16.

ESTIMATES OF COST OF PRODUCTION

The plant is operated for 330 days in one year.
1. Raw Materials Consumption Material -Picoline Oxygen Steam Sulfuric Acid kg per day 177.75 88.5 3 3 (Rs. / kg) 150 10 1 5 Cost Cost (lakhs/annum) 87.99 2.92 0.0099 0.050

Total Raw Materials Cost = Rs. 90.97 lakhs. 2. Utilities Consumption Material Steam Chilling water Cooling Water Dowtherm* Power kW-hr per year kg per day 11005.07 60001.24 37266.42 46737.02 175595.43 0.7 Rs/kg 20 Rs/m3 12 Rs/m3 100 Rs./kg 4 Rs/kW.hr Cost Cost (lakhs/annum) 25.42 3.96 1.48 0.23 7.02

Total Utilities Cost = Rs. 38.12 lakhs * Dowtherm is recycled. It is one time cost. Total life before replacement is assumed to be 1 years. 3. Catalyst Requirement Material V2O5 TiO2 kg 555.5 2530 3000 Rs/kg 250 Rs/kg Cost Cost (lakhs/annum) (Life = 3 years) 16.67 6.325

76

Total Catalyst Cost = 22.30 lakhs (Divided over 3 years) Catalyst cost = 7.7 lakhs/annum The various elements comprising the cost of production are as shown: Cost Component Variable Cost (V) 1. Raw Materials 2. 3. Utilities Catalyst Total V Fixed Cost (F) 1. Salaries and Wages 2. packaging 3. Factory Overheads 25.00 3.00 8.00 Cost in Rs. (lakhs)

90.97 38.12 7.70 136.8

Total F Cost of Production CP = (F + V) Gross Cost of Production, GP=(1.1xCP)

36.00 172.80 190.08

Gross Cost of Production, GP = Rs. 190.08 lakhs Annual Production of nicotinic acid = 66 Tons

Cost of Production per kg = GP / Annual Production Rate = 190.08 lakhs / 66 tons = Rs. 287.90 per kg

77