DETAILED PROJECT REPORT

OF

SS INDUSTRIES

Prepared By GSK & CO., Chartered Accountants

32

INDEX OF THE REPORT

1. COMPANY INTRODUCTION AND EXECUTIVE SUMMARY 03

2. KEY MANAGEMENT PERSONELL

06

3. PVC PRODUCTS AND ITS PROCESS 08

4. RAWMATERLAS AND UTILITIES

15

5. LAND AND SITE DEVELOPMENT LOCATIONS 16

6. PROJECT MEANS AND FINANCE 17

7. APPROVALS REQUIRED 19

8. SCHEDULE OF IMPLEMENTATION 20

9. FINANCIAL STATEMENTS AND VIABILITY 21

10. PROJECT ECONOMIES 25

11. SWOT ANALYSIS

28

12. MARKETING AND WORKORDERS 29

32

13. SUPPLIERS LIST 30

14. CONCLUSION 31

1.COMPANY INTRODUTION AND THE EXECUTIVE SUMMARY

SS INDUSTRIES, is a partnership firm having registered under the partnership

act , on the date of 20th April 2015, having its register office at Flat no , 5 th Floor

, Bharani Classic Apartments, Hakeemabad Colony , Chintalakunta , L B Nagar ,.

Hyderbad-

The Company is promoted by a team of Successful business entrepreneurs.

1. Mr. Srinivas Reddy Yerikalreddy

2. Mr. Srinivasulu Duggi

The promoters have vast experience in manufacturing, trading of all types

plastic PVC pipes.

The Company is having manufacturing unit at plot no 90 sy no 63 of 120 sq

yards of1400 sft in pedda amberpet village, RR Dist, which is under the lease

premises for a period of 9 years from S Amaravathi ,

The total Plant and machinery is divided into 5 units one for Dradied hose

pipes , Garden tubing pipes, and one for LLdpe krishi pipes .

The existing manufacturing unit is plot no 90 sy no 63 of 120 sq yards of1400 sft in

pedda amberpet village, RR Dist, , which is under leased premises for a period of 9

years , with total project outlay of Rs 164.26 Lakhs, and in addition to this the

32

company has also requested for the working capital limits of Rs 65.00 lakhs and

Domestic L.C 50.00 Lakhs.

Project Cost:

The total estimated project cost of the proposed manufacturing unit is

164.26Lakhs and the details are given in the table below:

A. PROJECT COST (Rs in Lakhs)

Description Amount1. Plant & Machinery 152.262. Electrical Equipment including transformer 3.003. Civil Works 7.504. IDC 1.50

Total 164.26

The current proposal is for the establishing a manufacturing unit at plot no 90 sy

no 63 of 120 sq yards of1400 sft in pedda amberpet village, RR Dist, with a total

built up area of 1400 sft ( which shall include the Machinery erection , Warehouse

for raw material and finished goods) and , the total project cost is 164.26 of which

the company has requested for the term loan of Rs 135.00 Lakhs for the

establishment of the unit which shall include the civil and the building cost and the

purchase of the machinery as detailed in, the company shall infuse the remaining S

65.00 Lakhs for the margin of electricity and other project essentials like working

capital margin and other necessaries including the machinery .

OPPURTUNITY TO LOCAL SMALL SCALE INDUSTRIES

The Telangana Government has provided ample opportunity for the the proposed

unit by enabling capital subsidy to the tune of 20 lacs and the power subsidy

32

and the refund of the Indirect taxes, as per the Telangana new Industrial

policy 2015.

Working Capital

The applicant has requested for the working capital limits of Rs 65.00 lacs and Rs

50.00 lakhs Letter of Credit for the purchase of the raw materials to meet the day

to day expenses of the company and to bridge the working capital gap.

32

2. KEY MANAGEMENT PROFILE

The Company is promoted by a team of Technically qualified and Successful business

entrepreneurs. The name & brief profile of the promoters are:

MR. SRINIVAS REDDY YERIKALREDDY

He is the managing partner of the firm he has been a successful and has a enrich

professionalism for its sustainability and financial discipline. He is currently the

director of MANJEERA PVC PRODUCTS PVT ;TD , KPR POLYMERS PVT LTD , KPR

PIPES PVT LTD , VARSHINI POLYMERS PVT LTD MR Sreenivas Reddy is a MBA

graaduate in the Marketing Management from Institute of Management and Research

( IMCR ) Belgaon, Karnataka. After completion of his management degree, he joined

Nandi group, Nandyal in Kurnool district one of the leading PVC manufacturers in South

India. He was inHe is on the Board of the Company as Whole-time Director designated

as Executive Director in Integrated Thermoplastics Limited, Hyderabad. Under his

leadership, group, in a span of 10 years since inception in the acquisition and

diversification which resulted achieving Rs. 800 crores turnover during FY 2009-2010.

Being a management graduate having rich experience of over 17 years of accomplished

career track record in PVC pipe industry spectrum for delivering and sustaining

revenue and profit gains. Presently founder director and will lead the KPR Pipes Pvt

Ltd, with capacity of Managing Director.A keen planner & strategist managing a wide

32

gamut of functions; leading in acceleration of business revenue. Expertise in managing

entire operations with key focus on bottom line profitability by ensuring optimal

utilization of resources.Proven abilities in swift ramp of projects with competent multi

functional teams. Aggressively identified opportunities, developed focus and provided

tactical business solution.Exceptional communicator with consultative sales style,

strong negotiation skills, exceptional problem solving abilities and possess needs

assessment analysis.

MR. SRINIVASULU DUGGI

He is the other director of the company, He holds Master’s degrees in Marketing

Management from Osmania University, Hyderabad .He has been a Successful trader in

Nandyala pipe agencies and laxmi pipes agencies, being a major distributor for the

major leading brands for Prakasaham district . Instrumental in initiating the

Hyderabad branch & reaching 100 dealers mark in AP. Distinguished efforts towards

maintaining more than 50% sales growth each year from 1999-2003.

Formulate the contents of marketing mix and put forth an effective marketing plan,

Obtaining the management consensus to develop marketing strategies for new products

development. Keep an eye on the current state of the market and the details of the

competitors in the same class. Conducting an exhaustive market research that will

really help in the advertising and promotional campaigns of the product. Supervising the

daily work of sales, marketing, and product promotion executives.

32

3 .PVC PRODUCTS AND ITS PROCESS

Introduction.

Plastic extrusion of tube, hose and pipe is a steady-state process for converting a

thermoplastic raw material to a finished or near-finished annular product. The raw

material is usually in the form of plastic pellets or powder. The conversion takes

place by forming a homogeneous molten mass in the extruder and forcing it under

pressure through an extrusion die orifice that defines the shape of the product's

cross section. The formed material, or extrudate, is cooled and drawn away from

the die exit at a controlled rate. The extrudate can then be wound on a spool, cut

to a specified length, or directed into another in-line process. By contrast with

injection molding or blow molding, which are cyclic processes, extrusion is a steady-

state process. This steady-state characteristic produces some unique benefits and

challenges as a manufacturing process. Extruded products are very long and

continuous, and have a cross section that is usually constant with respect to the

axis or direction of production. Injection-molded products are discrete items with

varying cross sections in each axis. The fact that the extrusion of tube, hose and

pipe is a steady-state process will be discussed in many areas of this article.

The terminology used for describing tube, hose and pipe varies from industry to

industry.

32

For the use in this article, tube products are 1” in outer diameter or less, and are

products that need to be flexible in their use. Examples of tubing include medical

catheters or flexible pneumatic tubing. Hose products are generally 1” in outer

diameter and greater, and are products that also are flexible in their use. Garden

or irrigation hose are good examples of hose products. Pipe products are generally

rigid in form when compared to tubing and hose, and can be any diameter in size.

Pipe products can range from ¼”diameter water pipe made from CPVC, up to 60”

diameter corrugated drainage pipe made from HDPE. These naming conventions are

arbitrary and are used for convenience.

Equipment.

The major components of a tube, hose, or pipe extrusion system are often divided

into components that are upstream of the extruder, the extruder itself, and those

that are downstream of the extruder. Upstream components include resin handling

equipment for conveying the raw materials to the extruder, and resin conditioning

equipment that will pre-heat the resin, or control the moisture content of the resin

before it enters the extruder feed throat. The downstream components include a

molten resin filter or screen changer, the extrusion die assembly, the quench or

vacuum sizing tank, any product measurement instruments, the extrusion line speed

controller in the form of a belt puller or nip roll set, and finally a product cut-off

device or winding equipment. There are additional extrusion process methods that

will take the extruded product directly into another in-line process for the addition

of a reinforcement braiding or for the addition of other coatings or resin

layers.

32

Materials.

Extrusion techniques can be used to process most thermoplastics and some

thermoset plastics. The resins most commonly extruded for tube, hose and pipe

products include high and low density polyethylene, polypropylene, polyurethane,

polystyrene, fluoropolymers, nylon, polyester, ABS, and flexible and rigid PVC. A

characteristic that often differentiates extruded resins from injection-molded

resins is the melt viscosity of the plastic at normal processing temperatures.

Extruded plastics often have a higher melt viscosity, which allows the extrudate to

retain the shape imparted to it by the die while the extrudate is in the quenching

stages.

Combinations of various resins can be used to gain special physical, biological, or

chemical properties. Many additives can be used during the extrusion process to

enhance processing characteristics of the polymer or to alter product properties.

Such additives include lubricants, thermal stabilizers, antioxidants, radiopacifying

agents, and colorants.

Processing Parameters.

The parameters important to extrusion processing are similar to those of injection

molding processes. Resin temperature, resin pressure, resin moisture content,

screw speed, and screw motor amperage are usually controlled or monitored to

32

provide a homogeneous melt at a controlled volumetric rate. Quenching temperature

and the rate at which the extrudate is drawn are controlled or monitored to

provide a controlled product size. Dimension measurements, using a variety of

gauging methods, can be taken of the extrudate as it is produced. In contrast to

injection molding, extrusion can vary the size of the final product without changing

the die tooling. Common extrusion production tolerances or process consistency are

held to within 1% of the nominal measured value.

As these manufacturing processes involve steady state conditions, any action that

can stabilize any parameter or condition is beneficial to the process.

Product Design Considerations.

Extruded tube, hose and pipe products fall readily into two categories: those having

just one resin in the product cross section, and those having more than one. The

first category includes plain tubing and pipe, or a single layer overcoating. The

second category includes tubing or pipe with surface or encapsulated striping, and

multilayer extruded products. Various non-resin materials can also be encapsulated

within layers of the extrudate to provide additional properties. Fibers can be

braided over an extruded tube substrate in to increase burst strength. Stainless-

steel wires can be added to improve kink resistance or to provide electrical

conductivity. Fiber-optic bundles can carry images or illumination. Each of these

techniques has potential for use in tube, hose and pipe manufacturing.

Upstream Components.

Incoming raw material inspection.

As these product manufacturing processes are steady-state as mentioned before,

and will be mentioned again, the consistency of the resin and its processing

properties are absolutely critical to the stability and consistency of the

32

manufacturing process.Changing from one batch of resin to another can be like

completely changing the type of polymer altogether. Even within a batch of resin,

there can be significant characteristic changes that will alter the steady-state

nature of the process.

It is very beneficial to be able to measure and verify the physical and processing

characteristics of the resin being processed on a regular basis to make sure that

the control parameters that have been set for the extrusion line will continue to

produce the desired product. It is very unrealistic to make the gross assumption

that the processing characteristics of resin in one bag or Gaylord will be identical

to that of another. This type of inspection also makes good economic sense as the

regular inspection will insure that the resin used in the process will not be

converted into useless scrap on the extrusion line. If the extrusion line is not

producing good product, making money for the company, it is costing money in lost

material, lost wages, and available manufacturing time. Resin characteristics to be

measured and recorded include resin density, melt index, shear rate vs. viscosity

data, and tensile strength. Another important visual measurement method is the

pressing out of thin resin films on a heated, hydraulic press. This allows a pre-

extrusion look at the resin after it has been melted and formed. This method allows

a look at clarity or color, the presence and amount of gels, unmelts, or particulate

contamination in the incoming resin batch.

The pressing our of resin films prior to extrusion is one of the single most valuable

evaluation opportunities that the extrusion line operator has. Every company that

does extrusion processing should invest in a small resin analysis lab area that has

the proper measurement tools. The resin measurements that are valuable to the

extrusion process do not require a high-level individual to make. An average

extrusion operator can be trainedto perform these basic resin property checks.

After all, the extrusion operator is the one that will be responsible at the end of

the day for making good extruded product at the end of the extrusion line.

32

The Extruder.Selection criteria.The performace requirements of the extruder are being successfully met when thedesired ouputs are being attained, with adequate resin melting and melthomogeneity, at a constant discharge pressure and melt temperature. When anextruder is selected for a process, the following extruder parameters need to beconsidered:Extruder diameter.L/D raio.Feedscrew design.Feedscrew RPM range and interchangeability.Available torque and horsepower.Gearbox design and thrust capacity.The distribution of barrel heating zones.The type of barrel cooling.The need for venting the barrel. The need for feedscrew cooling. The design of the feedscrew and the hardfacingof the barrel liner. The control instrumentation arrangement.

The extruder is discussed in other areas of this book in great detail. Suffice it tosay that for this article that the job of the extruder in the manufacturing of tube,hose and pipe, is to deliver a homogeneous melt material, at a fixed and uniformrate, at a fixed head pressure, and a fixed melt temperature. It is much easierstated than accomplished. As many variables are in action together in this system,as the variables interact, they will cause process variations of greater or lessermagnitude that will manifest themselves in the extruded product quality.

32

COMMON TUBE, HOSE, AND PIPE PRODUCT USES.Medical devices / Pharmaceutical products.Electrical / conduit.Plumbing.Irrigation.Natural gas distribution.Municipal water and sewer / corrugated pipe.Figure 14, photo courtesy of RDN Manufacturing

32

Page 24Swimming pools and spas.Writing instruments.Lawn and garden.Automotive.Consumer products / packaging.Appliances.Marine.Industrial hose.

USES OF THE PRODCUTS :

1. DRADIED HOSE PIPES : THE ABOVE PIPES ARE USED IN agricultural purpose , industrial and domestic purposes 2. GARDEN TUBING PIPES, for the garden purpose , curing of the buildings 3. LLDPE KRISHI PIPES , used in the agricultural sector.

4. RAWMATERLAS AND UTILITIES

a) RAWMATERIALS

32

The raw materials required for the production of the products are

PVC(POLY VINYL CHLORIDE) Resine , CPW (CHLORINATED PARAFIN

WAX) and DOP ( DI OCTYLE PSYLIDE)

b) Water

The water consumption for the process is 1 Cubic Meters per day for doing

hydro test for Equipment for finding out leakages in welding. The total

requirement of water works out can be met out of the bore well.

c) Effluents

The effluents are the tin stabilizers and the colors foe the coloring

d) Manpower

The total manpower requirement is 30 persons, including skilled & semi

skilled . The persons required for security is about 3 and they are hired on

contract basis from various agencies.

e) Power

The power requirement is 100 hp and source of Power is drawn from

TCPDCL and 750 KVA Generator is purchasing to avoid Power cut

Problems.

5.LAND AND SITE DEVELOPMENT AND LOCATION:

The manufacturing unit is situated at plot no 90 sy no 63 of 120 sq yards

of1400 sft in pedda amberpet village, RR Dist

32

The land which is proposed to be used for establishment of manufacturing unit

is admeasuring about 120 Sq yards .

The unit is accessible for the transport facility

1. Transport facility to National highway.

2. The unit is Provided with Compound wall with solar fencing to avoid theft

of Materials, and with a very good internal controls in all the areas.

6.PROJECT COST AND MEANS OF FINANCE

Project Cost:

32

The total estimated project cost of the proposed manufacturing unit is Rs

164.26 lakhs and the details are given in the table below:

A. PROJECT COST (Rs in Lakhs)

Description Amount1. Plant & Machinery 152.262. Electrical Equipment including transformer 3.003. Civil Works 7.504. IDC 1.50

Total 164.26

B. MEANS OF FINANCE

(Rs in Lakhs)Description Amount

1. Equity from Promoters 54.26

2. Term Loan from Bank 110.00Total 164.26 TotalD/E Ratio 2.03Debt component 66.97%equity Component 33.03%

The current proposal is for the establishing manufacturing plant for Dradied Hose

Pipes , Garden Tubing Pipes, Lldpe Krishi Pipes , with a total built up area of 1400

sft ( which shall include the Machinery erection ,building, civil) and , the total

project cost is Rs 164.26 lakhs of which the company has requested for the term

loan of Rs 110.00 lakhs for the purchase of the machinery and the establishment of

the unit like the building and the machinery as detailed in, the company shall infuse

32

the remaining Rs 54.26 lakhs for plant and machinery ,electricity and other

project essentials like working capital margin and other necessaries.

Working Capital

The applicant has requested for the working capital limits of Rs 65.00 lacs and

50.00 lacs Letter of credit to meet the day to day expenses of the company and to

bridge the working capital gap.

7. APPROVALS REQUIRED & STATUS

In Tanzania all the approvals and the permissions are provide by a single

window approving authority called Tanzania Investment Centre ( TIC).

32

Authority Purpose StatusRegistrar withPartnership

CertificateofIncorporation

Completed

TCPDCL Power Completed

Department ofCommercialTaxes

ValueAdded Tax & CST

Completed

DIC All Approvals & SSI

Completed

District Industries Centre

Ssi Registration

Completed

8.SCHEDULE OF IMPLEMENTATION

Particulars Date of

Commencement

Date of Completion

32

`Land Acquisition 01-05-2015 31-05-2015Civil Works 01-06-2015 31-08-2015Plant & Machinery

- Placement of Orders

- Delivery

Completed

1-07-2015Completed

31-08-2015Erection & Commissioning 01-09-2015 15-09-2015Trail Runs 15-09-2015 30-09-2015Commercial Production 01-10-2015

9.FINANCIAL STATEMENTS AND VIABILITY

The total commercial activity is being divided into 3 products

32

The company has started its expelling unit under leased premises at plot no

90 sy no 63 of 120 sq yards of1400 sft in pedda amberpet village, RR Dist

with a installed capacity of 75 TPD and the operating capacity at 60%, and

started its commercial activity from October 2015

REVENUE ASSUMPTIONS

The first full year of operation is for the FY 2016-17

1. The financial year is taken from 1st October 2015 to 31st March 2016.

2. The total number the working days are taken at 300 days per annum.

Revenue projections

The total products are

1. Flexible garden Hose Pipe

2. Braded Hose pipe

The total installed capacity of the product is 600 MT per annum for both

the product and the operating capacity is

60%,60%,65%,70%,75%,75%,75% 1thereon for the years 2015-16, 17,

18,19,20,21 and 22 respectively.

2. AAnd the Selling prices are as follows.

Particulars Capacity Selling price

in Rs per ton Flexible garden

Hose Pipe

100.00%

82,000/-Braded Hose pipe 100.00% 1,10,000/-

EXPENDITURE ASSUMPTIONS

1.The purchase price of the rawmaterial is as follows for Flexible garden

pipe

Particulars

Percentageof the

computation Rs per ton

32

Pvc Resine for Flexible garden Hose pipe 50.00% 84000CPW 49.50% 57000Utilities as Tin stabilizer and colours 0.50% 300000

The purchase price of the rawmaterial is as follows for Garden Hose pipe

Particulars

Percentageof the

computation Rs per ton Pvc Resine for Flexible garden Hose pipe 50.00% 84000CPW 30.00% 57000DOB ( Dioxy Butane) 19.75% 98000Utilities as Tin stabilizer and colours 0.25% 300000

2. Other expenses

a. Power is taken at 20,000 units per month at 7.00 per unit.

b. The water consumption is 30000 iters per month @ 1 Rs per liter

Administrative and Selling expenditures are taken at 0.50% of the sales

Repairs and maintenance

Repairs & Maintenance Buildings 0.50%Plant & Machinery 0.50%Electricals & Misc. Fixed Assests 0.50%

8. The total employees patter is given below

DETAILS OF MANPOWER REQUIRED

Particulars NoSalary perMonth n Rs

Salary perhead per Annum

32

Direct Wages Supervisor 1 35000 4Accounts Officer 1 15000 2Electrician 3 15000 5UnSkilled Labor 20 8000 19Peons 1 5000 1Operators 2 15000 4Marketing 2 15000 4Total salaries (Rs. In Lakh) 38Add: Fringe Benefits @ 5% 1.92Total salaries (Rs. In Lakh) 40.32 Total Manpower Requirement 30 Grand Total man power costs (Rs. InLakh)

40.32

9. The bank interest rates are taken at 12.00 % for term loan and 13.00%

for working capital.

10. The depreciation rates are considered at the following rates as per

Income Tax act .

Particulars Dep as perIncomeTax

Depas percomact

FactoryBuildings

10% 3.34%

Plant &Machinery

15% 5.28%

Electricals &Misc. FixedAssests

25% 7.07%

11.Income tax rates is taken at 32.5% as per Income tax including surcharge

of 5%

12. Mat is considered at 20.01 %

32

WORKING CAPITAL ASSUMPTIONS AND ITS HOLDING PERIOD

As per the general market survey and as per the industry analysis the

following is the holding periods

Particulars Holding period in months Raw material 1.00Finished Goods 0.50Bills Receivables 2.00Sundry Creditors (CL) 0.25

13. The total repayment is taken at 6.5 years, with 0.5 year moratorium .

14. The moratorium is taken at 6 months and the remaining 78 months.

15. The total capital contribution is at Rs 54.26 lakhs is for the initial

project outlay contribution and the remaining is for the working capital

margin.

10. PROJECT ECONOMICS

Profits before Tax (PBT)

The project makes profit right from the first year of operations which is

only for 6 months . The PBT is estimated to be Rs 51.96 lacs during the

first full year of operation which is 2017-18 increases to Rs 62.13 lakhs

during the third year of operation due to increase in capacity utilization. The

32

PBT figures are shown in the table below. The detailed calculations are

presented in Appendix – 7.

Particulars 2015-

16

2016-

17

2017-

18

2018-

19

2019-

20

2020-

21

2021-

22PBT (in

Rs )”lakhs 22.68 51.96 62.13 70.72 77.73 82.24 84.72

Profit after Tax: (PAT)

The PAT is estimated to be Rs 39.19 lacs during the first full year of

operation which is 2017-18 increases to Rs 44.96 lakhs during the third

year of operation due to increase in capacity utilization. The PAT figures are

shown in the table below.

Particulars 2015-

16

2016-

17

2017-

18

2018-

19

2019-

20

2020-

21

2021-

22PAT (in

Rs )”lakhs 18.15 39.19 44.96 49.84 53.80 56.20 57.33

Equity:

The equity contribution by the promoters towards project facility is Rs

54.26 Lakhs which is 33.03% of the total project cost.

Debt:

The term loan proposed by the promoters is Rs 110.00 lakhs, which involves

only for the purchase of the machinery which is given as per the Annexure

Internal Rate of Return

32

The internal rate of return (IRR) of the project after adding up non-cash

expenditure items such as Depreciation, Preliminary and pre-operative

expenses written off during the years under consideration and interest on

Term Loan works out to 30.39%. This is significantly higher than the

benchmark considered for the industry.

Breakeven Analysis

The breakeven analysis indicates that the operations breakeven at about

53.92 % of capacity utilisation during the first year of operations and

49.49% in the second year of operation. The high breakeven during the first

year of operations is primarily due to reduced number of operating days.

From third year onwards, the breakeven is 44.95% and registers a declining

trend signifying the robustness of the project.

Debt Service Coverage Ratio

The average DSCR is projected to be 2.50, well above the norm of 1.5. This

indicates ability of the -project to service the debt. Hence considering the

scheme the DSCR will further strengthen.

Mode of Financing, Depreciation & Interest:

The total capital investment for the project is estimated Rs 54.26.

The debt to equity ratio for the project works out to 2.03:1. The

financing mix is presented below:

Sl.

No.

Particulars Amount

(In.Rs

lakhs)”1. Equity from promoters 54.26

32

2. Term Loan 110.00Total 164.26

11. SWOT Analysis

11.1 Strengths

Very strong promoters back ground

The unit is being setup in a place where there is an abundance

availability of raw material.

Operations department consists of experienced personnel.

32

Government is offering many ].

11.2 Weaknesses

Availability of skilled labour.

11.3 Opportunities

Government policy is in favor of the industries as per the new

industrial policy of Telangana .

VAT refund by the state government.

Capital subsidy and the power subsidy and the interest rebate.

11.4 Threats

Rapid industry growth attracts several competitors.

12. MARKETING AND THE WORKORDERS

Since the promoters are in this activity for the past 20 years , they have a very

good inland and the export market to execute , the company has already taken the

following steps for its marketing through

32

Very strong clientele as the promoters are already in the field for the last

20 years .

One of the partners is already a reputed distributor in Andhra Pradesh and

Telangana.

13. MACHIENRY SUPPLIERS LIST

The company proposes to buy the machinery from .

1. Vijay Engineering works – Kavadiguda ,Hyderabad

2. M/s Sagar Plast Machines – New Delhi

32

3. M/s Sagar Machine tools - - Rampura, New Delhi

4. Hymax Industries- Hayathnagar Hyderabad.

14. CONCLUSIONS

S S INDUSTRIES proposes to set a manufacturing unit at plot no 90 sy

no 63 of 120 sq yards of1400 sft in pedda amberpet village, RR Dist

32

The following observations are made after a thorough assessment:

Promoters Strength

The promoter Mr. Srinivas Reddy Yerikalreddy , is already a director in

MANJEERA PVC PRODUCTS PVT ;TD , KPR POLYMERS PVT LTD , KPR

PIPES PVT LTD , VARSHINI POLYMERS PVT LTD , which are already in the

same kind of activity and so an established market

Raw Material Availability

The plant is located in the place where there is abundant reach of the

raw materials and utilities .

Other Financial Benefits:

Government policy is in favor of the industries as per the new industrial

policy of Telangana .

VAT refund by the state givernment.

Capital subsidy and the power subsidy and the interest rebate

It is considered that the process followed for the manufacturing

process for the project is feasible.

1. Capacity Utilization

Capacity utilization is assumed at 60% during first year of operation and

the same to go up by 60%, 65%,70%,75%,75%,75%,during the subsequent

year of operations. This assumption is justified in view of the fact that

there in an assured demand for the proposed products and the track

32

record of the company shows that they could achieve 100% capacity

utilization in the past for manufacture of similar products.

7. Break Even Point (BEP)

The project’s BEP for the project is at 49.49% level of installed capacity in

the second year. This factor stresses on the strength of the proposed

activity for financing the project.

8. Debt Service Coverage Ratio (DSCR)

The Average DSCR for the project is at 2.50 times, which is above the

benchmark.

9. Internal Rate of Return (IRR)

The Internal Rate of Return of the project is 30.39% and, the same is

considered reasonable, and above the benchmark level.

10. Debt Equity Ratio:

The debt equity ratio for the project is 2.03:1

11. Project Implementation

The Company proposes to complete the commissioning of the October

2015.

32

Overall we are of the opinion that the proposed idea of establishing a

manufacturing unit at plot no 90 sy no 63 of 120 sq yards of1400 sft in

pedda amberpet village, RR Dist, , is technically feasible and financially

viable.