PROJECT FOR POLYPROPYLENE (PP) YARN( A )

Project to Manufacture Polypropylene Yarn from PP Chips

I COST OF PLANT & MACHINERY

One Ton Capacity per Day per Machine (Complete Unit)

Minimum 6 Units x 60Lakhs/Unit = 360 Lakhs or 3.6Crore (Say)

Raw Material required for One Month

6 Ton x 25 Days = 150 Ton

(Per Day)

A Cost of Raw Material

150 Ton x Rs 40,000/- (Per Ton) = Rs. 60Lakhs

B Labour & Other Processing Charges = Rs 15,000/- (Per Ton) i.e.

150 Ton x Rs 15,000/-(Per Ton) = 22, 50,000/- or 23 Lakhs (Approx)

(A + B) Total Cost Price for 150 Ton = 60 Lakhs + 23 Lakhs = 83 Lakhs

Wastage 5% means 150 Ton – 7.5 Ton = 142.5 or 142 Ton (Fresh Yarn
Available)

Sale Price:

142 Ton x Rs80, 000/- (Per Ton) = Rs1, 13, 60,000/-

Net. Profit:

1, 13, 60,000/- - 83, 00,000/- = 30, 60,000/- or 30 Lakhs (Approx)

II

Working Capital Required for 4 Months Stock:

A x 4 i.e. 60 Lakhs x 4 = 240Lakhs

Total Capital for Plant:

I + II i.e. 360lakhs + 240 Lakhs = 600Lakhs or 6 Crore

Percent Profit of Working Capital per Month:

30,60,000 x 100 = 36.8%

83, 00,000

36.8% of Profit is here if calculated on behalf of One Month Working

Capital & One Month Profit. But Capital required will be Machine Cost +
4 month Raw material in Advance stock i.e.

Total Investment on Machines + Raw material for 4 Months:

360 Lakhs + 240 Lakhs = 600Lakhs

Profit for One Month = 30 Lakhs

Percent Profit on Total Investment (Plant + Raw Material For One Month)

= 30 x 100= 5 %
600

NOTE:

Small Plant requires 6 Crores.

Size of Plant & Working Capital can be increases as per Funds available
i.e.

4 Times Capital: 600Lakhs x 4 = 2400Lakhs

Profit/ Month = 30 x 4 = 120 Lakhs or 1.2Crores