (B) 14805 6822 4711 5721 5837 4194 2812 2862 2903 2939 2969
  A-B 2188 2851 2715 2126 2431 3907 5289 5240 5198 5162 5132
  Opening Cash Balance   2188 5039 7754 9880 12311 16218 21507 26747 31945 37107

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67
67
EXHIBIT-8.10
JBF Industries Limited
Projected Balance Sheet
(Rs. Lacs)
Year of Operation
Particulars
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Liabilities :                    
Share Capital 6993 6993 6993 6993 6993 6993 6993 6993 6993 6993
Reserves 3848 7893 12150 16711 21307 25885 30414 34901 39352 43774
Long Term Loan 9000 7000 4200 1400 0 0 0 0 0 0
Deposits 0 0 0 0 0 0 0      
Short Term Loan 2833 2999 3165 3331 3331 3331 3331 3331 3331 3331
Total Liabilities 22674 24886 26508 28436 31632 36210 40738 45225 49677 54098
                     
Assets :                    
Gross Fixed Assets 14805 14094 13383 12672 11961 11250 10539 9828 9117 8406
Less : Depreciation 711 711 711 711 711 711 711 711 711 711
Net Fixed Assets 14094 13383 12672 11961 11250 10539 9828 9117 8406 7694
Stocks                    
Debtors & Other Current Assets 3541 3749 3956 4164 4164 4164 4164 4164 4164 4164
Cash & Bank Balance 5039 7754 9880 12311 16218 21507 26747 31945 37107 42239
Profit & Loss Account                    
Total Assets 22,674 24,886 26,508 28,436 31,632 36,210 40,738 45,225 49,677 54,098

67
EXHIBIT-8.11
JBF Industries Limited
Debt-Service Coverage Ratio
(Rs.Lacs)
Year of Operation
Particulars
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Revenue 88128 93312 98496 103680 103680 103680 103680 103680 103680 103680
Profit Before Tax 5133.61 5633.50 6199.06 6800.13 6961.65 7023.78 7023.78 7023.78 7023.78 7023.78
Profit After Tax 3847.73 4045.68 4256.59 4561.20 4596.26 4577.99 4528.69 4486.85 4451.34 4421.18
LT Interest 683.38 585.75 422.45 223.65 62.13 0.00 0.00 0.00 0.00 0.00
Interest on Deposits 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Depreciation 711.05 711.05 711.05 711.05 711.05 711.05 711.05 711.05 711.05 711.05
LT Loan Repayment 1000.00 2000.00 2800.00 2800.00 1400.00 0.00 0.00 0.00 0.00 0.00
Deposit Repayment 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Return on Investment (%) 38% 41% 43% 46% 46% 46% 46% 46% 46% 46%
Debt-Service Coverage Ratio                    
- Debt Service 1683.38 2585.75 3222.45 3023.65 1462.13 0.00 0.00 0.00 0.00 0.00
- Coverage 5242.15 5342.48 5390.10 5495.90 5369.44 5289.04 5239.74 5197.91 5162.39 5132.23
DSCR 3.11 2.07 1.67 1.82 3.67          
Average DSCR 2.241                  

67
EXHIBIT-8.12
JBF Industries Limited
Pay Back Period & Internal Rate of Return
(Rs.Lacs)
Year of Operation
Particulars
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Cash Outflow 16993 0 0 88 0 0 0 0      
Cash Inflow 0 5242 5342 5390 5496 5369 5289 5240 5198 5162 5132
Net Cashflow -16993 5242 5342 5302 5496 5369 5289 5240 5198 5162 5132
Cumulative Cashflow -16993 -11751 -6409 -1106 4389 9759 15048 20288      
Payback Period 4.20 Years                  
Internal Rate of Return 29%                    

67
8.5 Sensitivity Analysis (CONCLUSION)
Various estimates of cost and revenue made in this report are on realistic side. Even though, a
contingency provision of 5% is made in the project cost. However, in every project there are certain
key factors and variables, which may affect the operating results. Sensitivity analysis identifies such
elements and their impact on the project.

Among several factors which have bearing on the proposed project viability, following factors have
the maximum uncertainty:

 PET Chips price

 Raw Material Price (PTA & MEG)

 Capacity Utilization Levels

 Project cost

 Capacity utilisation

With respect to above factors following adverse scenarios have been considered for evaluation:

Case 1 : 5 % Reduction in Selling Price

Case 2 : 5% Increase in Raw Material Cost

Case 3 : 10% Decrease in Capacity Utilization

Case 4 : 10% Increase in Project Cost

Results of sensitivity analysis are presented below:

5% Reduction 10%
5% Increase 10% Increase
Key Indicators Base Case in Selling Reduction in
in RM Price in Project Cost
Price Utilization
Gross Profit Margin 7.65% 3.03% 3.27% 7.58% 7.54%
Net Profit Margin 4.43% 1.46% 1.62% 4.40% 4.37%
Return on Investment
31.60% 13.03% 14.37% 29.28% 29.00%
(ROI)
Pay Back Period 4.2 8.11 7.51 4.43 4.48
IRR 28.72% 5.40% 7.48% 26.17% 25.71%
DSCR 2.24 1.00 1.10 2.26 2.03
From the sensitivity analysis, it is quite evident that the project is most sensitive to changes in PET
Selling, followed by changes in Raw Material Price, Capacity Utilisation and Project Cost.

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