cost estimation

Cost Estimation

An acceptable plant design must present a process that is capable of operatingunder conditions which will yield a profit. Since Net Profit equals total income minus all expenses, it is essential that the Chemical Engineer be aware of the many different types of costs involved in manufacturing processes.

A Capital Investment is required for any industrial process and determination of the necessary investment is an important part of a plant design project. The total investment for anyprocess consists of Fixed Capital Investment for physical equipment and facilities in the plant plus working capital which must be available to pay salaries, keep raw materials and products onhand and handle other special items requiring a direct cash outlay. Thus in an analysis including income taxes must be taken into consideration.

This report includes a detailed estimation of Costs incurred in a Manufacturing Plantfor the production of Active Pharmaceutical Ingredients (API's) extracted from Natural PlantSources. A detailed list required (based on the current data) has been included in each sheet,

After successful addition or deletion of data in the sheets, a detailed spreadsheets, Profitability Analysis Reports can be obtained providing Average Net Profit, Pay Back Period,Rate of Return, Unit Product Cost.

All the amounts taken in the worksheets are in Rs.

making it feasible to add or delete data shown in "Yellow".

Cost Estimation

Estimation of Capital InvestmentA detailed estimate is carried out based on the current data available.

The Break down of Fixed Capital Investment items are detailed as follows.

1) Purchased Equipment

S. No. Equip. Name Nos. Price in Rs. S. No. Equip. Name Nos. Price in Rs.1 RE 1 654,300 24 SS304 Receiver 100lts 3 29,8362 RFE 1 570,000 25 SS304 Receiver 75lts 1 7,8523 WFE 1 458,010 26 SS304 Stand 1 9,1604 36" Centrifuge 1 274,806 27 MS ST 6.0KL 2 70,6645 24" Centrifuge 1 196,290 28 MS ST 500lts 2 25,5186 24" Centrifuge GMP 1 412,209 29 SS304 VTD 24 Trays 1 257,1397 SS316 Reactor 5.0KL 1 536,735 30 SS304 GMP VTD-24T 1 310,7938 SS304 Reactor 1.2KL 2 348,088 31 SS304 Multi Mill GMP 1 39,2589 SS304 Reactor 630lts 2 238,165 32 SS304 MM GMP R&D 1 22,900

10 SS304 Reactor 300lts 3 404,357 33 SS304 Candle Filters 2 26,17211 SS304 Reactor 150lts 1 117,774 34 SS304 Receiver 250lts 1 19,62912 SS304 ST 4.0KL 1 78,51613 SS304 HE 6m2 9 288,54614 SS304 ST 7.0KL 2 236,85715 SS304 ST 1.0KL 1 35,33216 SS304 ST 500lts 2 67,26217 SS304 Steam pan 150lts 1 20,93418 SS304 HE 10m2 1 52,34419 SS304 H Receiver 300lts 1 18,05920 SS304 P Tank 200lts 1 12,43221 SS304 Receiver 200lts 10 124,31722 SS304 HE 2m2 8 136,09523 SS304 ST 500lts 3 96,182

Total Cost of Purchased Equipment = 6,196,531

2) Purchased Equipment Installation

Installation of all equipments listed, structural supports, insulation, paint (Taken as 25% of the Purchased equipment cost) = 1549132.75

3) Instrumentation and Controls

S. No. Description Nos. Price in Rs. S. No. Description Nos. Price in Rs.1 Pressure Gauge 0-7kg/cm2 44 11,9182 Pressure Gauge 0-10kg/cm2 7 2,1843 Temp. Gauge 4-50 deg C 6 8,2064 Vacuum Gauge 0-760mm Hg 21 5,8975 Water Flow Switch 1 1,3526 U syphon & Cock 55 4,5767 Safety Valves 8 2,0808 Temp. Controller 3 8,4869 Temp. Indicator 8 38,896

10 PID Controller 1 18,25211 FLP Temp. Scanner 2 26,34312 2/2 Pheumatic P.O valve 4 62,400

Total Cost of Instrumentation and Controls = 190,590

4) Piping a) Process Piping

S. No. Description Nos. Price in Rs.1 MS Pipes (all sizes) 360 460,7892 SS Pipes (all sizes) 77.3 667,4623 PVC Pipes and Fittings Lumpsum 48,6274 GI Pipes 48 21,375

Total Cost of Process Piping = 1,198,253

b) Pipe Hangers, Fittings, Valves, Beams, Channels etc.

S. No. Description Nos. Price in Rs.1 H Beams, Channels, Angles, Checkered Plates etc. 16,550kgs 558,5632 MS Flanges E-type 1579 182,0473 MS Dummy/Blind Flanges E-type 85 12,9264 MS Short Bends 626 35,3255 MS Long Bends 40 1,5756 MS Threaded Nipples 282 17,9107 MS Ball Valve 172 135,4508 Gun Metal Steam Valves 25 33,7509 MS Ball Valve E-type 10 11,250

10 MS T 8 18011 MS Reducer 49 6,81812 MS GI Coated Nuts & Bolts 495kgs 21,71813 GI U Clamps 10kgs 22514 Spirax Steam Trap 3/4" 10 24,47015 Gun Metal Steam Traps 3/4" 12 27,00016 Anchor Bolts 170 1,53017 MS Couplings 146 1,80018 MS Foundation Bolts 16 1,04019 PVC Foot Valve 3" 3 50620 Packing Sheet Non Metallic 3mm thick 73.5kgs 5,37421 CI Butterfly Valves 17 37,80022 CI Y-Strainer E-type 9 16,87523 Non Return Valves (Vertical type) 15 15,70024 4'x6'x2.5mm thick MS Sheet 140kgs 3,93825 SS 316 S40 Short Bends 249 111,78726 SS 316 S40 Threaded Nipples 165 23,18627 SS 304 Flanges E-type 934 174,99428 SS 316 S40 T 52 7,05429 SS 304 Ball Valves E-type 6 31,50030 SS 304 Flush Bottom Valves 6 33,75031 SS 316 S40 Reducer 141 63,56232 SS 304 Couplings 10 56233 SS 304 Ball Valves 157 248,20034 SS 316 View Glass 22 34,20035 SS 304 Dummy Flanges E-type 49 7,62736 SS 316 Welding Rods ESAB 308 10 22,50037 GI Flat 25x6mm 477.8kgs 14,67538 Teflon Tape 100 3,15039 MS welding rods 1 20840 SANT C3 PRV Valve 40mm 1 14,62541 SANT Bronze PRV S/E 1" 1 12,37542 ESAB Tig Rod 16.30 SS316 35kgs 19,68743 CI Ball Valves 3/4" 16 9,00044 MS Dummy Plugs 3/8" 20 22545 GI T 60 1,96946 GI Long Bends 101 2,576

S. No. Description Nos. Price in Rs.47 GI Union 35 2,13748 GI Dummy Plugs 4 6749 GI Threaded Nipple 155 6,80650 Hold tite 500gms 11351 GI Coupling 48 94552 PDSPSA102A Float Trap 1" 4 27,00053 PDSPSA204A Y-type S/E Strainer 4 11,25054 14"x14" CI Man holes 10 7,87555 GI U Clamps Lumpsum 563

Total Cost of Pipe Hangers, Fittings, Valves, Beams, Channels etc. 2,047,938

c) Insulation - Piping, Equipment

S. No. Description Nos. Price in Rs.1 Mineral Wool 40bags 36,0002 GI Mesh 8 Rolls 4,5003 GI Wire 15kgs 5064 Sheet metal screws 10pkts 5635 Bitumen 85/25 110kgs 24,7506 GI Sheets 24gauge 109kgs 7,3577 Aluminium Coil 24gx3' 772kgs 156,3308 Thermocol Pipes 1500mts 135,000

Total cost of Insulation - 365,006

Total Cost of Piping including a, b, & c = 3,611,197

5) Electrical Equipment and Materials a) Electrical equipment - switches, motors, conduit, wire, fitting etc.,

S. No. Description Nos. Price in Rs.1 Panel Boards 5 281,2502 Electrical Access. In panel boards Lumpsum 112,5003 Lighting, lamps, tubes & Gen. Fitting Lumpsum 168,7504 FLP Light Fittings 10 56,2505 FLP RV lamps on-off switch type 12 60,7506 FLP Push button station on-off type 30 20,2507 Armoured Cable 4275mts 1,715,6258 FCG' well glass 2x25W FLP lights 2 2259 FCG make bulk head fitting 2 2,250

10 120x3mm copper flat 14.2kgs 79911 FLP Glands 200 3,93712 320 wire (Fine cab) 15coils 8,43813 Exhaust Fan (FLP) 3 15,75014 Fresh Air Fan (NFLP) 3 4,50015 Galvanized Perforated Cable Trays 125mts 45,00016 Nut Bolt Washers 320sets 33717 Zeuzer Pumps(2.0hp)(Double M.Seal 2 104,00018 CG 5.0HP Monobloc pumpset 6 124,80019 CG 7.5HP Monobloc pumpset 3 78,00020 CG 3.0HP Monobloc pumpset 2 35,36021 Twin screw pump 1.0HP (Tushaco) 1 89,27822 Twin screw pump 1.5HP (Tushaco) 1 89,27823 Kirloskar 3.0HP Monobloc pumpset 1 15,60024 CG 7.5HP FLP Motor 1 27,48025 CG 1.0HP FLP Motor 7 109,20026 CG 1.0HP NFLP Motor 4 54,08027 CG 2.0HP FLP Motor 2 41,60028 Centrifugal process pumps 1.0HP 11 28,60029 Centrifugal process pumps 2.0HP 2 6,24030 High Vacuum Pump 5.0HP 1 20,800

Total Cost of Electrical Equipment = 3,320,927

b) Electrical materials and labor

S. No. Description Nos. Price in Rs.1 Labor of Excavation Lumpsum 2,2502 Labor for Electrical wiring Lumpsum 112,500

Total Cost for Electrical Materials and labor = 114,750

Total Cost for Electrical Equipment and Materials including a and b = 3,435,677

6) Buildings (Including Services)

a) Process Buildings Total Price incurred in constructing Process Buildings = 4,000,000

b) Auxiliary Buildings Total Price incurred in Auxiliary buildings = 0

c) Maintenance Shops Total Price incurred in Maintenance Shops = 0

d) Building ServicesS.No. Description Nos. Price in Rs.

1 Plumbing work (labor charges) Lumpsum 15,0002 Air Handling Units (HVAC) 2 337,5003 Paint Material Lumpsum 10,9124 Labor charges for painting Lumpsum 20,000

= 383,412 Total cost for Building services

Total Cost for Buildings including a, b, c & d 4,383,412 =

7) Yard Improvements Site Development - site clearing, grading, roads, walkways etc.

S. No. Description Nos. Price in Rs.1 Site Clearing Lumpsum 10,0002 Roads Lumpsum 30,0003 Walkways Lumpsum 15,0004 Landscaping Lumpsum 15,000

Total Cost for Yard Improvements = 70,000

8) Service Facilitites a & b) Utilities and Facilities

S. No. Description Nos. Price in Rs.1 Borewell and Pumpset Lumpsum 50,0002 POLYSTOL HDPE tanks 2 10,1253 Distribution Transformer 400KVA 1 302,5504 24TR aircooled packaged chiller 1 489,3755 SS water jet vacuum system 5 84,3756 70KVA kirloskar make generator 1 168,7507 ELGI air cooled Air Compressor 1 22,5008 1.0HP monobloc vacuum pumps 2 16,8759 Heating bath and Accessories 1 33,750

10 Cold rooms with panels 2 587,65011 SS304 Pass box 2 45,00012 Cooling Towers 2 78,750

Total Cost of Utilities and Facilities = 1,889,700

c) Non Process Equipment

S. No. Description Nos. Price in Rs.1 FC 1800 FRP Fume Chamber and base 1 165,8772 Pharma Room Doors (Steel Doors) 2 47,2503 Doors and Windows Lumpsum 50,0004 Granite 3000sft 151,8755 Labor charges for laying granite 3000sft 54,0006 Glazed Tiles 2000sft 45,0007 Labor charges for laying tiles 2000sft 16,0008 Fire Extinguishers 3 33,7509 Miscellaneous Laboratory Equipment Lumpsum 225,000

10 Office furniture and equipment Lumpsum 33,750

Total Cost of Non Process Equipment = 822,502

d) Distribution and Packaging Already Included in Item No. 1 and 6 = 0

Total Cost of Service Facilities including a, b, c & d = 2,712,202

9) Land - Surveys and fees, Property cost

The cost of Land is taken as 4% of the Total Purchased Equipment cost = 247861.24

Total Direct Costs (D)

S. No. Description Grand Total in Rs.1 Purchased Equipment 6,196,5312 Purchased Equipment Installation 1549132.753 Instrumentation and Controls 190,5904 Piping 3,611,1975 Electrical Equipment and Materials 3,435,6776 Buildings (Including services) 4,383,4127 Yard Improvements 70,0008 Service Facilities 2,712,2029 Land 247861.24

Total Direct Costs (D) = 22,396,603

Indirect Costs

1) Engineering and Supervision

Total Engineering and Supervision cost is taken as 8% of the Total Direct Cost = 1791728.239

2) Construction Expenses

Total Construction Expenses cost is taken as 7% of the Total Direct Cost = 1567762.209

3) Contractor's Fee

Total Contractor's fee is taken as 5% of the Total Direct Cost = 1119830.15

4) Contingency

Total Contingency cost is taken as 8% of the Total Direct and Indirect cost = 2337036.834

Total Indirect Costs (I)

S.No. Description Grand Total in Rs.1 Engineering and Supervision 1791728.23922 Construction Expenses 1567762.20933 Contractor's Fee 1119830.14954 Contingency 2337036.83373913

Total Indirect Costs (I) = 6816357.43173913

Fixed Capital Investment (FCI), D + I = 29,212,960

Working Capital (WC), 15% of TCI = 5155228.30971867

Total Capital Investment (TCI) = 34368188.7314578

Spreadsheet for Estimation of Total Capital Investment

S. No. Description Cost in Rs. Cost in Rs. Cost in Rs.

Direct Costs

1 Purchased Equipment 6,196,531

2 Purchased Equipment Installation 1549132.75

3 Instrumentation and Controls 190,590

4 Piping 3,611,197

5 Electrical Equipment and Materials 3,435,677

6 Buildings (Including services) 4,383,412

7 Yard Improvements 70,000

8 Service Facilities 2,712,202

9 Land 247861.24

Total Direct Costs (D) 22,396,603

Indirect Costs

10 Engineering and Supervision 1791728.2392

11 Construction Expenses 1567762.2093

12 Contractors Fee 1119830.1495

13 Contingency 2337036.83373913

Total Indirect Costs (I) 6816357.43173913

Fixed Capital Investment (FCI), D + I 29,212,960

Working Capital (WC), 15% of TCI 5155228.30971867

Total Capital Investment (TCI) 34368188.7314578

Spreadsheet for Estimation of Total Product Cost

S. No. Description Cost in Rs. Cost in Rs. Cost in Rs.Manufacturing CostsDirect Production Costs

1 Raw Materials 112500002 Operating Labor 14040003 Operating Supervision 11640004 Power and Utilities 31560005 Maintenance and Repairs 185895.936 Operating Supplies 27884.38957 Laboratory Charges 2808008 Patents & Royalties 09 Catalysts and Solvents 5471250

Total Direct Production Costs 22939830.3195Fixed Charges

10 Depreciation 4513446.4232608711 Taxes 292129.60421739112 Insurance 292129.60421739113 Rent 0

Total Fixed Charges 5097705.63169565Plant Overhead Costs

14 Plant Overhead Costs 826168.779Total Plant Overhead Costs 826168.779Total Manufacturing Costs (M) 28863704.7301957General Expenses

15 Administrative Expenses 35100016 Distribution & Marketing Expenses 3246078.3033550717 Research & Development 018 Financing (Interest) 0

Total General Expenses (G) 3597078.30335507Total Product Cost, M + G 32460783.0335507

TOTAL PRODUCT COST

Determination of the necessary Capital Investment is only one part of a complete cost estimate. Anotherequally important part is the estimation of costs for operating the plant and selling the products. These costs

The Total Product Cost is calculated for the known production process, which can be produced in the aboveinstalled plant. This production process is basically related to the product of Active Pharmaceutical Ingredient(API) produced from the naturally occuring plants. The basic Raw Material for the process is Duboisia Leaves.

Basis1) The Total Product Cost is calculated based on the Annual Cost Basis2) Number of days working per year is taken as 300 days3) Plant is running in 3-shifts I.e. 24hrs per day4) Capacity of the plant per year of the API, in Kg = 2,400

Manufacturing Costs

1) Direct Production Costs a) Raw Materials

S. No. Description Quantity per annum, Kg Cost per unit in Rs. Total Annual cost in Rs.1 Duboisia Leaves 90,000 125 11250000

0000000

Total Cost of Raw Materials = 11250000

b) Operating Labor

S. No. Description No, Required Monthly Salary in Rs. Total Annual Salary in Rs.1 Skilled Labor 30 3000 10800002 Unskilled Labor 10 1500 1800003 Watch men 6 2000 144000

00000

1404000

can be grouped under the general heading of Total Product Cost

Total Cost of Operating Labor =

c) Operating Supervision

S. No. Description No, Required Monthly Salary in Rs. Total Annual Salary in Rs.1 In-charge 3 12000 4320002 Supervisor - Plant 6 7500 5400003 Supervisor - Stores 1 6500 780004 Supervisor - Maint. 1 9500 114000

0000000000

Total Cost of Operating Supervision = 1164000

d) Power and Utilities

S. No. Description No. of Units/year Cost / unit (in Rs.) Total Annual Cost in Rs.1 Steam 2,15,205Kg 6.97 15000002 Electricity 3,60,000KWH 4 14400003 Water 4,320m3 50 216000

3156000

e) Maintenance and Repairs (MR)

Annual cost of maintenance and Repairs is aausmed as 3% of the Total Equipment Cost = 185895.93

f) Operating Supplies

Annual cost of operating supplies is assumed as 15% of the Total cost of Maintenance and Repairs = 27884.3895

Total Annual Cost of Power and Utilities =

g) Laboratory Charges

Annual cost of laboratory charges is assumed as 20% of the Total cost of Operating Labor = 280800

h) Patents and Royalties

Annual cost of patents and royalties = 0

I) Catalysts and Solvents

S. No. Description Quantity per Annum Cost per Unit Total Annual Cost in Rs.1 Methanol, Lts 466,000 8 37280002 D.M.Water, Lts 120,000 1 1200003 Hydrochloric Acid, Lts 1,500 4.5 67504 Chloroform, Lts 78,000 15 11700005 Ammonia, Lts 4,000 7 280006 n-Butylbromide, Lts 7,500 25 1875007 Acetonitrile, Lts 7,500 18 1350008 Activated Charcoal, Kgs 300 60 180009 Hyflow, Kgs 6,500 12 78000

00000000

5471250

Total Annual Direct Production Cost

S. No. Description Total Annual Cost in Rs.1 Raw Materials 112500002 Operating Labor 14040003 Operating Supervision 11640004 Power and Utilities 31560005 Maintenance and Repairs 185895.936 Operating Supplies 27884.38957 Laboratory Charges 2808008 Patents & Royalties 09 Catalysts and Solvents 5471250

Total Direct Production Cost = 22939830.3195

Total Annual Cost of Catalysts and Solvents =

2) Fixed Charges a) Depreciation i) Annual cost of Depreciation for Machinery and Equipment is assumed as 10% of the Fixed Capital Investment = 2921296

ii) Annual cost of Depreciation for buildings is taken as 3% of the Initial Cost of buildings = 131502

iii) Annual cost of Depreciation for Instrumentation & Controls, piping, Electrical equipment and Materials is assumed as 5% of FCI = 1460648

b) Taxes

Annual property taxes for plant is assumed as 1% of the Fixed Capital Investment = 292130

c) Insurance

Annual cost of Insurance is assumed as 1% of the Fixed Capital Investment = 292130

d) Rent

Annual cost of Rent for Land and Buildings = 0

Total Annual Fixed Charges

S. No. Description Total Annual cost in Rs.1 Depreciation 4513446.423260872 Taxes 292129.6042173913 Insurance 292129.6042173914 Rent 0

Total Fixed Charges = 5097705.63169565

3) Plant Overhead Costs

Annual Plant Overhead Costs is assumed as 30% of the total cost of operating labor, supervision and maintenance = 826169

Total Manufacturing Costs (M)

S. No. Description Total Annual cost in Rs.1 Direct Production Cost 22939830.31952 Fixed Charges 5097705.631695653 Plant Overhead Costs 826168.779

Total Manufacturing Costs = 28863704.7301957

General Expenses

1) Administrative Expenses

Annual cost of Administrative expenses is assumed as 25% of the total cost of operating labor = 351000

2) Distribution and Marketing Expenses

Annual cost of Distribution & Marketing expenses is assumed as 10% of the Total Product Cost = 3246078

3) Research and Development

Annual cost of Research and Development = 0

4) Financing (interest)

Annual cost of Financing (interest) = 0

Total General Expenses (G)

S. No. Description Total Annual cost in Rs.1 Administrative Expenses 3510002 Distribution and Marketing Expenses 3246078.303355073 Research and Development 04 Financing (interest) 0

Total Cost of General Expenses = 3597078.30335507

Total Product Cost (TPC), M + G = 32460783.0335507

Profitability Analysis

To Calculate Profitability Analysis two methods have been employed.

Method 1 : Based on Fixed Known Selling Price of the Finished Product API at 75% Capacity

Method 2 : Based on Selling Price of the Finished Product API calculated at 100%, 75% & 50% Capacity.

Method - 1

Revenue Through sales

At present the market value of the Finished Product API manufactured under this facility per Kg = 50,000

Annual Revenue through sales at 75% capacity = 90000000

57539216.96645

Net Profit = Gross Profit x (1 - tax%)

Assuming tax percent = 20

Net Profit = 46031373.57316

Pay Back Period

Pay Back Period = Total Investment / ( Net Profit + Depreciation )

where Total Investment = Fixed Capital Investment

0.578 years

Rate of Return

Rate of Return = ( Net Profit / Total Investment ) x 100

Rate of Return = 158 %

Gross Profit = Annual Revenue through sales - Annual Operating Cost

Gross Profit =

Pay Back Period =

Method - 2

Product Unit Cost

The Total Product Cost estimated in the facility is, Rs. = 32460783.034 per year This amount should be compensated by the annual sales of the Product

The Unit Cost per Kg of the Finished Product API = 13525.33 per Kg

Pay Back Period

In order for the Total Investment to have low level of risk, the minimum acceptable return should be = 16 %

Pay Back Period = Depreciable Fixed Capital Investment / ((Average profit/yr) + (Average Depreciation/yr))

Depreciable Fixed Capital Investment = Sum of Sl.Nos. 1,3,4,5 & 6 of Spread Sheet No.1

= 17,817,407

Average Profit / Year = Minimum Acceptable return x Fixed Capital Investment

= 4674073.667

Average Depreciation / Year = FCI / Number of years (N)

where Number of years = 10

= 2921296.042

2.346 years

Selling Price for Different Plant Capacities

To estimate Selling Price (Rs/Kg) of the Finished Product API, average net profit is to be determined. A calculation table is prepared to perform this at 100%, 75% & 50% capacity.

Assumptions

Evaluation time (N) is taken as 10 years Salvage Values (Vs) are assumed as 0

Contd……

Pay Back Period =

Capacity for the First and Second year is taken as 50% and 75% respectively.

Profitability Analysis Contd….

Table 1 : Calculation Table for 100% Capacity

1 2 3 4 5 6 7 8 9 10 SumA. Capacity of the Plant % 50 75 100 100 100 100 100 100 100 100

B. Product Rate, tons/year 1.2 1.8 2.4 2.4 2.4 2.4 2.4 2.4 2.4 2.4 22.2

16.23 24.35 32.461 32.461 32.461 32.461 32.461 32.461 32.461 32.461 300.262

D. All Fixed Costs, (except5.008 5.008 5.0075 5.0075 5.0075 5.0075 5.0075 5.0075 5.0075 5.0075 50.0751

2.921 2.921 2.9213 2.9213 2.9213 2.9213 2.9213 2.9213 2.9213 2.9213 29.213

F. Total Product Cost (C+D+E) 24.16 32.27 40.39 40.39 40.39 40.39 40.39 40.39 40.39 40.39 379.55

(*) indicates, consider sum of costs from Sl.No. 11 to 18 of spreadsheet No.2

All Variable Costs = Product Rate x Unit Cost of Finished Product API per Kg

Depreciation is calculated as Straight Line Method as follows :

Where, d annual depreciation, Rs/year V = Original value of the property at start of the service life period, completely installed and

ready for use, Rs or FCI

N = Service life, years

C. All Variable Costs, (10)6 Rs/year

Depreciation), (10)6 Rs/year (*)

E. Depreciation, (10)6 Rs/year

(10)6 Rs/year

d = (V - Vs) / N

Vs = Salvage value of property at the end of service life, Rs



B. Product Rate, tons/year 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 18

24.35 24.35 24.346 24.346 24.346 24.346 24.346 24.346 24.346 24.346 243.456


2.921 2.921 2.9213 2.9213 2.9213 2.9213 2.9213 2.9213 2.9213 2.9213 29.213











(10)6 Rs/year

d = (V - Vs) / N




B. Product Rate, tons/year 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 12

16.23 16.23 16.23 16.23 16.23 16.23 16.23 16.23 16.23 16.23 162.304


2.921 2.921 2.9213 2.9213 2.9213 2.9213 2.9213 2.9213 2.9213 2.9213 29.213











(10)6 Rs/year

d = (V - Vs) / N


Where, p is the unit selling price N is the evaluation period tax % is taken as 20%

Pay Back Period = Fixed Capital Investment / (Average Net Profit + Average Depreciation)

Where, Pay Back Period = 2.35 years Average Depreciation = FCI / 10 = 2921296

22463.91

9531876

Average Net Profit (Np,ave) is calculated as

Np, ave = (1/N) x [p x Sum (B) - Sum (F)] (1 - tax%)

The Unit Selling Price of the Finished Product API at 100% capactiy is =

Therefore, Average Net Profit per year =




24549.57

9531876








30061.7

9531876

Table - 4 : Minimum Selling Price for different Plant Capacities

Plant Capacity % Minimum Selling Price (Rs/Kg)

100 22463.91

75 24549.57

50 30061.7





References :

1) Plant Design and Economics for Chemical Engineers, 5/e by Max S. Peters, University of Colorado, Klaus Timmerhaus, University of Colorado, Boulder, Ronald E. West, University of Colorado, Boulder.

2) Data Available from my Professional Experience in a Bulk Drug Pharmaceutical Industry

3) Chemical Engineering Resources, website, http://www.cheresources.com

4) Profitability Analysis, websit, http://odellion.com

Note :

1 USD = Rs.45.00 (Approx)

cost estimation

Documents