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PRODUCTS AND CAPACITY PLAN: The project under ref. is for setting up a New greenfield Unit having 1 Line for Disposable nonwoven products from Airlay line and,1 Line for heavier Geotextiles from geotex/Needle punching line. The key assumptions for planning a practical and Viable project for above ,are: The unit is based on Imported plant from Europe,under 5% concessional import duty. The Unit will be working for 360 days x 3shifts per year.However, the % capacity utilisation will be 65% in 1st year and, at 75% Optimum from 3 rd year onwards. The project would be financed with Debt-Equity ratio of 3 to 1,as per TUF guidelines;and will be eligible for Interest rebate of 5% under TUF scheme.As such the Net effective term loan interest rate would be bank PLR less 5%. Also,the Unit will be eligible for 10% capital subsidy on Plant & mcy for tech tex processes. This will help bring down promoters own capital. The project will be based on prime input and raw material,of 100% Polyester fiber. The project would have Power consumption of abt 2.5MW,sourced from SEB grid. PRODUCT AND CAPACITY PLAN, PORPOSED FOR THE INTEGRATED UNIT IS AS: A] GEO TEXTILE PRODUCTS,Needle punched 22 Ton/day B] AIRLAY WEB PRODUCTS, 24 TOTAL OUTPUT AT 100% CAPACITY, IS 360X 46 TON/YEAR, WHICH EQUALS.46
Ex-Mill SALE PRICES ASSUMED ARE Rs 110/Kg for Type A,and at Rs 150/kg for Type B,which leads to an Yearly Sale turnover of Rs 160 crore, at Optimum 75% capacity for the new greenfield Unit. UNLIKE NORMAL TEXTILE UNIT A TECHTEX PROJECT HAS BETTER T/OVER TO CAPEX RATIO,1.5 to 1
TOTAL PROJECT COST: Rs 101 crore The overall Investment for the new Techtex project works out to a cost effective Rs 2.2 Cr/TPD,based on state of the art technology,and Imported plant being 60% of Total.
DEBT, by way of bank term loan, at Rs 75 crore. A rebate of 5% on the bank Term loan will be available under the TUF scheme. EQUITY PART, AT 25% OF PROJECT COST, WORKS OUT TO Rs 26 crore. However,with capital Subsidy of abt Rs 5 cr.,the promoter share will be Rs 21 cr.
When the interest rebate of 5% ,under the TUF scheme, is applied the cash profit of the project further improves. Also, the project is able to deliver a pay back of 1+ 5 years; and a healthy Return on equity at 40% on the new profit.
Total cost of all materials works out to 65% of sales,at Opt. capacity. This leads to a healthy Gross margin[ or G P ] of 21% for the project. G P to sale ratio is essentially called PBIDT ;and indicator of comparative Financial health of Units of same capacity and same product lines.
A Summary of all major manufacturing costs is provided ,as below, for the Optimum plant capacity at 75%. A reasonable RM to sale ratio of % leads to healthy Gross Profit to Sale ratio of 21%. A] Raw materials cost: Rs 106 crore, for direct + indirect materials And Rs 3.5 crore for inward and outward freight costs. B] Utility cost Covers the power and fuel expenses at the Opt. capacity. 1. Power cost ,at Rs 6 crore p.a 2. Steam cost,at Rs 2 crore p.a C] Manpower cost,incl. Salaries : 1.Total Manpower requirement for production will be 140 no/day 2.The yearly manpower cost ,incl. admn. Staff and benefits, works out to Rs 2.10 crore D] Manufacturing overheads incl. repair,insurance etc 1. The cost of various Factory overheads is est.at Rs 2 crore,including maintenance etc. E] TOTAL PRODUCTION COST [ i.e Cost before Sale], works out to Rs 125 crore,and which leads to the Gross Profit margin of 21% after allowing 3% sale expenses.
DSCR of 1.76
2. The break even Point, will be at 55-56%, in Optimum working Year 3. 3. The project will lead to IRR of 15%; and a Return on equity of 40% on net profit. A. B. C. Under the prevailing cost of all inputs,and market value of output, the project is profitable and viable with healthy and robust financial ratios.However, like all textile units the Tech tex project is also v. sensitive to change sin raw materials and selling prices. It is,thus, imperative to constantly monitor the RM and sale prices ,to retain GP profits. Tech tex projects are technology and capital intensive.Thus ,5% interest concession under TUF,with capital Subsidy, is a helpful incentive to make indian units investmentcompetitive.
-and Thanking
you.
Tech tex is still a nascent and emerging field,and Needs careful assessment of `most relevant` technology mix and saleable products with focus on industry to industry marketing strategy. Project promoters need to clearly understand the grey areas in the marketing of tech textiles,as also the impact of cheaper imports form China in near future,esp. in Disposable nonwoven products. Technical textile are `Functional` products for specific performance end use and,need to be engineered with right mix of technology, and Fibers to service the very specific end uses.
At policy level, it will be desirable to promote Tech tex projects, with lower technology and investment needs, under SME sector.