feasibility report - keralaports report on intermodal...the different sizes and dimensions of...

KITCO LTD. P.B.No.1820, M.G. Road, Ravipuram, Cochin – 682 016 August 2012

FEASIBILITY REPORT

ON

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Feasibility Report on Intermodal Container Manufacturing Unit

\\Linux\2012-13\DP-601\Container Manufacturing Unit\Final Report\Feasibility Report- Contents.docx

CONTENTS

CHAPTER NO.

TITLE

PAGE NO.

I INTRODUCTION 01

II RATIONALE FOR THE PROJECT 04

III TECHNICAL ASPECTS 11

IV PROJECT PARTICULARS 15

V COST OF PROJECT & MEANS OF FINANCE 32

VI FINANCIAL VIABILITY 37

VII CONCLUSION 41


\\linux\2012-13\DP-601\Container Manufacturing Unit\Final Report\Executive Summary.docx

EXECUTIVE SUMMARY

Name of Project Intermodal Container Manufacturing Unit

Project Details

Certified intermodal containers are an inevitable requirement

in safe and sound cargo movement across the world. The

demand supply mismatch, closeness of Kerala to busy sea

routes and Colombo port promises huge market for

containers. Completion of Panama Canal expansion by 2014

also will result in increased cargo movement between

continents and thereby causing more demand for containers.

The proposal comprises manufacturing of 20’, 40’ and 40’ High

Cube Containers.

Location About 20 ha Govt. land is available on lease in coastal area of Kasabha Beach, Pallam, Kasargod

Proposed Capacity 50000 TEU/Year

Period of Implementation

30 months

Financials

a Investment Rs 300.00 Crores

b Annual Turnover at 100 percent

capacity Rs 841.50 Crores

B Internal Rate of Return

22.04 %

c Payback period 5 year 8 months

Benefits Employment generation. Self Sufficiency. Foreign Exchange Earnings.


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CHAPTER ‐ I

INTRODUCTION

Many nations in the World have more than enough of a specific resource or product but

in contrary no country in the world has plenty of all the natural resources, climate or

geography to produce all the goods and food required by its population. Hence, the

international movement of goods has become inevitable. The movement of such goods

needs to be carried out either through land or water or air. Movement of goods through

Sea become more popular because of its convenience and cost effectiveness as

compared to other mode of transportation.

Containerization is the system of transportation of cargo in large units in intermodal

containers for minimizing the handling effort at various transfer points from one mode to

the other. The unitized transport system known as the containerization system has the

following advantages:

− Handling in large units and time saving

− Security against theft, pilferage of goods

− Containers available for carrying specific type of products like liquids, gas,

refrigerated products, etc

− Flexibility between different types of transports

− Multiple handling of the content in the container is eliminated

− Labour saving

− Little cargo damage.



The containerization system of transport in the sea trade comprise of mainly the

specialized container vessels and the containers for carrying goods. The containers are

provided by the shipping lines to the shippers, by ownership or through lease

arrangements.

The shipping container industry produces a lot of intermodal containers each and every

year. They are used to transport goods all over the world. About 180 million container

loads crisscross the oceans each year in about 5000 container ships. International

shipping of containerized commodities is indispensable for global trading firms to thrive

in the increasingly competitive economic environment. Intermodal shipping is a method

of transporting cargo using multiple modes of shipping from origin to destination,

without any handling of the freight itself while changing modes. Intermodal shipping

utilizes special containers or trailers which allow goods to be moved directly from one

mode of transportation to another without having to be repacked. Transportation modes

used in the intermodal shipping method include trucks, railroad and ocean carriers.

An intermodal container (also container, freight container, ISO container, shipping

container, hi‐cube container, box, conex box and sea can) is a standardized reusable

steel box used for the safe, efficient and secure storage and movement of materials and

products within a global containerized intermodal freight transport system. "Intermodal"

implies that the container can be moved from one mode of transport to another without

unloading and reloading the contents of the container. Lengths of containers, which each

have a unique ISO 6346 reporting mark, vary from 8‐foot (2.438 m) to 56‐foot (17.07 m)

and heights from 8‐foot (2.438 m) to 9 feet 6 inches (2.9 m). There are approximately

28.535 million TEU intermodal containers in the world of varying types to suit different

cargoes. Aggregate container capacity is often expressed in twenty‐foot equivalent

units (TEU / teu) which is a unit of capacity equal to one standard 20 × 8 ft (6.10 × 2.44 m)

(length × width) container.



Containers are either made of steel (the most common for maritime containers) or

aluminum (particularly for domestic) and their structure confers flexibility and hardiness.

The development of intermodal transportation and containerization are mutually

inclusive, self strengthening and rely of a set of driving forces linked with technology,

infrastructures and management. One of the initial issues was the one concerned with

the different sizes and dimensions of containers used by shipping lines, which was a

source of much confusion in compiling container shipping statistics. A lift could involve

different quantity since different box sizes were involved. This led to the establishment of

the standard unit of Twenty‐foot Equivalent Units (TEU).

Records state that, out of every 100 containers in the world, 97 are made in China. There

are only a few container manufacturers in India. But the number of Indian manufacturers

who produce ISO certified containers, used in the international trade, are negligibly

small. Their output capacity is also quite insignificant. In India the market is mainly

catered either by importing new containers from China or by revamping used containers.

The demand for containers arises mainly in the places where there is higher number of

containerized cargo exports as compared to containerized imports. As Kochi is an

international container transshipment port, where the export of containerized cargo is

higher than number of container imports and the growing demand for container in

movement of goods will support the establishment of container manufacturing unit(s) in

Kerala. It is in this background, the Directorate of Ports, Kerala, which administrates the

Non‐major ports under of Government of Kerala, came forward with the idea of

establishing a Container Manufacturing Unit in Kerala. If begun, being the only certified

container manufacturer in India, it can dominate the market and help in earning huge

revenue and saving of foreign exchange.



CHAPTER ‐ II

RATIONALE FOR THE PROJECT

2.1 PRESENT STATUS OF DEMAND SUPPLY MISMATCH

There has been an unexpected surge in the global demand for shipping containers since

2011 that has caught global investors and the shipping industry completely off‐guard. As

a result of this growth, the industry is experiencing the biggest shortage and rise in

demand, from the maritime sector; and it has created an incredible investment

opportunity; for retirement and high yield investors.

Carriers are warning that a shortage of container equipment could develop in the coming

months as container manufacturing fails to keep up with growing vessel slot capacity.

Based on Alphaliner estimates, the box‐inventory‐to‐vessel capacity ratio will drop to

1.99 by the end of this year from 2.03 in 2010. This is the lowest ratio on record. It lies

way below the 2.99 boxes per slot of 2000. The World Shipping Council (WSC) has

warned that reduced container production levels in 2009 and 2010 will affect the supply

of boxes. WSC added that when demand for boxes rises, so does the price. It said

shippers and carriers would need to employ better planning and forecasting to manage

their way through the shortage. The WSC noted that though around 3.5 million TEU in

new containers are delivered in 2011, this is still 1.8 million TEU fewer than what was

required by the worldwide container shipping lines in 2011.

Since the crash of international financial markets in 2009, more and more shipping lines

have come to rely upon leasing companies, for the containers needed to fulfill their

contractual obligations. In fact, the most recent figures suggest that container lessors



occupy a substantial portion of the total market coming under container industry.

Shipping companies understand that a container on lease is often costlier than

ownership, however this approach offers them more flexibility, reduces their overhead

and it has proven to be more cost effective; in the long run. Furthermore, the container

shortage has created an opportunity for shipping operators to establish long‐term

relationships with container investing and leasing companies. Reports, shows that the

worldwide container fleet, operating on lease, grew in both 2010 (8.8%) and 2011 (9%),

and is expected to continue to grow through 2015; at an expected rate of 7‐8% per

annum. Shipping containers are currently in high demand. With the completion of the

expansion of the Panama Canal by 2014 and due to the ever‐growing world economy,

there will be steady growth in demand.

A container manufacturing unit in Kerala may be a drop in the bucket when compared to

the Chinese container manufacturing giants. But it is still possible for the product to

capture market taking into account the exports business in India. Present container

lessors/shipping lines are making use of containers manufactured mainly from China.

Even the Indian shipping lines depends on Chinese containers because the Indian

manufacturers do not have adequate capacity to meet the requirement. Further, the

container through put statistics in Cochin Port shows that the export of containers is

higher than import.

International Container Transshipment Terminal (ICTT) at Vallarpadam, being the first

transshipment terminal in India, plays a key role in bringing about a change for the

benefit of trade and commerce in the country. Only the 1st phase of the terminal have

completed and started functioning.

The present capacity of the terminal is as shown in Table 2.1 given as follows.



Table 2.1:‐ Terminal Specifications – Phase 1A

Quay Length 600 meters

Terminal Size 40 Hectares

Depth Alongside 16 meters (MSL)

Max Draft 14.5 meters

Max LOA 350 meters

Capacity 1 Million TEU’s

Container Yard 2500 TEU Ground Slots

Rail Tracks 2

Reefer Points 450 Points (415 V,3 phase AC)

As per its records, this competed first phase of the terminal dealt with an import 15205

TEU and exports of about 15724 TEU per month which clearly shows that, there occurred

a demand of more than 500 TEU in a single month as an import‐export quantity

mismatch alone. At the final stage of this Terminal the expected Terminal capacity is as

given below in Table 2.2.

Table 2.2:‐ Terminal Specifications – Final

Quay Length 1800 meters

Terminal Size 115 Hectares

Depth Alongside 16 meters (MSL)

Max Draft 14.5 meters

Max LOA 350 meters

Capacity 4 Million TEU’s

Container Yard 15000 TEU Ground Slots

Rail Tracks 2

Reefer Points 450 Points (415 V,3 phase AC)



This shows that the handling capacity of the Terminal will become four times that the

phase 1A have. This means that the demand for containers also will increase, causing a

higher demand per month in the ICCT alone. Under such demands, usual suppliers of

containers are either from China or rarely from North India.

These market situations can be exploited by establishing a container manufacturing unit,

here in south India.

2.2 MARKET FOR INTERMODAL CONTAINERS

Containers are inevitable in transportation industry, because of which its manufacturing

unit possesses its own market influence. Containers are either bought by the shipping

lines or taken on lease for satisfying the goods transportation needs. So, manufacturer

can either sell their containers to the shipping lines or to leasing companies.

New containers have a market price of about Rs.2 to Rs.4 lakhs per container in India

whereas its market price at China ranges from about Rs. 1.5 to 2 lakhs. In India suppliers

sell used containers at rates that are almost equivalent to the rate of the new ones in the

country where it is manufactured. This alone shows a clear picture of how much profit a

local manufacturer can make and how easily the market can be captured, as local

production can offer better service as well as competitive prices than imported

containers.

Cochin, an all weather natural harbor is located strategically close to the busiest

international sea routes.



Image 2.1: Sea Routes

The major sea routes indicated above are:

1) Gulf to Singapore and Far East (Distance from Cochin Port ‐11 Nautical Miles)

2) Suez to Singapore / Far East (Distance from Cochin Port ‐74 Nautical Miles)

Amongst all major Indian ports, Cochin is the closest to the International East West

Shipping routes. This geo‐strategic location of Cochin gives it a distinct advantage in

keeping it a favorite location for container shipping lines. Presence of a manufacturing

unit in Kerala therefore will be an added advantage for existing as well as growing

shipping lines to do more business, as it cause less effort or delay in getting new certified

containers in the closest location.

In addition to the adding of containers to the shipping line fleet, replacement of existing

containers also happens each year. This is as indicated in Table 2.3 given as follows.



Table 2.3:‐ Growth & Replacement of Global Container TEU Fleet for 2005‐2011 &

Projected 2012‐2015

Year

Fleet Addition

(TEU)

Fleet

Replaced

(TEU)

Total

Output

(TEU)

End Year Fleet

Size(TEU)

2005 1450000 1150000 2600000 21415000

2006 1920000 1180000 3100000 23335000

2007 2900000 1350000 4250000 26235000

2008 1900000 1350000 3250000 28135000

2009 ‐1050000 1500000 450000 27085000

2010 550000 1450000 2000000 27635000

2011 1850000 1550000 3400000 29485000

Projected Profile

2012 2700000 1600000 4300000 32185000

2013 2750000 1650000 4400000 34935000

2014 2700000 1800000 4500000 37635000

2015 3000000 2000000 5000000 40635000

By 2012 end there arises a demand of about 1600000 TEU worth new containers, to

replace in the old fleet. The net requirement of containers in 2012 is projected to be

4300,000 TEU. This also indicates the huge demand of containers in the world market.

Leasing of containers also is a highly promising area that can ensure good returns. Most

of the shipping lines finds it non viable to invest money on buying containers, if they are

having less share in the world trade. Such companies will always look towards leasing

containers to meet their needs rather than investing money in buying containers. The

average life span of a container is 10 to 15 years depending on its level of usage and the

conditions it has been exposed to. A well maintained container not exposed to harsh



conditions can even have a lifespan up to 20 years. Thus leasing can ensure fixed income

for a greater period of time. By leasing the containers the manufacturing cost of

containers can be reimbursed within a few years. Leasing of containers provides an

added advantage that proper tracking of each and every container is possible. When a

company buys a container it will have to shop around for an agreement with a container

manager, to avoid the day‐to‐day managing and maintenance by themselves. Therefore,

more companies can be attracted towards leasing of containers, as it reduces the

tracking headache of the customer companies.



CHAPTER – III

TECHNICAL ASPECTS

3.1. TYPE OF CONTAINERS

The different types of containers are as given in Table3.1:

Table 3.1:‐ Types of Containers

VENTILATED CONTAINER 20'

Ideal for cargo requiring ventilation

BULK CONTAINER 20'

For bulk cargoes

TANK CONTAINER 20'

For transportation of liquid chemicals and food stuffs

DRY FREIGHT CONTAINER 20' and 40'

General purpose container

HIGH CUBE CONTAINER 40' and 45'

9'6" High ‐ For over height and voluminous cargo

OPEN TOP CONTAINER 20' and 40'

Removable tarpaulin for top loading of over height cargo

FLAT RACK 20' and 40'

For over width and heavy cargo

PLATFORM 20' and 40'

For extra length and heavy cargo



INSULATED CONTAINER 20' and 40'

For additional insulation of sensitive cargo

REEFER CONTAINER 20' and 40'

For cooling, freezing or heating of foods or chemicals

HIGH CUBE REEFER CONTAINER40' and 45'

9'6" High ‐ For over height and voluminous cargo requiring cooling or freezing

3.2. ISO STANDARD FOR CONTAINERS

In the early years of the shipping container industry many different sizes of containers

were in use. Because of the difference in sizes and design, the containers could not be

easily stacked or transferred from one mode of transport to another. In the late 1960s

and finally in 1970, significant strides were made to define standard terminology,

dimensions, corner fittings, markings and ratings. With the ISO Standardization the

freight delivery over long distances, even between continents, has now become easier

than ever.

The ISO 6346 standard establishes a visual identification system for every container that

includes a unique serial number, the owner, a country code, a size, type and equipment

category as well as any operational marks.

Each code comprises 4 capital letters (3 for the ‘owner code‘ and 1 as a ‘category

identifier‘ assigned by the owner) and 7 digits (6 assigned by the owner and a single

check digit). It is this unique 11 digit shipping container number which is required

for tracking.



There are 3 possible category identifiers:

• U – all freight containers

• J – detachable freight container‐related equipment

• Z – trailers and chassis

The standard is managed by the International Container Bureau (BIC). Hence the ISO

6346 standard is also known as a BIC code.

Freight can be moved between roads/rail and ships without being opened and this

system mean lower transport costs and greater possibilities for international trade.

All major shipping companies such as Maersk, OOCL, MSC, CMA CGM and CSAV provide

comprehensive international container tracking for customers.

3.3. MATERIAL FOR CONTAINERS

Containers are generally made using corrugated weathering steel. Weathering steel,

optimized through their alloying elements (copper, chromium, nickel and phosphorus), is

best‐known under the trademark COR‐TEN steel and sometimes written without the

hyphen as "Corten steel". It is a high strength, low alloy steel that protects itself from

corrosion by forming a protective oxide patina eliminating the need for painting or other

protective coatings. The corrosion rate of steel is so low that the containers fabricated

from the weathering steel can achieve long life spans with minimal maintenance.

Weathering steel is produced under license from the United States Steel Corporation

with the registered trade mark Cor‐Ten.



3.4. FACILITIES

The proposal is to develop state of the art facilities for Container manufacturing with an

annual capacity of 50,000 TEU. The unit will be capable of manufacturing steel containers

conforming to ISO standards and of size 20 and 40 feet (standard containers) as well as

40 feet High Cube containers.



CHAPTER – IV

PROJECT PARTICULARS

4.1 MANUFACTURING PROCESS

4.1.1. UNROLLING & CUTTING

Image 4.1:‐Unrolling of Rolls of Steel Sheets

Weathering Steel is available in the form of rolled sheets. This sheet is unrolled first and

cut into desired lengths using an Unrolling Machine together with Hydraulic Swing Beam

Shearing Mechanism.

4.1.2. SURFACE TREATMENT

Image 4.2:‐ Sandblasting & Priming



Steel sheets are then subjected to sandblasting and priming. By sandblasting, the

impurities present in the steel sheet are removed by using a jet of sand driven by

compressed air or steam. Then this sheet is coated with a layer of paint so as to keep it

protected from getting exposed to impurities later.

4.1.3. CORRUGATION

Image 4.3:‐ Corrugation of Sheets

Sheets are then corrugated to the shape required to form the side walls of the container.

This is done by using a special purpose Metal Sheet Forming Machine, set up with rollers

as dies that corrugates the sheets to the desired shape. Corrugating adds strength to the

sheets. These sheets are then accurately cut into desired width before proceeding to

assembly processes by Shear Cutting Machines.



4.1.4. FABRICATION OF ROOF PANELS

Image 4.4:‐ Roof Panels

Roof Panels are formed by passing the sandblasted, primed steel sheets through a

Hydraulic Press, using dies of required shape.

4.1.5. FABRICATION OF FLOOR BRACES

Image 4.5:‐ Floor Braces

In this step, the floor braces required are manufactured by using a Sheet Metal Bending

Machine so as to make it as a C‐section. Arrangement of these braces evenly in the floor

gives the container the strength to hold heavy loads.



4.1.6. DIFFERENT STAGES OF WELDING

Image 4.6:‐ Welding Wall Panels

This stage involves the fabrication of the wall panels by welding the metal sheets

sidewise by TIG welding. In this process sheets are welded together forming a 20 or 40

feet length as per the type of container required to manufacture.



Image 4.7:‐ Welding Square Tubing to the top of the wall

This step involves the use of different special purpose welding as well as material

handling machines. At first metal sheets are to be held in 90 degree using a special

purpose machine before performing the welding. Then a welder in a seat which has its

movement synchronized with the welding speed does the welding operation.



Image 4.8:‐ Floor Frame Assembly

In this step, floor braces are welded together so as to form the floor frame of the

container. This also involves the use of various special purpose machines to handle the

frame to facilitate accurate welding.



4.1.7. DOOR FRAME ASSEMBLY

Image 4.9:‐ Door Frame Assembly



Doors are made out of the corrugated steel sheets and are welded with supporting

frames on all sides. Then these doors are assembled with the Door frame with the help of

several special purpose machines.

4.1.8. INSTALLATION OF DOORS & WALLS ONTO FLOOR FRAME

Image 4.10:‐ Installation of Doors and Walls onto floor frame

In this step, door frames and Walls are assembled on the floor frame and are welded

together. In this stage also special purpose welding arrangements like, moving seat

synchronized with the welding speed are made use of to ensure efficient and uniform

welding.



4.1.9. INSTALLATION OF ROOF

Image 4.11:‐ Installation of Roof panel

In this stage, roof panel is brought to the top using material handling cranes and is spot

welded to the square block on wall tops initially. Then the roof is held tight against the

entire square block using another special purpose machine and is completely welded.

4.1.10. PRIMING

Image 4.12:‐ Priming

The container manufactured is then subjected to priming by giving it a coating as a base

before performing the painting. This process includes both manual and mechanical

works. Inner parts are primed by a human labour, while the outside by a machine.



4.1.11. PAINTING

Image 4.13:‐ Painting

In this process, the container is painted with colour to provide the look.

4.1.12. INSTALLING FLOOR PANELS & DOOR HARDWARE

Image 4.14(b):‐ Floor Panel& Door Hardware Installing



Floor panels are installed on the container in this step. The floor is usually made of steel

itself. The door hardware like locks and attachments are also installed during this step.

4.1.13. WATER PROOFING & CORROSION RESISTANCE

Image 4.15:‐ Waterproofing & Corrosion Resistance



In this step, the entire container is made leak proof. This process includes covering of the

leak prone areas with a particular resin coating and with rubber belts. Waterproofing is

also done at the bottom of the box.

4.1.14. WATERPROOF TESTING& FINAL INSPECTION

Image 4.16:‐ Waterproof Testing & Final Inspection

In this step, the manufactured container is made to pass through a test chamber in which

water is pumped onto the container from various directions at high force. This container

is then inspected by a team of experts to ensure that the container is waterproof and is

standard.



4.1.15. MATERIAL HANDLING SYSTEMS INVOLVED

Image 4.17:‐ Various material handling cranes used in different stages of manufacturing



Image 4.18:‐ Roller Table to move floor frames

Image 4.19:‐ Chain Conveyor to move containers after assembly

In the entire manufacturing unit different types of material handling devices are made

use of to ensure proper handling of each and every part without any delay time in

production. The entire processes performed within the plant is so well synchronized so as

to keep the delay time minimum and increase the efficiency as well as productivity of the

plant.



4.2 LAND

It is estimated that about 56,000‐square meter of land is required for setting up the

factory and warehouse; and about 66,000‐square meter area for the container storage

yard. The total area of the entire plant would be about 130,000‐square meter or around

13 ha.

4.3 PLANT AND MACHINERY

The plant and machinery involved is classified into five main sectors:‐

1. De‐coiling area where the steel coils were unrolled, sand‐blasted, cut and

corrugated.

2. Parts production area where the components for the shipping containers are cut

and formed.

3. Box line area, where the components are welded together

4. Surface finishing line area, where the container boxes are painted.

5. Finishing line area where the flooring is installed in the container boxes and the

container boxes are cleaned, water proofed, inspected and finished off.

Other machinery consists of material handling equipments like conveyors, EOT Cranes,

etc. The machinery also includes a Diesel Generator and its accessories as emergency

power supply.

4.4 ANNUAL SALES REVENUES

The production of containers from the unit at 100 percent capacity is 50,000 TEU per

annum with 40 percent each of 20 feet containers and 40 feet standard containers and



20 percent of 40 feet high cube containers. Containers with ISO certification are

presently selling at a rate of around Rs.2.60 lakhs for 20 feet standard containers, Rs.3.80

lakhs for 40 feet standard containers and Rs.4 lakhs for 40 feet High Cube Containers.

However, considering the highly competitive market, especially from Chinese companies,

a 25 percent discount in selling price has been considered for the project. Hence the

annual sales turnover at 100 percent capacity utilization is estimated to be Rs.841.50

Crores. The computation of annual sales turnover is given as Annexure No. I.

4.5 RAW MATERIAL AND CONSUMABLES

The raw materials required for the unit is Weathering Steel (Corten Steel) which has to be

imported. Generally about 2.4 MT is required for manufacturing a 20 feet container;

3.9MT for a 40 feet container; 4 MT for 40 feet High Cube Container. The quantity of

steel required for production for single day works out to 382MT (including 5% loss) to

produce about 170 TEU equivalent containers. Weathering Steel (Corten Steel) costs

around Rs.50,000/MT. The computation of cost of raw materials and consumables is

given as Annexure No. II.

4.7 UTILITIES

The connected load requirement of the manufacturing line and other facilities is

estimated to be 800 KVA. The annual power charges works out to Rs.1.60 Crores. The

cost of diesel works out to be Rs.0.16 Crores per annum. The annual cost of water

required for the project is Rs.0.38 Crores. The detailed computation of utilities is given as

Annexure No. III.



4.8 MANPOWER REQUIREMENT AND EMOLUMENTS

The manpower requirement of the centre is about 850 including 600 skilled workers. The

total cost of salaries and wages works out to Rs.36.52 Crores per annum.



CHAPTER ‐ V

COST OF PROJECT & MEANS OF FINANCE

5.1 COST OF PROJECT

The cost of project is estimated at Rs.300 Crores as detailed in Table No.4.1.

Table No.4.1: Cost of Project

Sl. No. Particulars Amount

(Rs. Crores)

1. Land On lease

2. Building & Civil Works 92.00

3. Machinery & Equipment 100.00

4. Electrification & Water Supply Works 10.00

5. Miscellaneous Fixed Assets 8.00

6. Contingency 10.50

7. Preliminary/Pre‐operative expenses 41.00

8. Margin money for working capital 38.50

Total 300.00



5.1.1. Land (On lease)

The unit requires a 130,000‐square meter of land (13 ha) for setting up the factory,

buildings, warehouse and storage yard. About 20 ha government land is available on

lease in coastal area at Kasabha beach, Pallam, Kasaragod. On the western side of the

land is Arabian Sea and the eastern side is Chandragiri River. The fishing harbor is also

near to it. The Kasaragod Railway station and N.H.17 are within 1.5 km from the

proposed land.

The nearest city and major Port is Mangalapuram which is about 50km from Kasaragod.

The raw material like weathering steel which is not manufactured in India can be

imported through Mangalapuram Port and brought to Kasaragod by road or rail.

5.1.2. Building & Civil Works

For the factory and warehouse building about 56,000‐square meter built up area is

required. The cost of these buildings including foundation, flooring, etc at the rate of

Rs.15,000 per square meter works out to Rs.84 Crores. For land development works like

clearing, internal road formation, landscaping, etc a provision of Rs.8 Crores has been

considered in the project cost. The total cost for buildings and civil works is estimated at

Rs.92 Crores.

5.1.3. Machinery and Equipment

The machinery and equipment include Unrolling machines, Hydraulic Swing Beam

Shearing Machines, Metal Sheet forming machines, Hydraulic presses, Sheet metal

bending machines, Welding Machines, Paint shop, Testing Facilities, etc. The total cost

envisaged under this head is projected at Rs.100 Crores.



5.1.4. Electrification & Water Supply Works

The electrification works include transformer, Panels, internal & external electrification

works, cabling, earthing, etc. A water supply system also has to be set up to meet the

requirements for manufacturing intermodal containers and also for domestic purposes.

The total cost of electrification and water supply works is estimated to be about Rs.10

Crores.

5.1.5. Miscellaneous Fixed Assets

The miscellaneous fixed assets which include fire detection and fighting system, air

conditioners, vehicle, forklifts, office equipments, furniture, computer, etc are expected

to cost Rs.8 Crores.

5.1.6. Contingency

In order to meet any unforeseen escalation in the cost of any of non firm fixed assets, a

contingency provision at rate of 5 percent of cost of fixed assets, amounting to Rs.10.50

Crores is included in the project cost.

5.1.7. Preliminary/Pre‐operative Expenses

The Preliminary and Pre‐operative expenses include cost for preparation of detailed

project reports, Statutory fees, Electricity deposit and connection charges, salary during

construction period, office expenses, travelling expenses, consultancy charges, interest

during construction period, etc.



In view of competitive environment and to achieve the projected orders for intermodal

containers, a marketing/publicity budget of Rs. 7 Crores has been provided under this

head.

The Preliminary and Pre‐operative expenses work out to Rs. 41 Crores.

5.1.8. Margin Money for Working Capital

The computation of working capital requirement is given in Annexure No. IV. Working

capital loan from financial institutions is envisaged for meeting a portion of the working

capital requirements. The Margin money for working capital requirement for the second

year of operation, i.e. Rs.38.50 Crores is considered in the project cost.

5.2 Means of Finance

The cost of the project of Rs.300 Crores is proposed to be financed as given below.

Table No.4.2: Means of Finance

Sl No.

Mode of Financing Amount

(Rs. Crores)

1 Promoter’s contribution as equity 100.00

2 Term Loan from Financial Institutions 200.00

TOTAL 300.00



5.2.1 Promoter’s Contribution

The promoter of the project is expected to bring one third of the project cost i.e. Rs. 100

Crores as equity.

5.2.2 Term Loan

For meeting the balance fund requirements, a term loan of Rs.200 Crores at an interest

rate of 14 percent will be availed from the financial institutions. The entire loan will be

repaid in a period of 10 years after a one year moratorium for principal repayment. The

schedule for repayment of term loan is given as Annexure No. V.



CHAPTER ‐ VI

FINANCIAL VIABILITY

6.1. COST OF PRODUCTION AND PROFITABILITY

A projected profitability statement for the first 10 years after the commencement of

production is attached as Annexure No. VI. The statement has been worked out on the

basis of the following assumptions.

1. The unit is expected to work for 300 days on a two‐shift basis.

2. The capacity utilization for the unit is 50 percent during the first year, 60 percent

during the second year and 70 percent from the third year onwards.

3. The selling prices and the cost of various inputs are based on prevailing market

rates.

4. Possible fluctuations in the selling price of products are not taken into

consideration. It is expected that any increase in the cost of raw materials,

consumables and packing materials will be offset by corresponding increase in the

sales revenue.

5. Raw materials is consumed at the rate of 382 MT per day (including 5% loss) and

the cost of raw materials has been taken as Rs.50000/MT and that of

consumables is worked out as 2 percent of raw material cost.



6. The total number of employees has been considered as 850. Among these 10

percent are managerial staff with an average monthly salary of Rs.70000 and the

remaining comes under worker category with an average monthly salary of

Rs.32000. Wages and salaries have been increased by 5 percent per annum to

provide for annual increment.

7. Repairs, maintenance and insurance are taken as 2 percent for first 5 years of the

cost of building and plant & machinery and as 3 percent of the same from sixth

year onwards.

8. In order to meet any unforeseen escalation in any of the direct expenses other

than raw materials and consumables, a contingency provision at the rate of 10

percent is included in the cost.

9. Depreciation is charged in the profitability statement under straight line method.

But for the purpose of computation of income tax, adequate adjustments have

been made in the computation so that depreciation is charged under the written

down value method. (Annexure No. VII).

10. Administrative overhead is worked out at 1 percent of the sales revenue.

11. Selling overhead is worked out at 2 percent of sales revenue.

12. Interest on working capital loan is worked out at 16 percent.

13. The rate of Income Tax is taken as 32.45 percent including surcharge and cess.

(Annexure No. VIII).



On the basis of the above assumptions, the gross income of the unit will increase from

Rs.420.75 Crores in the first year to Rs.504.90 Crores in the second year and to Rs.589.05

Crores from the third year onwards. The operations will generate a profit after tax of

Rs.18.95 Crores, Rs.34.98 Crores and Rs.45.73 Crores during the first, second and third

year of operation respectively.

6.2. BREAK‐EVEN ANALYSIS

The unit will break‐even at 42.55 percent of the installed capacity. Further, it will

generate cash surplus at any level above 35.94 percent of the installed capacity. The

detailed computation is attached in Annexure No. IX.

6.3. CASH FLOW STATEMENT

Cash flow statement for a period of 10 years on the basis of the above profitability

statement is furnished as Annexure No. X. The cash balance at the end of 10th year for

the project is Rs.346.32 Crores.

6.4. BALANCE SHEET

Balance Sheet for 10 years is attached as Annexure No. XI.

6.5. PAY BACK PERIOD

The Payback Period (non‐discounted) for the project is 5 years and 8 months. (Annexure

No. XII).



6.6. DEBT SERVICE COVERAGE RATIO

The average Debt Service Coverage Ratio (DSCR) for the project is 2, which is good. The

average Interest Coverage Ratio (ICR) is 6.33. Computation of DSCR & ICR is given as

Annexure No. XIII.

6.7. INTERNAL RATE OF RETURN

The Internal Rate of Return (IRR) for the project is computed to be 22.04 percent which is

good. Detailed computation is given in Annexure No. XIV.

Note: The above financials have been worked out without considering lease rent on the

land and hence is subjected to variation depending upon the extent of lease rent

required to be paid by the promoter to the land owner.



CHAPTER ‐ VII

CONCLUSION

As the world economy begins to bounce back, the subsequent rise in global production

has created a sharp increase in the demand for shipping containers, especially in the

maritime sector. As the current demand is exceeding the available supply, it has created

a favorable investment opportunity; for both experienced and novice investors.

For an intermodal container manufacturing unit, there needs to be sufficient production

capacity and the containers produced also should conform to International standards, so

as to get it registered among the international container fleet. Hence small scale

manufacturers will not be able to show their presence in this field. Absence of

manufacturers of weathering steel in India is also a hindrance. But, if the demand is high

enough, Indian steel companies like SAIL will be able to produce and supply weathering

steel economically.

With the prevailing demand supply gap in the industry, the manufacturing facility should

comprise of sophisticated systems with automation coupled with zero motion‐waste

policy producing 50,000 TEU equivalent containers per annum.

The preliminary study has revealed the potential of the venture and the established its

technical viability. The total project cost is estimated at Rs.300 Crores out of which

Rs. 100 Crores will be brought in as equity by the promoter and balance Rs.200 Crores

will be raised by the way of term loan from financial institutions. With this financing

model, the project has an Internal Return Rate of 22.04 percent and will break even at



42.55 percent of installed capacity. The average Debt Service Coverage Ratio for the

project is 2 while the non‐discounted Pay Back Period is 5 years, 8 months.

The project will provide direct employment to around 850 people. Apart from these,

there will be additional employment in the ancillary industries being set up to cater to

the requirements of the manufacturing unit.

The project is technically feasible and financially viable

.


\\Linux\2012-13\DP-601\Container Manufacturing Unit\Final Report\Annexure.docx

ANNEXURES

Annexure No-I

Sl. No.

Type No of containers produced per annum (Nos)

Rate/Container (Rs. Lakhs)

Annual Income

(R C )

Raw Materials

1 20' Container (Standard) - 1 TEU 20400 2.60 530.402 40' Container (Standard) - 2 TEU 10200 3.80 387.603 40' Container (High Cube) - 2 TEU 5100 4.00 204.00

Total 35700 1122.00

Total with 25% discount on Selling Price 841.50

FEASIBILITY REPORT ON INTERMODAL CONTAINER MANUFACTURING UNIT

Computation of Annual Revenues

Annexure No-II

Sl. No. Type

produced per annum

(Nos)

Material Required per

container (MT)

Material Required per annum (MT)

Rate/MT (Rs)

Annual Cost(Rs.

Crores)

Raw Materials

1 20' Container (Standard) - 1 TEU 20400 2.4 48960 50000 244.802 40' Container (Standard) - 2 TEU 10200 3.9 39780 50000 198.903 40' Container (High Cube) - 2 TE 5100 4.0 20400 50000 102.00

Total 35700 109140 545.70

Total cost of raw materials with 5% wastage 572.99

Total cost of consumables (2% of raw material cost) 11.46


Requirement of Raw Materials and Consumables

Annexure No-III

Sl No. Particulars

A PowerConnected Load (kW) 720Maximum Demand (kVA) 640Monthly Fixed Charge per kVA (Rs.) 300Fixed Charges per annum (Rs.Crores) 0.23

Variable Charge per unit including surcharge(Rs.) 4.10Capacity Utilisation 100%Projected Power Consumption per year 3348000Variable Charges per year (Rs.Crores) 1.37

Annual Power Charges (Rs. Crores) 1.60

B DieselOperation of DG set per day (hours) 0.50Fuel consumption per hour 230.00

Annual Diesel Charges (Rs.Crores) 0.16

C Water

Water requirement per day (kL) 500Water requirement per annum (kL) 150000Annual water charges @ Rs.25 per kL 0.38

Annual cost of utilities in Rs. Crores (A+B+C) 2.13


Computation of Cost of Utilities

Annexure No-IV

(Rs. Crores)Requir- Bank I year II Year III Year

Particulars ement Finance (Months) (%) Working Bank Margin Working Bank Margin Working Bank Margin

Capital Finance Money Capital Finance Money Capital Finance Money

Raw materials 1.00 60 23.87 14.32 9.55 28.65 17.19 11.46 33.42 20.05 13.37

Other materials 2.00 60 0.96 0.58 0.38 1.15 0.69 0.46 1.34 0.80 0.54

Work-in-progress 0.10 60 2.76 1.66 1.10 3.27 1.96 1.31 3.77 2.26 1.51

Finished goods 0.50 60 14.29 8.57 5.72 16.85 10.11 6.74 19.41 11.65 7.76

Receivables 1.00 60 34.89 20.93 13.96 41.86 25.12 16.74 48.84 29.30 19.54

Working expenses 1.00 60 4.22 2.53 1.69 4.47 2.68 1.79 4.73 2.84 1.89

Total 80.99 48.59 32.40 96.25 57.75 38.50 111.51 66.90 44.61


Computation of Working Capital and Margin Money Requirements

Annexure No-V

(Rs. Crores)

Opening Amount Closing Interest TotalYear Balance Repaid Balance 14.00 % Repayment

I 200.00 0.00 200.00 28.00 28.00

II 200.00 22.22 177.78 28.00 50.22

III 177.78 22.22 155.56 24.89 47.11

IV 155.56 22.22 133.34 21.78 44.00

V 133.34 22.22 111.12 18.67 40.89

VI 111.12 22.22 88.90 15.56 37.78

VII 88.90 22.22 66.68 12.45 34.67

VIII 66.68 22.22 44.46 9.34 31.56

IX 44.46 22.22 22.24 6.22 28.44

X 22.24 22.24 0.00 3.11 25.35


Repayment Schedule of Term Loan

Annexure No-VI

(Rs. Crores)

YearParticulars I II III IV V VI VII VIII IX X

No. of working days 300 300 300 300 300 300 300 300 300 300

No. of shifts 2 2 2 2 2 2 2 2 2 2

Capacity utilisation 50 60 70 70 70 70 70 70 70 70

A. INCOME Sales (A) 420.75 504.90 589.05 589.05 589.05 589.05 589.05 589.05 589.05 589.05

B. OPERATING COST Raw materials 286.49 343.79 401.09 401.09 401.09 401.09 401.09 401.09 401.09 401.09


Projected Profitability Statement

Consumables 5.73 6.88 8.02 8.02 8.02 8.02 8.02 8.02 8.02 8.02

Utilities 1.18 1.37 1.56 1.56 1.56 1.56 1.56 1.56 1.56 1.56

Rent (not considered) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Employee remuneration including 29.38 30.84 32.31 33.78 35.25 36.72 38.19 39.66 41.13 42.60benefits

Repairs, maintenance & insurance 5.19 5.19 5.19 5.19 5.19 7.79 7.79 7.79 7.79 7.79

Contingency 3.57 3.74 3.91 4.05 4.20 4.61 4.75 4.90 5.05 5.20

Depreciation 14.52 14.52 14.52 14.52 14.52 14.52 14.52 14.52 14.52 14.52

Total (B) 346.06 406.33 466.60 468.21 469.83 474.31 475.92 477.54 479.16 480.78

Annexure contd...

Annexure No-VIcond..

(Rs. Crores)


C. ADMINISTRATIVE EXPENSES Salary including benefits 7.14 7.50 7.86 8.22 8.58 8.94 9.30 9.66 10.02 10.38

Administrative overheads 4.21 5.05 5.89 5.89 5.89 5.89 5.89 5.89 5.89 5.89

Selling expenses 8.42 10.10 11.78 11.78 11.78 11.78 11.78 11.78 11.78 11.78Excise duty 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Total (C) 19.77 22.65 25.53 25.89 26.25 26.61 26.97 27.33 27.69 28.05

D. FINANCIAL EXPENSES Interest on term loan 28.00 28.00 24.89 21.78 18.67 15.56 12.45 9.34 6.22 3.11

Interest on working capital loan 7.77 9.24 10.70 10.70 10.70 10.70 10.70 10.70 10.70 10.70


Projected Profitability Statement

Total (D) 35.77 37.24 35.59 32.48 29.37 26.26 23.15 20.04 16.92 13.81

E. Total expenses (B+C+D) 401.60 466.22 527.72 526.58 525.45 527.18 526.04 524.91 523.77 522.64

F. Profit (A-E) 19.15 38.68 61.33 62.47 63.60 61.87 63.01 64.14 65.28 66.41

G. Preliminary expenses written-off 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20

H. Profit before tax (F-G) 18.95 38.48 61.13 62.27 63.40 61.67 62.81 63.94 65.08 66.21

I. Income tax 0.00 3.50 15.40 17.35 18.99 19.48 20.70 21.76 22.71 23.55

J. Profit after tax (H-I) 18.95 34.98 45.73 44.92 44.41 42.19 42.11 42.18 42.37 42.66

K. Withdrawal 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

L. Retained profit (J-K) 18.95 34.98 45.73 44.92 44.41 42.19 42.11 42.18 42.37 42.66

Annexure No-VII

(Rs. Crores)


Land 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Building & Civil Works Opening Balance 113.69 109.89 106.09 102.29 98.49 94.69 90.89 87.09 83.29 79.49Less: Depreciation 3.80 3.80 3.80 3.80 3.80 3.80 3.80 3.80 3.80 3.80Closing Balance 109.89 106.09 102.29 98.49 94.69 90.89 87.09 83.29 79.49 75.69

Plant & Machinery Opening Balance 123.56 114.39 105.22 96.05 86.88 77.71 68.54 59.37 50.20 41.03Less: Depreciation 9.17 9.17 9.17 9.17 9.17 9.17 9.17 9.17 9.17 9.17


Computation of Depreciation (Straight line method)

Closing Balance 114.39 105.22 96.05 86.88 77.71 68.54 59.37 50.20 41.03 31.86 Electrification, Water Supply, Etc. Opening Balance 12.36 11.44 10.52 9.60 8.68 7.76 6.84 5.92 5.00 4.08Less: Depreciation 0.92 0.92 0.92 0.92 0.92 0.92 0.92 0.92 0.92 0.92Closing Balance 11.44 10.52 9.60 8.68 7.76 6.84 5.92 5.00 4.08 3.16

Miscellaneous Fixed Assets Opening Balance 9.89 9.26 8.63 8.00 7.37 6.74 6.11 5.48 4.85 4.22Less: Depreciation 0.63 0.63 0.63 0.63 0.63 0.63 0.63 0.63 0.63 0.63Closing Balance 9.26 8.63 8.00 7.37 6.74 6.11 5.48 4.85 4.22 3.59

Summary Opening Balance 259.50 244.98 230.46 215.94 201.42 186.90 172.38 157.86 143.34 128.82Less: Depreciation 14.52 14.52 14.52 14.52 14.52 14.52 14.52 14.52 14.52 14.52Closing Balance 244.98 230.46 215.94 201.42 186.90 172.38 157.86 143.34 128.82 114.30

Annexure contd…

Annexure No-VIIContd...

(Rs. Crores)


Land 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Building & Civil Works Opening Balance 113.69 102.32 92.09 82.88 74.59 67.13 60.42 54.38 48.94 44.05Less: Depreciation 11.37 10.23 9.21 8.29 7.46 6.71 6.04 5.44 4.89 4.41Closing Balance 102.32 92.09 82.88 74.59 67.13 60.42 54.38 48.94 44.05 39.64

Plant & Machinery O i B l 123 56 97 77 77 37 61 22 48 44 38 33 30 33 24 00 18 99 15 03


Computation of Depreciation (WDVM)

Opening Balance 123.56 97.77 77.37 61.22 48.44 38.33 30.33 24.00 18.99 15.03Less: Depreciation 25.79 20.40 16.15 12.78 10.11 8.00 6.33 5.01 3.96 3.14Closing Balance 97.77 77.37 61.22 48.44 38.33 30.33 24.00 18.99 15.03 11.89 Electrification, Water Supply, Etc. Opening Balance 12.36 9.78 7.74 6.12 4.84 3.83 3.03 2.40 1.90 1.50Less: Depreciation 2.58 2.04 1.62 1.28 1.01 0.80 0.63 0.50 0.40 0.31Closing Balance 9.78 7.74 6.12 4.84 3.83 3.03 2.40 1.90 1.50 1.19

Miscellaneous Fixed Assets Opening Balance 9.89 8.10 6.63 5.43 4.45 3.64 2.98 2.44 2.00 1.64Less: Depreciation 1.79 1.47 1.20 0.98 0.81 0.66 0.54 0.44 0.36 0.30Closing Balance 8.10 6.63 5.43 4.45 3.64 2.98 2.44 2.00 1.64 1.34

Summary Opening Balance 259.50 217.97 183.83 155.65 132.32 112.93 96.76 83.22 71.83 62.22Less: Depreciation 41.53 34.14 28.18 23.33 19.39 16.17 13.54 11.39 9.61 8.16Closing Balance 217.97 183.83 155.65 132.32 112.93 96.76 83.22 71.83 62.22 54.06

Annexure No-VIII

(Rs. Crores)


A. GROSS TAXABLE PROFIT

1. Profit as per profitability statement 19.15 38.68 61.33 62.47 63.60 61.87 63.01 64.14 65.28 66.41

2. Add: depreciation under S/L method 14.52 14.52 14.52 14.52 14.52 14.52 14.52 14.52 14.52 14.52

3. Less: Depreciation under WDV method 41.53 34.14 28.18 23.33 19.39 16.17 13.54 11.39 9.61 8.16

4. Less: Preli. Expenses Written off 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20

5. Less: Unabsorbed Depreci. & losses 0.00 8.06 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Total (A) -8.06 10.80 47.47 53.46 58.53 60.02 63.79 67.07 69.99 72.57


Computation of Income Tax

B. DEDUCTIONS

1. Deduction u/s 80 HH 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

2. Deduction u/s 80 IA 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Total (B) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

C. Taxable profit (A-B) -8.06 10.80 47.47 53.46 58.53 60.02 63.79 67.07 69.99 72.57

D. Income Tax with surcharge & cess 0.00 3.50 15.40 17.35 18.99 19.48 20.70 21.76 22.71 23.55

F. Total 0.00 3.50 15.40 17.35 18.99 19.48 20.70 21.76 22.71 23.55

Annexure No-IX

(Based on III year's operation) (Rs. Crores)

A. CAPACITY UTILISATION 70 %

B. GROSS INCOME 589.05

C. VARIABLE EXPENESES

1. Raw materials 401.092. Consumables 8.023. Utilities 1.564. Interest on working capital loan 10.705. Selling expenses 11.786. Excise duty 0.00 433.15

D. CONTRIBUTION (B-C) 155.90

E. CASH FIXED OVERHEADS

1. Employee remuneration 32.312 Repairs maintenance & insurance 5 19


Computation of Break even Level of Operation

2. Repairs, maintenance & insurance 5.193. Rent 0.004. Contingency 3.915. Salary 7.866. Administrative overheads 5.897. Interest on term loan 24.89 80.05

F. NON-CASH FIXED OVERHEADS1. Depreciation 14.522. Preliminary expenses written-off 0.20 14.72

G. TOTAL FIXED OVERHEADS (E+F) 94.77

H. BREAK EVEN POINT = [Total Fixed Overheads/(Contribution/Capacity)] 42.55 %

I. CASH BREAK EVEN POINT = [Cash Fixed Overheads/(Contribution/Capacity) 35.94 %

Annexure No-X

(Rs. Crores)

Pre-op- YearParticulars erative I II III IV V VI VII VIII IX X

period

A. SOURCE OF FUNDS Profit before tax & preliminary 0.00 19.15 38.68 61.33 62.47 63.60 61.87 63.01 64.14 65.28 66.41

Add: Depreciation (SL) 0.00 14.52 14.52 14.52 14.52 14.52 14.52 14.52 14.52 14.52 14.52

Add: Interest on term loan 0.00 28.00 28.00 24.89 21.78 18.67 15.56 12.45 9.34 6.22 3.11

Total generation of funds 0.00 61.67 81.20 100.74 98.77 96.79 91.95 89.98 88.00 86.02 84.04

Equity capital 100.00

Term loan 200.00


Projected Cash Flow Statement

Government Grant 0.00

Increase in working capital loan 48.59 9.16 9.15

Total (A) 300.00 110.26 90.36 109.89 98.77 96.79 91.95 89.98 88.00 86.02 84.04

Annexure contd...

Annexure No-XContd...

(Rs. Crores)


period

B. APPLICATION OF FUNDS Fixed assets 220.50

Preli./Pre-operative expenses 41.00

Increase in working capital 76.77 15.01 15.00

Repayment of term loan 0.00 22.22 22.22 22.22 22.22 22.22 22.22 22.22 22.22 22.24

Interest on term loan 28.00 28.00 24.89 21.78 18.67 15.56 12.45 9.34 6.22 3.11

Income tax 0.00 3.50 15.40 17.35 18.99 19.48 20.70 21.76 22.71 23.55


Projected Cash Flow Statement

Dividend/Withdrawal 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Total (B) 261.50 104.77 68.73 77.51 61.35 59.88 57.26 55.37 53.32 51.15 48.90

Opening balance 0.00 38.50 43.99 65.62 98.00 135.42 172.33 207.02 241.63 276.31 311.18

Difference (A-B) 38.50 5.49 21.63 32.38 37.42 36.91 34.69 34.61 34.68 34.87 35.14

Closing balance 38.50 43.99 65.62 98.00 135.42 172.33 207.02 241.63 276.31 311.18 346.32

Annexure No-XI

(Rs. Crores)


A. FIXED ASSETS Gross block 259.50 244.98 230.46 215.94 201.42 186.90 172.38 157.86 143.34 128.82

Less: Depreciation 14.52 14.52 14.52 14.52 14.52 14.52 14.52 14.52 14.52 14.52

Net block (A) 244.98 230.46 215.94 201.42 186.90 172.38 157.86 143.34 128.82 114.30

B. CURRENT ASSETS Inventory of raw materials 24.83 29.80 34.76 34.76 34.76 34.76 34.76 34.76 34.76 34.76 & consumables


Projected Balance Sheet

Work-in-progress 2.76 3.27 3.77 3.77 3.77 3.77 3.77 3.77 3.77 3.77

Finished goods 14.29 16.85 19.41 19.41 19.41 19.41 19.41 19.41 19.41 19.41

Receivables 34.89 41.86 48.84 48.84 48.84 48.84 48.84 48.84 48.84 48.84

Cash & bank balance 43.99 65.62 98.00 135.42 172.33 207.02 241.63 276.31 311.18 346.32

Total (B) 120.76 157.40 204.78 242.20 279.11 313.80 348.41 383.09 417.96 453.10

C. CURRENT LIABILITIES Working capital (C) 48.59 57.75 66.90 66.90 66.90 66.90 66.90 66.90 66.90 66.90

D. NET WORKING CAPITAL 72.17 99.65 137.88 175.30 212.21 246.90 281.51 316.19 351.06 386.20 (B-C)

Annexure contd...

Annexure No-XIContd...

(Rs. Crores)


E. Net operating assets 317.15 330.11 353.82 376.72 399.11 419.28 439.37 459.53 479.88 500.50 (A+B-C)F. Investments 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

G. Net tangible assets 317.15 330.11 353.82 376.72 399.11 419.28 439.37 459.53 479.88 500.50

H. Long term loan 200.00 177.78 155.56 133.34 111.12 88.90 66.68 44.46 22.24 0.00

I. Net worth (G-H) 117.15 152.33 198.26 243.38 287.99 330.38 372.69 415.07 457.64 500.50

Evidenced By


Projected Balance Sheet

J. Promoter's capital 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

K. Subsidy 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

L. Reserves and surplus 18.95 53.93 99.66 144.58 188.99 231.18 273.29 315.47 357.84 400.50

M. Total 118.95 153.93 199.66 244.58 288.99 331.18 373.29 415.47 457.84 500.50

N. Preliminary expenses 1.80 1.60 1.40 1.20 1.00 0.80 0.60 0.40 0.20 0.00 not written-off

O. Net worth (M-N) 117.15 152.33 198.26 243.38 287.99 330.38 372.69 415.07 457.64 500.50

Annexure No-XII

(Rs. Crores)


period

Profit after tax 0.00 18.95 34.98 45.73 44.92 44.41 42.19 42.11 42.18 42.37 42.66

Non Cash Expenses

Depreciation (SL) 0.00 14.52 14.52 14.52 14.52 14.52 14.52 14.52 14.52 14.52 14.52

Preliminary expenses written off 0.00 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20

Total non cash expenses 0.00 14.72 14.72 14.72 14.72 14.72 14.72 14.72 14.72 14.72 14.72

Total inflow 0.00 33.67 49.70 60.45 59.64 59.13 56.91 56.83 56.90 57.09 57.38

Total project cost 300.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00


Computation of Pay Back Period

Balance -300.00 -266.33 -216.63 -156.18 -96.54 -37.41 19.50 76.33 133.23 190.32 247.70

Pay back period

PAY BACK PERIOD = 5 Years, 8 Months

Annexure No-XIII

(Rs. Crores)

YearParticlars I II III IV V VI VII VIII IX X

A. 1. Profit after tax 18.95 34.98 45.73 44.92 44.41 42.19 42.11 42.18 42.37 42.66 2. Interest on term loan 28.00 28.00 24.89 21.78 18.67 15.56 12.45 9.34 6.22 3.11

3. Non-cash expenses 14.72 14.72 14.72 14.72 14.72 14.72 14.72 14.72 14.72 14.72

Total (A) 61.67 77.70 85.34 81.42 77.80 72.47 69.28 66.24 63.31 60.49

B. 1. Interest on term loan 28.00 28.00 24.89 21.78 18.67 15.56 12.45 9.34 6.22 3.11

2. Principal repayment 0.00 22.22 22.22 22.22 22.22 22.22 22.22 22.22 22.22 22.24

Total (B) 28.00 50.22 47.11 44.00 40.89 37.78 34.67 31.56 28.44 25.35

C. 1. Interest coverage ratio (A/B1) 2.20 2.78 3.43 3.74 4.17 4.66 5.56 7.09 10.18 19.45 Average ICR 6.33

2. Debt service coverage ratio (A/B) 2.20 1.55 1.81 1.85 1.90 1.92 2.00 2.10 2.23 2.39 Average DSCR 2.00


Computation of Coverage Ratios

Annexure No-XIV

(Rs. Crores)

Year Cash Cash Net Discounting Discounted Discounting DiscountedInflow Outflow Flow Factor Value Factor Value

22.00 23.00

0 261.50 -261.50 1.00 -261.50 1.00 -261.501 61.67 32.40 29.27 0.82 24.00 0.81 23.712 77.70 6.10 71.60 0.67 47.97 0.66 47.263 85.34 6.11 79.23 0.55 43.58 0.54 42.784 81.42 81.42 0.45 36.64 0.44 35.825 77.80 77.80 0.37 28.79 0.36 28.016 72.47 72.47 0.30 21.74 0.29 21.027 69.28 69.28 0.25 17.32 0.23 15.938 66.24 66.24 0.20 13.25 0.19 12.599 63.31 63.31 0.17 10.76 0.16 10.13

10 60.49 -66.66 127.15 0.14 17.80 0.13 16.53

0.35 -7.72

Computation of Internal Rate of Return


Internal Rate of Return (IRR) = 22.04 %

KITCO Ltd.Registered Office P.B.No. 1820, Ravipuram, M.G. Road

Cochin - 682 016.Telephone : (91-484) 2357437 / 2357699 / 4129000/ 2357478 (CMD)

Facsimile : (91-484) 2357687Telegram : CONSULTUS

E-mail : [email protected] site : www.kitco.in

Regional Office �� Old No.59, New No.8,S-Block, 20th Street,Annanagar,CHENNAI - 600 040Telephone : (044) 26220074/75Fax:(044) 26220075

Branch Offices �� TC No.14/733, Nandavanam Road, Palayam, Vikas Bhavan,TRIVANDRUM - 695 033.Telephone /Fax: (0471) 2328956E-mail: [email protected]

�� KITCO Placement ParkATC Building, 2nd FloorMooleppadam Nagar Road,Opp. Govt. Polytechnic College, HMT Jn.,Kalamassery, Kochi 683 104Telephone : (0484) 6453444/2550072Fax : (0484) 2550072E-mail : [email protected]/[email protected]

[email protected]

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