TECHNO-ECONOMIC VIABILITY

APPRAISAL REPORT

PREPARED FOR
BITUMODE INTERNATIONAL PRIVATE LIMTED
(Modern Group of Companies)
VADODARA, GUJARAT, INDIA

PREPARED BY
GUJARAT INDUSTRIAL AND TECHNICAL
CONSULTANCY ORGANISATION LIMITED
"GITCO HOUSE", SP STADIUM ROAD,
NAVRANGPURA AHMEDABAD-380 009

SEPTEMBER 2012
 INDEX

SR CONTENTS PAGE
CHAPTERS
I INTRODUCTION 1
II BACKGROUND OF THE FIRM 2
III PRODUCT OVER VIEW 9
IV MARKET ASPECTS 13
V TECHNICAL FEASIBILITY 32
VI PROJECT COST AND MEANS OF FINANCE 43
VII ECONOMIC VIABILITY 49
VIII SWOT ANALYSIS 55
IX RISK ANALYSIS AND MITIGATION 57
X OBSERVATIONS AND CONCLUSION 59
ANNEXURES
I PROCESS FLOW CHART 65
II PROJECTED WORKING CAPITAL REQUIREMENT 66
III PROJECTED PERFORMANCE 67
IV BREAK EVEN ANALYSIS 68
V PROJECTED CASH FLOW 69
VI PROJECTED BALANCE SHEET 70
VII SENSITIVITY ANALYSIS 71
VIII BASES OF PROJECTED PERFORMANCE 77
IX INTEREST CALCULATIONS 83
X DEPRECIATION CALCULATIONS 84
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I – INTRODUCTION

1.1 Background
M/s. Modern Waterproofing Company (MWC), incorporated in the year 1999 in
Egypt envisages upon setting up of a manufacturing facility in India at Dahej SEZ
in Bharuch District of Gujarat State with an aggregate capacity of 21.02 Million
m2 in the name of M/s Bitumode International Pvt. Ltd (BIPL). BIPL will
produce 8 varieties of Bitumen based Waterproofing Products to be distributed in
India and abroad. The aggregate cost of the project is estimated at Rs. 57.20 Crs
and is proposed to be financed by a Term Loan of Rs. 29.00 Crs and promoter’s
equity participation of Rs. 28.20 Crs. The promoter’s equity contribution will be
made through the internal accruals from the parent company. BIPL has proposed
to avail financial assistance in the form of Term Loan and Working Capital Loan
from Bank.

1.2 Scope of Work and Methodology

BIPL has referred this proposal to GITCO for Techno-Economic Viability Study
of the project. GITCO has appraised the techno-economic viability of the project
in terms of product overview, market aspects, technical feasibility, economic
viability and other related aspects.

The report has been prepared on the basis of the relevant details and information
of the project furnished by the BIPL management, GITCO data base including
internet surfing, and discussion with the BIPL personnel.

1.3 The Report

The appraisal report presents background of the company, product over view,
market aspects, technical feasibility, economic viability, SWOT analysis, risk
analysis and mitigation, and observations and conclusion as follows.

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II – BACKGROUND OF BIPL

2.1 The Company

M/s. Modern Waterproofing Company (MWC), incorporated in the year 1999 in
Egypt envisages upon setting up of a manufacturing facility in India at Dahej SEZ
in Bharuch District of Gujarat State in the name of M/s Bitumode International
Pvt. Ltd (BIPL). BIPL is incorporated on Dt. 03-08-2011 vide Corporate ID No.
U74140GJ2011PTC066617 of 2011-12. BIPL registered office is at 103, Deepam
Residency, 26, Vishwas colony, B/H National Plaza, RC Dutt Road, adodara,
Gujarat, India and corporate office in Egypt.

2.2 Management Profile

BIPL is promoted by Dr. Walid and his associates. The management of the BIPL
has been involved in the Water Proofing business for about 12 years and has an
Indian market presence for nearly 5 years.
1) Dr. Mohamed Walid Gamaleldin (Chairman) has over 20 years of industry
experience and is responsible for the daily management of the Group. Dr.
Walid has a B.S. in Civil Engineering from California State University,
M.S. and Ph.D. from the University of Southern California. Additionally
Dr. Walid has completed the Executive Education program at Harvard
University. Dr. Walid will be involved in the strategic planning and
administrative decisions of the company.
2) Mr. Alok Kumar (Managing Director) has a cumulative experience of
more than 14 years in Indian manufacturing industry. Prior to this he
worked as Sr. Manager Business Development at UP Twiga Fiberglass
Limited where he was involved in strategic planning and development of
the SBU. Before that he was the national Sales Manager for Universal
Building Products Pvt. Ltd. He is a graduate from Banaras Hindu
University with Botany Hons. in 1994 and PGDBM (Marketing) from
EMPI Business School affiliated to AICTE in 1998.

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3) Mrs. Dina Syad Ahmed (Director) holds a B.A. in Economics from the
American University in Cairo, M.S. in Environmental Development from
the University of Sussex in the United Kingdom.
4) Mr. Hassan Kamel (Technical Director) holds a B.S. in Chemistry from
Cairo University. Most recently Chem. Hassan held the position of Plant
Manager at MWC before being promoted to Group Technical Director.
Chem. Hassan has been with the Group since October 2002. Previously
Chem. Hassan was a Quality Control Manager at Insumat, where he held
the position from 1995 to 2002.

2.3 BIPL Share Holding Pattern

The Company was incorporated with the share capital of 1.5 lakhs. The Company
issued 15000 Nos. of Equity Shares at face value of Rs. 10/- Per Share to its three
directors, each of them holding 5000 shares. Further equity would be infused by
the parent Company M/s Modern Waterproofing Company, post which 14999
shares of the Company would be transferred to M/s Modern Waterproofing
Company and. Dr. Mohamed Walid Gamaleldin will hold One (1) Share.

2.4 The Parent Organisation

MWC is a joint stock company organized under law 8 of 1997 (The Investment
Law). The Company’s administrative headquarters are located in Cairo, Egypt
while the three manufacturing plants are located in Badr Industrial City, which is
situated on the outskirts of Cairo. MWC, directly and through its fully owned
subsidiaries, Spuntex and Modern Plastics, is a vertically integrated leader in the
local waterproofing and insulation materials markets, manufacturing:

1) Torch applied modified bitumen waterproofing membranes (“bituminous

membranes”) APP and SBS modified;
2) Spun-bond non-woven polyester geo-textiles (“geo-textiles”);
3) Spun-bond non-woven polyester reinforcement (“polyester
reinforcement”);

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4) Extruded polystyrene insulation (“XPS”);

5) Recycled bitumen modifying polymer compounds (“recycled polymers”);
6) Recycled polyethylene terphthalate (“PET”) flakes;
7) Self adhesive (peel & stick) membrane as well as rigid bituminous
protection boards will be produced starting mid 2011.

MWC became the market leader in Egypt in its sector within a few short years.
The Company has 150 employees and is ISO 9001:2000 certified. Currently,
Modern is a listed company in the Cairo stock exchange, and it is part of EGX 70
stock index.

2.5 Group Structure

The Group is vertically integrated and its business is conducted through its three
manufacturing plants:
1) MWC produces bituminous membranes;
2) Spuntex produces nonwoven fabrics, as well as recycling PET bottle waste
into PET flakes, which are used mostly as an input for the production of the
nonwoven fabrics;
3) Modern Plastics produces XPS foam insulation boards as well as a range of
recycled polymers including recycled polypropylene, polyethylene and
polystyrene.

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2.6 Group Shareholding Pattern

MWC is listed on the Egyptian Stock Exchange and trades under the symbol
WATP.CA. Grandivew Investment Holdings is the majority shareholder, owning
53.1% of the Company. Grandivew is owned by Sphinx Private Equity
Management (“Sphinx”), which is an Egyptian private equity manager with
extensive experience in the field of direct investment in medium-sized companies.
The second largest shareholder is Dr. Walid Gamal El-Din, the founder and
chairman of the Group. The group share holding pattern is given in Table 2.1

Table 2.1
Group Shareholding Pattern

Sr. Name of Share Holder %

1 Grand View investment Holding 50.70
2 Dr. Walid Gamal El-Din 35.00
3 Mr. Badran Kamel 5.40
4 Mr. Sameh Shenouda 1.50
5 Mrs. Amal Gamal El-Din 1.00
6 Free Float 6.40
Total 100

2.7 Group Product Profile

The Group currently produces four primary products, namely:
1. Bituminous membranes;
2. Nonwoven fabrics (polyester reinforcement and geo-textiles);
3. XPS foam insulation boards; and
4. Recycled polymers (polypropylene, polyethylene and polystyrene).
5. Liquid bituminous coatings
While Modern Waterproofing holding company produces bituminous membranes,
Spuntex produces nonwoven fabrics, as well as recycling PET bottle waste into
PET flakes. PET flakes are used mostly as an input for the production of the
nonwoven fabrics. The third entity, Modern Plastics produces XPS foam
insulation boards as well as a range of recycled polymers including recycled
polypropylene, polyethylene and polystyrene. A summary of the capacities and
productions lines is presented in the Table 2.2.

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Table 2.2
Product Lines of the MWC Group
Company Products Production Capacity Expansion
Line Per Year
MWC Bituminous 3 15 mn m2 30 mn m2
Membranes
Spuntex Non-Woven Fabrics 1 10000 tons NA
and Geo Textiles
Modern XPS Foam and 1 100,000m3 NA
Plastics Recycled Plastics and 10000 tons

2.8 The Proposal

BIPL is being set up in India at Dahej SEZ in Bharuch District of Gujarat State
with the main objective of manufacturing waterproofing products in India and
will operate as the subsidiary to MWC. The main objective behind MWC’s plan
to establishing the Company in India is to utilize low cost Indian labor and raw
materials. Through the Indian subsidiary MWC plans to manufacture and
distribute quality and cost effective waterproofing products to local as well south
Asian markets.

The plant would produce Bitumen based waterproofing products, shingles, and
adhesive products at installed production capacity of 21.02 million m2 bituminous
of membranes. The aggregate cost of the project is estimated at Rs.57.20 Crs and
is proposed to be financed by a Term Loan of Rs. 29.00 Crs and promoter’s
equity participation of Rs. 28.20 Crs. The promoter’s equity contribution will be
made through the internal accruals from the parent company. BIPL has proposed
to avail financial assistance in the form of Term Loan and Working Capital Loan
from Bank.

The Company plans to leverage upon the large infrastructure demand of the
country and simultaneously utilize its low cost structure. Additionally it will also
help the Company in improving its global market share by optimal distribution of
its products in the Asia Pacific region. The existing market presence of the

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Company would help it in launching its products in Indian local markets as

already the product has brand recognition.
The implementation of proposed project is expected by February 2013. BIPL
plans to start the trial production within March 2013 and initiate commercial
production from April 2013.

2.9 Government Registrations/Approvals

BIPL has obtained necessary Government Registrations/Consent/Approvals as
listed below.

Company Registration No. U74140GJ2011PTC066617, Dt. 03-08-2011

SIA Registration Being applied
Importer Exporter Code 3712000308
PAN No. No. AAECB6564F, Dt. 03-08-2011
Central Excise Registration To be applied
CST Registration To be applied
GST Registration To be applied
GPCB NOC To be applied
Any Other To be applied

BIPL is in process of obtaining approvals from the Development Commissioner

Dahej SEZ. Under the single window approval applicable for BIPL, all the
necessary approvals like environmental clearance, electricity clearance will be the
responsibility of Dahej SEZ (post the approval from the Development
Commissioner of SEZ).

Dahej SEZ has taken up the responsibility to facilitate the necessary regulatory
and statutory clearances and approvals for any manufacturing plant proposed to
be set up in the SEZ. Dahej SEZ will utilize single window clearance approach to
facilitate all regulatory and statutory clearances for the proposed project from
various government departments resulting in granting speedy approvals to the
units.

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2.10 Observations
 M/s. Modern Waterproofing Company (MWC), incorporated Egypt
envisages upon setting up of a manufacturing facility at Dahej SEZ with
installed production capacity of 21.02 Million m2 in the name of M/s
Bitumode International Pvt. Ltd (BIPL).
 BIPL plant is being set up in India Dahej SEZ in Bharuch District of
Gujarat State with the main objective of manufacturing waterproofing
products in India and will operate as the subsidiary to MWC.
 The management of the BIPL has been involved in the Water Proofing
business for about 12 years and has an Indian market presence for nearly 5
years.
 The aggregate cost of the proposed project is estimated at Rs.57.20 Crs
and is proposed to be financed by a Term Loan of Rs. 29.00 Crs and
promoter’s equity participation of Rs. 28.20 Crs.

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III - PRODUCT OVERVIEW

3.1 The Product

BIPL envisages upon setting up of a manufacturing facility to produce eight
varieties of Bitumen based waterproofing products. The plant would produce
Bitumen based waterproofing products, shingles, and adhesive products at
installed production capacity of 21.02 million m2 bituminous of membranes.
Bituminous membrane roofing includes a range of products that are based on
refined petroleum bitumen or coal tars. These include asphalt shingles, which are
the most commonly used steep-slope roofing material in the US and Canada;
corrugated panels that incorporate organic or glass fibers in the bitumen; single-
ply roofing membranes made with modified bitumen; and bitumen or coal tar
saturated felts that can be used in multilayer installations of built-up bituminous
roofing.

The Company will have a single production line, with the combined capacity of
all the four production lines of MWC. The Company will produce 8 different
products and their nearly 360 plus variants to be distributed in India. These
products can be used to waterproof roofs, basements, swimming pools,
foundations, or any place in the structure that is subjected to water or moisture.
The main product classifications are as follows.

1) Modified bituminous waterproofing membranes modified with APP

(Atactic polypropylene) and reinforced with non woven polyester
2) Modified bituminous waterproofing membranes modified with APP and
reinforced with glass fiber mat 3. Modified bituminous waterproofing
membranes modified with SBS (Styrene Butadiene Styrene) and
reinforced with non woven polyester
3) Modified bituminous waterproofing membranes modified with SBS and
reinforced with glass fiber mat

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4) Self-adhesive modified bitumen membranes. These membranes can be

used for waterproofing of structures and also for pipe protection.
5) Bituminous protection boards that are used for underground construction
to protect the
6) Waterproofing membranes from being punctured during backfilling
operations
7) Bitumen based paints
8) Rigid protection boards

3.2 Waterproofing in India

The waterproofing method currently prevalent in India is Brickbat Coba. This
method starts with thoroughly clearing the roof slab to its bare surface, leaving it
free of debris, grease and oil. Next cement slurry mixed with waterproofing
compound is spread neatly over the cleaned surface, while repairs are done on all
cracks through honeycombing etc. As for all cracks, they are to be filled (both
structural and non-structural by the specified methods). The brick bat laying
comes next, where bricks are laid vertically at a slope at 20mm intervals, and
heads towards a rain water pipe to collect the overflow. In between the bricks,
cement sand mortar and waterproofing admixtures fill the gaps. A week later, a
finishing smooth layer tops things off; the layer is composed of cement sand
mortar admixed with a waterproofing agent.

Disadvantages of Brickbat Coba

 More of a water retardant than a waterproofing method with short life span
 Takes a long time to apply
 The bricks translate into an extra load on the built structure
 The system is rigid, and cracks under thermal variations, which annuls its
waterproofing characteristics.
 The system relies on bricks, which are porous by nature, thereby storing
large amounts of water and creating a kind of reservoir over the roof slab.

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 Once the coba is applied, it tends to fasten to the concrete so thoroughly

that it damages the roof slab in the event of its removal. The removal
process also tends to result in large amounts of debris and noise.
 It is labor intensive. If the workmanship is not high, then the required
results will not be achieved.

3.3 Waterproofing using Bituminous Technique

Bituminous method of waterproofing is much more advanced and long lasting
than the current brick bat coba method prevalent method in India. To waterproof a
roof with modified bituminous membrane, the surface is cleared, and a primer
coats the whole area. Next the membrane rolls are unrolled, and fixed to the
ground through torching the back of the membrane to melt the bitumen, and make
it stick to the surface below. Care has to be given that the rolls overlap so that the
water does not infiltrate through the points in between.

Advantages of Modified Bituminous Membranes

 Can take thermal and structural stresses effectively, without any fatigue
 Self finished monolithic membranes provide excellent watertight and
vapor barrier system
 Do not undergo early aging, thus provide long life durable membrane of 3-
5 years
 Laid quickly and easily; safe and environment friendly
 The tensile strength in the membrane is calculated to ensure the correct
level of load-elongation properties is present, so that any expansions
resultant from heat does not result in cracks in the membrane.

3.4 Proposed Product Mix

BIPL has proposed product mix which is given in Table 3.1. BIPL has envisaged
optimum projected sales turnover of Rs. 207.42 Crs.

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Table 3.1
Proposed Product Mix

Products % Sq. Mtrs Rs. /Unit Rs. Crs

APP Membrane -Polyester(CB)-PE//PE 70.00 9065549 157.50 142.78
APP Membrane -Polyester-PE//SLATES 5.00 647539 169.65 10.99
APP Membrane -Glassfibre-PE//PE 15.00 1942618 124.65 24.21
SBS Membrane -Polyester-PE//PE 5.00 647539 193.50 12.53
SBS - Self adhesive -Polyester-PE//PE 2.70 349671 198.00 6.92
Shiengles - Polyester-PE//PE 0.30 38852 270.00 1.05
Protection Boards 2.00 259016 202.50 5.25
Total 100 12950784 203.73
Recycled Poly Propylene/MT --- 3221 27000 8.70
Total 212.43
Sales Commission (2%) 5.01
Total 207.42

3.5 Observations
 BIPL has proposed to produce eight varieties Bitumen based
waterproofing products, shingles, and adhesive products at installed
production capacity of 21.02 million m2 bituminous of membranes.
 The waterproofing method currently prevalent in India is Brickbat Coba.
 Bituminous method of waterproofing is much more advanced and long
lasting than the current brick bat coba method prevalent method in India.
 BIPL has envisaged optimum projected sales turnover of Rs. 207.42 Crs.

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IV - MARKET ASPECTS

4.1 Global Market

4.1.1 Roofing Market Overview
Global demand for roofing materials is projected to grow 3.1% annually through
2014 to 11.1 billion square meters. This represents a noticeable improvement
from the market gains registered during the recession impacted 2004-2009 period.
Product sales are expected to increase at a fast pace in dollar terms, rising 4.5%
per year to $78.6 billion in 2014 because of an expected increase in average
roofing prices.

Market Segments
Roofing demand can be segmented into two major markets: residential buildings
and nonresidential buildings, and within each of these markets, roofing is used in
both new construction and maintenance/repair (reroofing) applications.
The residential reroofing market is the largest on a worldwide basis, accounting
for 37 % of all product sales in 2009. However, new residential construction
roofing demand is expected to register the strongest gains through 2014, bolstered
by a rebound in new housing starts in the US, Japan and other developed
countries.

Use of roofing materials in new nonresidential buildings and additions is also

expected to expand at an above-average pace, driven by an acceleration in
manufacturing production growth as the global economic environment improves.

Geographic Segments
In terms of geographical demand, China is expected to account for 35% of all
additional demand through 2014, strengthening its position as the largest roofing
market in the world in area terms. Growth is also expected to be healthy in lower-
volume developing world markets like Turkey, India, Hungary, Nigeria and

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Pakistan. The sales outlook for Eastern Europe is somewhat uneven, with some
countries expected to register above-average market gains, while roofing demand
will expand at a sub par rate in others. The US is the largest producer of roofing
products commanding 23.9% of total production, USD terms, followed by
Western Europe and China, which command c.18.4% and c.14.4% respectively.
Africa and the Middle East have a 9.5% market share, with Egypt, Iran, Nigeria,
Saudi Arabia, South Africa and Turkey having the largest manufacturing
capabilities.

Product Segment
Although the popularity of various roofing materials differs from area to area,
global sales are dominated by bituminous and tile (clay and concrete) products,
which together account for over 70 % of all roofing demand in area terms. The
World Roofing demand by product segment is given in Table 4.1. It is expected
that:

 Concrete roofing tiles will post the fastest market increases of any major
product type through 2014, stimulated by above-average growth in
building construction in developing Asian nations.
 Asphalt shingle and plate and modified bitumen roofing demand will
climb at the next fastest rates. Suppliers of asphalt shingles and plates will
benefit from renewed strength in new single family housing construction
in the US and Canada.
 Sales of modified bitumen roofing will be spurred by competitive inroads
in markets now served by built-up and roll roofing, aided by new product
introductions.

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Table 4.1
World Roofing Demand by Product Segment

(million square meters)

Particulars 1999 2004 2009 2014 2019
Bldg Constriction Expenditure 4185 5054 5820 7560 9365
m2 roofing//000$ construction 1.77 1.72 1.64 1.47 1.36
World Roofing Demand 7410 8680 9530 11100 12700
Bituminous 3025 3485 3580 4160 4700
Tile 2395 2835 3220 3780 4350
Metal 742 870 1045 1210 1410
Elastomeric 333 399 466 549 642
Plastic 295 361 427 493 578
Fiber Cement & Other 620 730 792 908 1020
Source: Freedonia roofing industry report

4.1.2 Roofing Demand Analysis

The demand for the roofing products can be categorized into six major product
categories including: bituminous, metal, plastic, tile and fiber cement. Bituminous
products commanded the lion’s share, accounting for 38.0% of FY 2009 global
roofing sales in m2. Concrete and clay tile were the second most commonly used,
making up 33.0% of FY 2009 roofing demand in area terms, followed by metal
(11.0%) elastomeric (5.0%) and plastic (4.0%) roofing products, with fiber
cement and other materials accounting for the remainder. In terms of dollar sales
however, tile and metal roofing account for larger shares of world roofing dollar
sales than bituminous materials because of their higher average prices for these
products.

The large size of the bituminous roofing market is predominantly due to the
popularity of asphalt shingles for steep-slope roofing applications in the huge US
market and the smaller Canadian market. Use of bituminous materials in steep-
slope applications is less common elsewhere, although pockets of demand can be
found in Europe, Central and South America, and the Asia/Pacific region. Outside
of North America, demand for bituminous roofing is typically limited to low-
slope applications, where built-up roofing felts and modified bituminous
membranes are used.

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Table 4.2
World Roofing Demand (million square meters) 2004 – 2019

Item 2004 2009 2014 2019

Bldg Const. Expend (bil 2008$) 5054 5820 7560 9365
m2 roofing/000$ constrn. 1.72 1.64 1.47 1.36
World Roofing Demand 8680 9530 11100 12700
North America: 2705 2600 2930 3200
United States 2390 2260 2550 2760
Canada & Mexico 315 340 380 440
Western Europe 1075 1010 1100 1135
Asia/Pacific: 3410 4140 5000 5960
China 1950 2490 3040 3660
India 342 450 570 730
Japan 291 265 285 90
Other Asia/Pacific 827 935 1105 1280
Central & South America 445 515 600 690
Eastern Europe 365 430 480 540
Africa/Mideast 680 835 990 1175
$/m2 5.29 6.62 7.08 7.82
World Roofing Demand (mil $) 45950 63100 78600 99300
Source: Freedonia roofing study

Concrete and clay roofing tiles are utilized on a more geographically widespread
basis. Products offered include everything from low-end, homemade items to tiles
mass-produced in modern manufacturing facilities to high-end, artisan-made
goods. Concrete accounts for a larger share of the tile market total than clay,
supported by strong demand in the large China market, Central and South
America, and Eastern Europe. Metal roofing is also commonly used throughout
the world, although it accounts for a larger share of total demand in the
Africa/Mideast region than it does in most other areas. Products offered range
from untreated, corrugated steel panels used in low-end housing to precoated
steel, aluminum and other metal panels and tiles installed on residential,
commercial and industrial buildings. Water Proofing Product Demand is shown in
the below:

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4.1.3 Bituminous Demand

Bituminous membrane roofing includes a range of products that are based on
refined petroleum bitumen or coal tars. These include asphalt shingles, which are
the most commonly used steep-slope roofing material in the US and Canada;
corrugated panels that incorporate organic or glass fibers in the bitumen; single-
ply roofing membranes made with modified bitumen; and bitumen or coal tar
saturated felts that can be used in multilayer installations of built-up bituminous
roofing. Asphalt shingles and plate account for the largest share of global
bituminous roofing demand, accounting for 46% in FY 2009, followed by built-
up and roll roofing at 35% and modified bituminous membranes at 19%.

The US market is the clear market leader in bituminous roofing demand

representing 45.0% of total global demand. China comes at a distant second with
c.21.0% of global demand, followed by the Asia/Pacific region with 9.0% of
global demand. Ongoing growth in the large Chinese market -- where built-up and
roll roofing and, to a lesser extent, modified bitumen membranes are widely
utilized in low-slope applications will also contribute to overall market gains.
Advances will be restrained by competition from other material types, including
clay and concrete tiles in steep-slope roofing applications and elastomeric
membrane materials in low -slope roofing applications.

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Worldwide sales of modified bitumen roofing systems are forecast to increase by

3.6% per year through FY 2014 to USD 810 million, outpacing bituminous
roofing as a whole. Demand will be stimulated by further competitive in-roads in
markets now served by built-up and roll roofing, aided by the introduction of new
modified bitumen roofing products. The World Bituminous demand is shown
below:

4.2 Indian Market

4.2.1 Roofing Outlook and Supply
Demand for roofing in India is expected to increase 4.8 percent annually through
2014 to 570 million square meters, among the fastest growth rates of any nation in
the world. Gains will be driven by ongoing industrialization efforts, helping to
stimulate new building construction expenditures and associated roofing sales.
Government efforts to improve housing conditions in rural areas through such
programs as the Golden Jubilee Rural Housing Finance Scheme and Pradhan
Mantri Adarsh Gram Yojana will also contribute to future roofing market
advances.(Source: Freedonia Roofing Study). However, India’s strong market
advances will also attract some competition from foreign suppliers, which will
constrict industry output growth through 2014. However increases will be
dampened to some degree by international competition for investment funding

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due to generally healthy economic and construction market climates in other parts
of the Asia/Pacific region. The most robust sales growth will be posted by
elastomeric, modified bitumen and plastic roofing, although tile products (and
clay tiles in particular) will remain the most commonly used roofing materials.

Notable Indian roofing product manufacturers which include Annexy

International, GK Roofings India, Global Impex, Hyderabad Industries, Sahyadri
Industries and Visaka Industries. Participation by foreign multinationals in the
local roofing industry is largely limited to sales and distribution operations,
although BlueScope Steel (through a joint venture arrangement with Tata Steel)
and Monier both have factories in the nation.

India’s strategic location also means that Modern could supply the rest of the
region with its products more effectively. In 2009, India represented only 10.9%
of the Asia/Pacific roofing materials consumption. Modern already has existing
customers all over Southeast Asia and the Persian Gulf market. Modern will serve
these customers from its Indian plant.

4.2.2 Indian Water Proofing Industry

The Indian water proofing industry is in its early growth stage. With the emphasis
now on building fast and building to last, there is lot for this industry in the
construction sector. In 2009, roofing demand in India reached 450 million square
meters, valued at $2.9 billion, representing the second largest market in the
Asia/Pacific region in area terms and the third largest market in dollar terms
behind China and Japan. As India is emerging as the leading manufacturing centre
for number of multinationals, the sector is growing fast and demand growth is
moving upwards by the emergence of new market. On the supply side despite
ongoing industry consolidation and M&A activities at the multinational
companies, new small and medium sized companies are beginning to serve
targeted market niches.

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India has a population of nearly 1.2 billion which require housing facilities, and
additional growth in annual roofing sales can result from the presence of strong
monsoons that generate demand for building repair and maintenance. Besides this,
the quality of construction in India is inferior as compared to international
standard. Per capita use of roofing materials in the country is extremely low, due
to both widespread poverty and the relatively small size of much of its housing
stock. This means that in effect, buildings need more repairs and maintenance
than their counterparts worldwide.

These factors present a huge latent demand for waterproofing products in India. In
recent years, roofing market gains in India have exceeded regional and global
norms, averaging 5.6% annually from 2004 to 2009. Roofing service suppliers
have benefited from economic reforms that have attracted investment capital into
the country, which has resulted in industrialization-related nonresidential and
residential construction activities.

In India clay and concrete tiles account for the largest single share of roofing
materials demand, while fiber cement roofing sheets are also popular. Both
asbestos fiber and non asbestos products are available, but the former
predominate.

Modern is not only looking to capture the growing modified bituminous

membrane market that exists in India today –and which is already being serviced
by the company from Egypt. It also seeks to seize market share from the other
waterproofing products that exist today. The bituminous membrane is more
advanced, effective, easier to apply and more price competitive than many of the
other options on the Indian market today, and in much the same way Modern
managed to convert the Egyptian market to its more advanced mechanism, it will
attempt to do so in the Indian market. The Freedonia study predicts the following
for the Indian roofing market as a whole as given in Table 4.3

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Table 4.3
Water Proofing Demand in India

Item 1995 2000 2005 2010 2015

Population (millions) 929 1012 1091 1165 1239
GDP/capita 1960 2400 3010 3840 4810
Gross Domestic Product (bil 2000$) 1817 2427 3280 4475 5965
sq.m. roofing/capita 0.22 0.26 0.31 0.38 0.45
sq.m. roofing/mil $ GDP 113 109 103 98 94
Roofing Demand by Market 204.50 264.20 338.70 440 562.80
Residential 97.50 128.1 167.10 221.8 288.70
New 37.90 50.5 65.70 86.60 112
Reroofing 59.60 77.6 101.40 135.20 176.70
Nonresidential 107 136.10 171.60 218.20 274.10
New 37.30 49.60 64.10 83.20 106.60
Reroofing 69.70 86.50 107.50 135 167.50
Source: Freedonia roofing industry research

4.2.3 Bituminous Demand

According to the Freedonia International Roofing Study India’s demand for
bituminous membrane in 2010 is expected to be 440 million square meters, and is
expected to increase to 563 million in 2015, and 613 million by 2019. With the
increase in GDP over the years the demand for Modified bituminous membrane,
which only represents 5.78% of the different types of waterproofing methods used
in India, is expected to grow by 15% over the last 3 years. Beside this, other
waterproofing methods such as bituminous shingles and plates, bituminous built
up and roll, concrete tiles, clay tiles, metal sheets, elastomeric sheets, plastic
sheets, and fiber cement sheets would also be used for waterproofing.

Modern Waterproofing Company which is already exporting 5 million square

meters to India annually plans to supply that same 5 million initially from India to
its existing customers when its Indian operation starts manufacturing.

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4.3 Competitors Analysis

Even though the actual category where BIPL operates in India is the modified
Bituminous membranes market in India and worldwide, to understand the market
structure in detail the waterproofing products market has been divided into three
segments. The competitor analysis has however been only provided for the
Bituminous Membranes markets as it is the market where BIPL actually faces
threat of competitor.

Due to the fact that Modified Bituminous membranes are relatively new products
in India, the total market for Modified bituminous membranes can be subdivided
and categorized under three categories:

4.3.1 Traditional non-membrane waterproofing and roofing

In India currently brick bat coba method, which is used for roof, terrace, and wet
area waterproofing is most prevalent. It is still the largest and most popular
method of waterproofing in India by far and at the same time it is the most rapidly
shrinking method. This is the lowest quality category. As the method is labor
intensive and expensive, it is losing market share to modified bitumen
membranes, which is the fastest growth category.

4.3.2 Traditional membrane waterproofing and roofing

This category is the second largest in terms of current volumes and includes all
types of traditional membranes such as membranes made from coal tar pitch or
straight (unmodified) bitumen reinforced with paper, organic felts, jute, plastic
sheets, etc. This is a medium to low quality category and for Indian market most
of the products are indigenously made. The main manufacturers are IWL, STP,
Swastik Tar, Apaar, and Tiki Tar. There are no imports in this category. This
category is also losing market share to modified bitumen membranes.

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4.3.3 Modified Bitumen membranes

This is the fastest growing category and is rapidly grabbing market share from the
other two categories. This category is dominated by imports from Egypt, Europe,
and Saudi Arabia, out of which Imports from Egypt are the most dominant.

Table 4.4
Modified Bituminous Category Market Share

Company Country Market Share

Modern Water Proofing Egypt 25%
Bitunil Egypt 25%
Texas Spain 10%
Bitumat Saudi Arabia 5%
Demabir Saudi Arabia 5%
Tiki Tar India 5%
Swastik Tar India 5%
Others NA 20%
Total 100%

Saudi Arabian players

Earlier the market was majorly developed and dominated by Saudi companies
such as Awazel, Dermabit, and Bitumat. They created demand for modified
bitumen, provided training for contractors and created a distribution network.
They were extremely price competitive because the Saudi government used to
provide huge subsidies for the supply of bitumen. However, this situation has
reversed in the last two years after the Saudi government imposed export duties
on the bituminous products exported out of Saudi Arabia. These taxes have raised
the price of the Saudi membranes and subsequently reduced their market share in
favor of the Egyptian. The cheap prices offered by the Saudis have retarded the
growth of the Indian modified bitumen membrane industry.

Egyptian Players
In the last two years, the Egyptian government has gradually started removing
subsidies on bitumen but kept an export incentive scheme. This has helped the
Egyptian dominate the India market and gain the largest market share.

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In terms of average volumes for the last three years, currently the largest two
players are Modern Waterproofing Company and Bitunil, both of them being
Egyptian manufacturers.

The two Egyptian companies alone account for over 50% of the supply into the
Indian market. They have grown by 90% since last year and are expected to grow
by a further 30% this year. Both these Companies utilize either their brand names
or utilize private label arrangements with major Indian companies, such as Pidilite
(Dr. Fixit), STP, and IWL to distribute their products in India.

Non-Egyptian Companies
Another foreign player, Texsa of Spain is also a big competitor in the modified
bitumen membrane market in India. It currently has a 10 % market share. Texsa
relies on its own company in India and does not use distributors and that has
restricted its growth. Further, it sells at high prices, so it only appeals to a limited
sector. Texsa is currently putting up a plant in Jaipur using an old production line it acquired
from a bankrupt Spanish company.

Domestic Companies
There are a few Indian companies manufacturing modified bitumen membranes
such as Tiki Tar, Swastik Tar, and Hydro Tech. Their plants are quite simple and
of low production capacity. The largest, Tiki Tar claims to have a production
capacity of 3000 square meters per day. To put things in perspective, the
Bitumode International plant can produce 45,000 square meters per day. The
economies of scale, the quality of the machinery, and the unique product know
how that Bitumode has developed over the years will enable Bitumode to produce
in India better quality, larger quantity, and at a cheaper price than its smaller
competitors.

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Market Expectation
The Egyptian government is now raising the price of bitumen aggressively and it
is expected that by early 2012, the cost of producing the membranes in Egypt will
be the same as or even more than in India. Thus, by 2012 the Indian market will
start to open for competition. Due to this it is expected that the market in the next
few years in India will be dominated by both Bitumode and Texsa. However the
Bitumode’s India entry strategy will help it in gaining market share over Texsa
due to the following factors:

 Bitumode is better at understanding the Indian consumer mentality

because its mother company
 Modern Waterproofing has a larger market share in India
 95% of the sales of Modern are derived from emerging markets, while
Texsa is primarily a European company, with European overheads and
prices.
 The strategy of Bitumode is to be ready for establish its ground in India
with a modern large capacity production line that will enable it to quickly
take the lead in the Indian market that will no longer be dominated by
imported products.
 In the last ten years Modern has competed head to head with Texsa in the
Middle East, North Africa, and Southeast Asia. In all countries where they
are both present, Modern has always come out ahead.

4.4 The Rational

 MWC not only intends to capture the growing modified bituminous
membrane market that exists in India but also seeks to seize market share
from the other waterproofing products that exist in India today. MWC has
already managed to convert the Egyptian market to more advanced and
mature waterproofing methods and intends to do so in the Indian market.

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 Existing presence: Within India, Modern's products are very well-known

and widely available and are approved for use by all major consultants and
contractors. The products are being used in thousands of projects all over
India, including many governmental and military establishments. This
means that when Modern establishes its Indian plant it will be already at
an advantage from a marketing point of view.
 Opportunity: Currently in India old, expensive, time consuming, labor
intensive waterproofing methods prevails. Modified bituminous
membranes in comparison to its predecessors is more effective, cheaper,
faster, less labor intensive, more environmentally friendly, and more
durable. India is one of the few large countries that are in the early phases
of transformation to new water proofing products. This presents a huge
opportunity for growth.
 Discontinuation of the bitumen price advantage: Up until recently,
bitumen prices in Egypt were subsidized, and given that bitumen is the
primary raw material in the end product, the production cost of the
bituminous membrane has gradually risen in Egypt. Accordingly,
exporting membranes from Egypt is not as advantageous as it used to be,
Therefore, production costs in India will soon match those of Egypt and
producing in India will become very attractive.
 India’s strategic location: with the strategic location of India, Modern
could supply the rest of the Asia/pacific region with its products more
effectively. In 2009, India represented only 10.9% of the Asia/Pacific
roofing materials consumption. Modern already has existing customers all
over Southeast Asia and the Persian Gulf market. Modern will serve these
customers from its Indian plant.

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4.5 Marketing Strategy

4.5.1 Product Differentiation
BIPL plans to differentiate its products from its competitors in quality rather than
price. With a proven capability of producing 360+ variants of waterproofing
products using the same raw materials, BIPL plans to capture Indian
waterproofing industry market share at an exponential pace. Additionally, being
one of the few major players in the industry to set up their manufacturing plants in
India, BIPL plans to cash out its first mover advantage by utilizing the low cost
structure of the country and earning higher margins on same quality product.
In addition, BIPL plans to introduce different types of lower priced variants of its
current products to tap the lower end of the value chain of the Indian
waterproofing industry.

4.5.2 Product Pricing

The ability to source raw material from local market, cheap labor and locational
advantage are some of the factor which will help the company in attaining higher
margins even after maintaining the same product pricing. BIPL already has a
strong presence in Indian market and has gained enough market knowledge.

Currently Indian market players rely on imports for good quality waterproofing
products due to which the average price for waterproofing products in India is at a
slightly higher side. However, BIPL plans to utilize the same price structure
available in India while producing products at lower cost hence increasing its
margins.

4.5.3 Branding Strategy

BIPL plans selling its product under the brand name Bitumode and to establish
and expand its brand image BIPL plans to:
1) Conduct various seminars and exhibition
2) Utilize advertisement campaigns and hoardings

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3) Get highest quality certification for its products. The company plans to
certify its product from the ISO 9001.

4.5.4 Distribution Strategy

Currently BIPL only utilizes its direct sales channels to client like large clients
like Pidilite, STP Pvt. Ltd and IWL and has no other distribution channel of its
own in the country. However, going forward BIPL plans to develop its own
network of client and managers for distributing its products in India. This
distribution channel would help BIPL in expanding its upcoming lower priced
version of its products to smaller clients.

As per the initial plans of BIPL, it envisages a time period of 3-4 months for
setting up its own distribution network. For quick execution of these plans the
BIPL plans to appoint best talent from Indian industry. BIPL currently envisages
hiring a chairman who would be made responsible for growing distribution chain;
and would be supported by 4 regional managers for each zone.

4.5.5 Target Segments

BIPL plans to target a variety of clients via different distribution channels in
phase manner.
 BIPL plans to have distributors in each of the metros and direct dealers in
all the major A and B class cities to target Infrastructure projects like
airports, thermal and nuclear power plants, refineries, railways, defense
projects etc. Sales personal of distributors / dealers may also be utilized
for operational works.
 Major builders will be contacted to serve the commercial and public
spaces segment. Dealers will be made in all the A and B class cities
directly by the company to cater the residential segment.
 The third major segment which is the Industrial segments like Fertilizer
plants, Textiles etc. will be taken care by Sales Manager located in the
Metro cities.

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4.6 Observations and Conclusion

Observations
 Global demand for roofing materials is projected to grow 3.1% annually
through 2014 to 11.1 billion square meters.
 The demand for the roofing products can be categorized into six major
product categories including: bituminous, metal, plastic, tile and fiber
cement. Bituminous products commanded the lion’s share, accounting for
38.0% of FY 2009 global roofing sales in m2.
 Worldwide sales of modified bitumen roofing systems are forecast to
increase by 3.6% per year through FY 2014 to USD 810 million,
outpacing bituminous roofing as a whole.
 Demand for roofing in India is expected to increase 4.8 percent annually
through 2014 to 570 million square meters, among the fastest growth rates
of any nation in the world.
 The Indian water proofing industry is in its early growth stage. With the
emphasis now on building fast and building to last, there is lot for this
industry in the construction sector. In 2009, roofing demand in India
reached 450 million square meters, valued at $2.9 billion, representing the
second largest market in the Asia/Pacific region.
 India is emerging as the leading manufacturing centre for number of
multinationals, the sector is growing fast and demand growth is moving
upwards by the emergence of new market.
 According to the Freedonia International Roofing Study India’s demand
for bituminous membrane in 2010 is estimated to be 440 million square
meters, and is expected to increase to 563 million in 2015, and 613 million
by 2019.
 With the increase in GDP over the years the demand for Modified
bituminous membrane, which only represents 5.78% of the different types
of waterproofing methods used in India, is expected to grow by 15% over
the next 3 years.

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 Due to the fact that Modified Bituminous membranes are relatively new
products in India, the total market for Modified bituminous membranes
can be subdivided and categorized under three categories:
i) Traditional non-membrane waterproofing and roofing
ii) Traditional membrane waterproofing and roofing
iii) Modified Bitumen membranes

 Modified Bitumen membranes category is the fastest growing and is

rapidly grabbing market share from the other two categories. This
category is dominated by imports from Egypt, Europe, and Saudi Arabia,
out of which Imports from Egypt are the most dominant.

 Marketing Strategy
i) BIPL plans to differentiate its products from its competitors in
quality rather than price.
ii) BIPL plans to utilize the same price structure available in India
while producing products at lower cost hence increasing its
margins.
iii) BIPL plans selling its product under the brand name Bitumode and
to establish and expand its brand image.
iv) BIPL already has a strong presence in Indian market and has
gained enough market knowledge.
v) Currently BIPL only utilizes its direct sales channels to client like
large clients like Pidilite, STP Pvt. Ltd and IWL and has no other
distribution channel of its own in the country.
vi) BIPL plans to develop its own network of client and managers for
distributing its products in India. This distribution channel would
help the Company in expanding its upcoming lower priced version
of its products to smaller clients.

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vii) As per the initial plans of BIPL, it envisages a time period of 3-4
months for setting up its own distribution network. For quick
execution of these plans the BIPL plans to appoint best talent from
Indian industry.

 BIPL has plan to target sectors of infrastructure projects as well as

commercial and public spaces in A and B category cities and industrial
projects.

Conclusion
In view of the market potential of Bitumen based waterproofing products, BIPL
management’s marketing experience and group set up as well as proposed
marketing strategy, it can be concluded that it will be possible for BIPL to achieve
targeted turn over.

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V – TECHNICAL FEASIBILITY

5.1 Background
BIPL envisages upon setting up of a manufacturing facility to produce eight
varieties of Bitumen based waterproofing products at Dahej SEZ in Bharuch
District of Gujarat State. The plant would produce Bitumen based waterproofing
products, shingles, and adhesive products at installed production capacity of 21.02
million m2 bituminous of membranes. Technical feasibility of the proposed
project is appraised in view of the following aspects.
1) Manufacturing Process
2) Raw Materials
3) Plant and Machineries
4) Installed Capacity
5) Infrastructure Facilities
6) Manpower Requirement
7) Project Implementation Schedule

5.2 Manufacturing Process

The raw materials like raw bitumen, chillers and other chemicals are fed in the
production line at one end the final packaged output is received at the other end
with minimal human intervention. The major processes carried out are mixing and
preparation of various raw materials, coating of reinforcement materials and
packaging. The Process Flow Chart is given at Annexure -1

5.3 Raw Materials

The main raw material is Bitumen which is supplied by oil refineries. BIPL plans
to source the raw material from Koyali and Jamnagar refineries in Gujarat. Beside
this Gujarat has a booming plastic industry, hence polyester can be easily sourced
from the adjoining regions. The raw materials mix and cost at optimum level of
operations is given in Table 5.1.

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Table 5.1
Raw Materials Mix

Raw Material Rs. /Unit Sq. Mtrs Rs. Crs

Bitumen 22.50 33032270 74.32
Reinforcement 10.80 12955206 13.99
Polymer 1 27.00 7493324 20.23
Polymer 2 58.50 770572 4.51
Polymer 3 146.25 215397 3.15
Colored Slates 8.10 647539 0.52
Additives 11.25 19426176 21.85
PE Film 1.17 25215176 2.95
Densified IPP Raw Material 21600 * 3221 6.96
Total 148.49
* Tons

5.4 Plant and Machinery

The production line is the key component of the plant and is used in
manufacturing bituminous membranes and liquids. The proposed production line
is highly adaptable and gives the user flexibility to switch from one product
variant to another very quickly and with minimum raw material losses.

The machinery for the project has already been tied up with the overseas supplier.
A brief description about the plant and its main segments is provided here below:

1) Nardini Production Line and Accessories: The production line is the key
component of the plant and is used in manufacturing bituminous membranes and
liquids. The Company will utilize the production line manufactured by Nardini
Company of Treviso, Italy which is considered as the world's top supplier of such
equipment. Generally the line is 100 meters long and 10 meters high. The line is
fully-automated and very flexible giving the user flexibility to switch from one
product variant to another very quickly and with minimum raw material losses.
The Production line will have additional by parts as listed below:

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 Mixing and Preparation System: This part of the line is used to mix the
bitumen with the other components of the product such as the polymers,
fillers, and other chemical additives. There are two stages of mixing,
primary and secondary, after which the liquid bituminous compound is
pumped to the coating section of the line.
 Coating Section: The coating section is where the reinforcement material
(non-woven polyester, fiberglass tissue, etc.) is unrolled, and then
impregnated and coated in two stages with the bituminous compound
which is pumped in from the mixing and preparation system. The final
finished material is then applied onto the surface of the membrane (sand,
slate, polyethylene film, etc.). Finally the membrane rolls are cooled
down, cut, rolled, and packaged.
 Packaging Section: The packaging section is composed of a fully-
automated system whereby the rolls are removed from the rolling winder,
placed upright on a pallet and the pallet is then covered automatically with
a shrink bag. The pallet is then rolled into a shrinking oven, which heats
up the shrink bag, causing it to shrink and cling tightly to the membrane
rolls.
 Auxiliaries Section: This section contains all the machinery and
equipment that is necessary for operating the plant. This section includes a
diathermic oil heating system, chillers, compressors, pumps, motors,
piping, etc.

2) Plastic Recycling Extruder and Accessories: This is equipment that is

necessary to recycle plastic polymers. It is composed of a silo followed by a
complete extrusion system which ends with a cooling section and a pelletizing
system.
3) Plastic Densifier: This is equipment which is used to increase the density of
recyclable plastics through the use of heat and centrifugal force. The result is a
densified plastic polymer which is then ready to be added to the extrusion step.

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4) Dry Cleaning Centrifugal Machine: This is a high tech machine using

centrifugal force to remove dirt and contaminants from plastic waste in
preparation for densification and subsequent recycling steps.
5) Fork Lift: This section is used to haul raw materials and finished products.
6) Electrical Transformers: The plant uses two transformers with capacity of
1500 KVA each to provide power supply to the plant.
7) Bitumen Storage Tanks: This is a group of tanks used to store liquid bitumen
and other liquid additives. The tanks are heated through a coil system that wraps
around the body of the tanks and on its inside. The tanks are connected with a
group of pumps that are used to move the liquids around.
8) Shingles Production Line: This production line is used to cut asphalt shingles
into various shapes and colors.

The total plant and machinery cost Rs. 36.90 Crs. is tied up with the overseas
suppliers as given in Table 5.2. The cost of CIF, installation, electrification, etc is
estimated.

Table 5.2
List of Proposed Plant and Machinery

Sr. Description No. Total Cost

USD(mn) INR(Cr)
1 Nardini Production Line along with Motors, Oil 1 6.42 28.89
Heating System, Chillers, Compressors, Pumps and
Motors inclusive of Shipping, Storage and Installation
2 Plastic Recycling Extruder and Accessories 2 0.25 1.13
3 Plastic Densifier 2 0.16 0.72
4 Dry Cleaning Centrifugal Machine 1 0.27 1.21
5 Fork Lift 3 0.11 0.50
6 Electrical Transformers 2 0.10 0.45
7 Bitumen Storage Tanks 3 0.44 1.98
8 Shingles Production Line 1 0.25 1.12
Total 8.00 36.00
CIF, Installation, Electrification, etc. (2.5%) 0.90
Grand Total 36.90

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5.4 Installed Capacity

Installed Capacity is based on the machine speed per minute. Installed Capacity is
worked out as follows:

= 40 (Metres/Minute) X 60(Minutes/Hour) X 24 (Hours/Day) X 365 (Days/Year)

= 21024000

The plant availability factor will be at 80%. Capacity utilization envisages is as

given in Table 5.3

Table 5.3
Installed Capacity and Production

Particulars 2013-14 2014-15 2015-16 2016-17 2017-18

Installed Capacity (m/year) 21024000 21024000 21024000 21024000 21024000
Plant Availability factor 80% 80% 80% 80% 80%
Capacity Utilization 55% 65% 70% 75% 77%
Production 9250560 10932480 11773440 12614400 12950784

5.5 Infrastructure Facilities

5.5.1 Land
BIPL has already acquired lease hold land at Plot Nos. from Z43 and Z44
admeasuring total 12,485 Sq. Mtrs at Dahej SEZ, Bharuch District in Gujarat for
30 years and extendable by another 30 years.. The land cost as per lease
agreement is Rs. 1.52 Crs. The land area is adequate for the requirements of the
project.

5.5.2 Building and Civil Works

The requirement of built up area will be 5200 Sq. Mtrs. The cost of the building
has been estimated at Rs. 5.22 Crs. The building and Civil works will consist of
followings.

 Factory Building with RCC flooring.

 Administrative office from the RCC Building Material.

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 All weather roads with drains.

 A mix of barbed wire and brick wall for fencing.
 Water System will include underground storage together with pumping
system and distribution network. This includes fire fighting system.

Break up of building and civil construction with the cost is given in Table 5.4.
The building construction and civil works as above will be adequate for the
requirement of the project.

Table 5.4
Break Up of Building and Civil Works

Sr. Type of Building Area Rs,/ Total Cost

Sq. Mtrs. Sq. Mtrs. Rs. Crs
1 Factory Building 4700 6000 2.82
2 Administrative Office 500 16000 0.80
3 Roads with Drains 0.60
4 Barbed Wire and Brick Wall for 0.40
fencing
5 Water System: UG ST, Pumping, 0.60
Distn. Network, Fire Fighting
Total 5.22

5.5.3 Power
The total power requirement to carry out operations of the project will be 2000
KW. The required power connection will be available from Torrent Power and
will be arranged by the Company. The break up of power requirement is given in
Table 5.4. Power bill at optimum level of operations is worked out as follows.

= 2000(KW) X 24(Hrs) X 365(Days/PA) X 0.80(LF) X 0.80(AF) X 0.77(UF)

X 4.5 (Rs./Unit)
= Rs. 389 Lacs

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Table 5.4
Break Up of Power Requirement

Sr. Description No. KW

1 Nardini Production Line and Accessories 1 800
2 Plastic Recycling Extruder and Accessories 2 500
3 Plastic Densifier 2 200
4 Dry Cleaning Centrifugal Machine 1 400
5 Shingles Production Line 1 50
6 Others 50
Total 2000

5.5.4 Fuel
Gas will be used as fuel for heating Bitumen tanks for coating Bitumen on the
Membranes. The gas requirement will be 250 Cubic Meter per hour. The required
Gas supply will be available from GSPC and will be arranged by Dahej SEZ.
Gas cost at optimum level of operations is worked out as follows.

= 250(Cu.Mtr)) X 24(Hrs) X 365(Days/PA) X 0.80 (AF) X 0.77 (UF)

X 2.40 (Rs./Cu. Mtr.)
= Rs. 33 Lacs

5.5.5 Water
Water requirement will be for cooling which is 150 cubic meter in closed circuit
and will be required to compensate only the evaporated part. The consumption
will only be for human usage and may be for green areas in the compound which
could be 5 cubic meter /day. The water supply will be arranged by Dahej SEZ.

5.5.6 Effluent Treatment Plant

The industry is classified as environmental friendly and there is no emission from
its machines hence there is no requirement for any Effluent Treatment plant.
In addition to this, the proposed machine will be equipped with the most advanced
air treatment unit which is compatible with the international environmental
standards.

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5.6 Manpower
BIPL will need manpower of 57 persons at the maximum to carry out operations
of the proposed project. The necessary manpower will be available. The
requirement of manpower in various categories is given in Table 5.4.

Table 5.4
Manpower Requirement

Category 2012-13 2013-14 2014-15 2015-16

General Manager 1 1 1 1
Plant Manager 1 1 1 1
Plant Engineers 2 2 2 2
Lab Technicians 2 2 2 2
Skilled labor 30 30 30 30
Sales Head 1 1 1 1
Zonal Managers 1 2 3 4
Regional Managers 4 8 12 16
Total 42 47 52 57

Finding trained labor in highly specialized but nascent industries like

waterproofing could be difficult. However, BIPL over time would develop in-
house training facilities for its employees which will help it in retaining and
improving efficiency of its labor.

5.7 Project Implementation Schedule

BIPL will initiate the construction post acquisition of land and plans to import the
machinery simultaneously while the construction work is being worked upon.
BIPL has already signed a contract with the machinery installation team for
setting up the plant within the stipulated time as mentioned Table 5.5.

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Table 5.5
Project Implementation Schedule

Activity Date of
Start End
Land Acquisition Completed Completed
Signing of Construction Contract 1st July 2012 30th Sep 2012
Completion of Building structures 30th Sep 2012 30th Nov 2012
Financial Closure 31st July 2012 15th Oct 2012
Shipment of Machinery 15th Oct 2012 30th Nov 2012
Erection of Machinery 30th Nov 2012 28th Feb 2013
Trial Production 1st March 2013 st
31 March 2013
Commencement of Operations 1st April 2013

5.8 Location Analysis

The proposed project is being set up at Dahej SEZ at Bharuch District in Gujarat.
The SEZ is about 40 KMs from Mumbai Ahmadabad NH 8. The proposed site is
located under an industrial zone and all the basic infrastructure is in place. The
project site is within 600 Km from the Kandla Port, Mundra Port, and from the
Mumbai-JNPT. The site is well connected through road and rail. The nearest
railway station Bharuch is at 40 Km. The Ahmadabad International airport is
located at about 200 Km from the project site. The selected location posed some
additional benefits to the Company which includes:

 The strategic location of the project would help it in easy sourcing of raw
materials. As the main raw material is Bituminous which is supplied by oil
refineries, BIPL plans to source the raw material from Koyali and
Jamnagar refineries in Gujarat. Beside this Gujarat has a booming plastic
industry, hence polyester can be easily sourced from the adjoining regions.
 Being situated nearer to Ahmedabad - Mumbai national highway the
company would have connectivity to road, port, and airway facilities.
 The Dahej SEZ developer will help the company in availing the basic
facilities like water, connectivity, labor accommodation, power in most
efficient manner.

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 Being setup in SEZ, the company would be able to avail the tax exemption
under the Income tax Act.
 Being located in Gujarat, the Company will have good connectivity to
western, northern and southern regions in India. Hence BIPL would be
able to capture the western as well the local market of the country.

One of the prime benefits that BIPL would accrue from setting up its plant in the
Dahej SEZ is that almost all of the infrastructure facilities required in setting up
such a plant would be provided by the SEZ. A list of the facilities provided by the
SEZ is provided below:

 Uninterrupted operational gas supply

 20 meter wide and expandable internal roads and drains
 Reliable power supply 66 / 33 KV substation
 Dedicated water supply from Sardar Sarovar Narmada Nigam
 Extensive water management systems like rain water harvesting and
ground water re-charging
 Advanced waste management systems
 Hi-tech IT infrastructure and telecom connectivity
 Entrance hub, transport hub, and adequate parking area
 Guest houses

5.9 Observations and Conclusion

Observations
 BIPL envisages upon setting up of a manufacturing facility to produce
eight varieties of Bitumen based waterproofing products at Dahej SEZ at
Bharuch in Gujarat
 The plant would produce Bitumen based waterproofing products, shingles,
and adhesive products.
 Manufacturing process for the proposed products is well established.

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 All the raw materials required to produce the proposed products are easily
available.
 The proposed Plant and Machinery are appropriate for the propose project.
 The plant will have installed capacity of 21.02 million m2 bituminous
membrane producing.
 The plant availability factor will be at 80%. The optimum plant operating
capacity will be at 77%.
 Land acquired for the proposed project is adequate for the requirements.
 The building construction and civil works as above will be adequate for
the requirement of the project.
 All the required infrastructure facilities are available at the project site.
 Manpower of 57 persons at the maximum will be required to carry out
operations of the proposed project. The necessary manpower will be
available.
 The proposed location is most suitable looking to various aspect
concerning to the proposed project.
 The project will be fully implemented by March 2013 and start
commercial production from April 2013.

Conclusion
Looking to the appraisal of various technical aspects of project proposed by BIPL,
it can be concluded that the project is technically feasible. With the proposed
manufacturing and infrastructure facilities, it will be possible to achieve targeted
production.

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VI PROJECT COST AND MEANS OF FINANCE

6.1 Project Cost

BIPL envisages upon setting up of a manufacturing facility to produce eight
varieties of Bitumen based waterproofing products at Dahej SEZ in Bharuch
District of Gujarat State. The plant would produce Bitumen based waterproofing
products, shingles, and adhesive products at installed production capacity of 21.02
million m2 bituminous of membranes. The cost of proposed project appraised at
Rs. 57.20 Crs. as given in Table 6.1.

Table 6.1
Project Cost

Sr. Particulars Rs. Crs

1 Land 1.52
2 Building and Civil Works 5.22
3 Plant and Machinery 36.90
4 Misc. Fixed Assets 0.42
5 Vehicles 0.84
6 Computers 0.42
Total Fixed Assets 45.32
7 Preoperative Expenses 4.53
8 Interest During Construction Period 1.73
9 Contingencies 0.62
10 Working Capital Margin 5.00
Total 57.20

6.1.1 Land
BIPL has already acquired lease hold land measuring 12,485 Sq. Mtrs at Dahej
SEZ at Bharuch in Gujarat for 30 years and extendable by another 30 years. The
land cost as per lease agreement is Rs. 1.52 Crs. The land area is adequate for the
requirements of the project.

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6.1.2 Building and Civil Works

The requirement of built up area will be 5200 Sq. Mtrs. The cost of the building
has been estimated at Rs. 5.22 Crs. The building cost is considered as per the
estimates of BIPL.

6.1.3 Plant and Machinery Cost

The total plant and machinery cost of Rs. 36.0 Crs. is tied up with the overseas
suppliers. The cost of CIF, installation, electrification, etc. is estimated at Rs. 0.9
Cr.

6.1.4 Other Fixed Assets Cost

The other fixed assets including miscellaneous fixed assets consist of furniture
and fixtures, office equipments, etc. vehicle and computers are considered in view
of the size of the project. The cost of these assets are considered in view if the size
of project.

6.1.5 Preoperative Expenses

Preoperative expenses for the project are estimated at Rs. 4.53 Crs. Break up of
preoperative expenses breakup is given in Table 6.2.

Table 6.2
Preliminary Expenses

Sr. Particulars Rs. Crs.

1 Advisory / Consultancy Cost 1.13
2 Technical Cost 0.45
3 Administrative Cost 0.68
4 Manpower Cost 0.68
5 Travel and Other Expenses 0.45
6 Trial Run Cost 0.23
7 Legal Expense 0.23
8 Other Expenses 0.68
Total 4.53

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6.1.6 Interest During Construction Period

Interest during construction on a total debt of Rs 29.00 Crs. is estimated at
Rs.1.73 Crs. The coupon interest rate of 13% PA has been considered for the
purpose of calculating IDC of the project as given in Table 6.3. It is expected that
the project will require six and half months for its construction to complete.

Table 6.3
Interest during Construction Period
(Rs. in Crs)
Particulars TL Payment Total TL 13% Interest
Jul-12 0.00 0.00 0.00
Aug-12 0.00 0.00 0.00
Sep-12 0.00 0.00 0.00
Oct-12 14.50 14.50 0.16
Nov-12 14.50 29.00 0.31
Dec-12 0.00 29.00 0.31
Jan-13 0.00 29.00 0.31
Feb-13 0.00 29.00 0.31
Mar-13 0.00 29.00 0.31
Total 29.00 1.73

6.1.7 Contingencies
The contingent expenses are considered at 5% of non-firm CAPEX as per
estimate of BIPL as given in Table 6.4.

Table 6.4
Contingent expenses on Non-firm CAPEX

Sr. Particulars Total Cont. 5%

Rs. Crs Rs. Crs
1 Building and Civil Works 5.22 0.26
2 P & M/c (CIF, Installation, Electrification, etc.) 0.90 0.05
3 Misc. Fixed Assets 0.42 0.02
4 Vehicles 0.84 0.04
5 Computers 0.42 0.02
Total Fixed Assets 7.80 0.39
6 Preoperative Expenses 4.53 0.23
Total 12.34 0.62

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6.1.8 Allocation of Pre Op Expenses, IDC and Contingencies

Pre Operative expenses, IDC and Contingencies are allocated to total fixed assets
as given in Table 6.5.

Table 6.5
Allocation of Pre Op Expenses, Contingencies and IDC

Sr. Particulars Amount % Pre Op Cont. IDC Total

Rs. Crs Rs. Crs Rs. Crs Rs. Crs Rs. Crs
1 Land 1.52 3.35 0.15 0.02 0.00 1.69
2 Building and Civil Works 5.22 11.52 0.52 0.07 0.21 6.03
3 Plant and Machinery 36.90 81.41 3.69 0.50 1.51 42.61
4 Misc. Fixed Assets 0.42 0.93 0.04 0.01 0.00 0.47
5 Vehicles 0.84 1.86 0.08 0.01 0.00 0.94
6 Computers 0.42 0.93 0.04 0.01 0.00 0.47
Total Fixed Assets 45.32 100.00 4.53 0.62 1.73 52.20

6.2 Projected Working Capital Requirements

The working capital requirements for the proposed project are appraised in view
of the industry norms as given in Annexure-II. Projected working capital
requirement for the first year is given in Table 6.5.

Table 6.5
Projected Working Capital Requirements

Sr. Particulars Days 2013-14

I Current Assets Rs. Crs.
1 Raw Materials 30 8.66
2 Packing materials 30 0.10
3 Finished Goods 30 9.09
4 Book Debts 75 30.28
5 Working Expenses 30 1.55
Total 49.69
II Creditors 60 17.52
III Net Working Capital 32.17
IV Bank Borrowing 17.00
V Margin Money 15.17

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The working capital allocation towards the “working expenses” has been
provided to represent the minimum amount of cash which is needed to maintain
smooth running of operations. It is a part of the total cash surplus available. It is
not separately shown in cash flow analysis as well as balance sheet. For all the
projected operating years, the cash surplus will be greater than this minimum
required cash balance to meet working expenses.
Working Capital Loan from bank is sought at Rs. 17.00 Crs. against net working
capital of Rs.32.17 Crs. and the balance Rs. 15.17 Crs will be margin money for
working capital during the year 2013-14. To start the operations, initial margin for
working requirement is estimated at Rs. 5.00 Crs. Interest rate on working capital
loan is considered at 13% per annum.

6.3 Means of Finance

BIPL has proposed means of finance as given in Table 6.6. It is estimated that
initial cost of the project will be funded by Term Loan of Rs. 29.00 Crs. and
balance Rs. 28.20 by Equity. However, going forward BIPL plans to fund its
growth by internal accruals only. BIPL has sought for term loan at 13% interest
per annum for 65 months from the Bank. Term loan will be fully repaid with in
five years period starting from April 2013 in quarterly installments considering
moratorium period of initial six months starting from April 2013 to September
2013 and a construction period of 5 months from November 2012.

Table 6.6
Means of Finance

Sr. Sources Rs. Crs. %

1 Equity 28.20 49.5
2 Term Loan 29.00 50.5
Total 57.20 100
Financial Ratios
1 Debt/Equity 1.00
2 Asset Coverage Ratio 1.80

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Based on the proposed means of finance, Debt/Equity ratio and Asset Coverage
Ratio work out to be favorable as compared to the normal standard.

6.4 Observations
 The cost of proposed project appraised at Rs. 57.20 Crs.
 Bank Term Loan is sought for Rs. 29.00 Crs. and Balance Rs. 28.20 Crs.
will be equity. Term Loan amounts to 50.5% of the project cost.
 The proposed Debt/Equity ratio and Asset Coverage ratio work out to be
1.03 and 1.80 respectively.
 Net Working Capital is appraised at Rs. 32.17 Crs, out of which Bank
Working Capital Loan is sought for Rs. 17.00 Crs. and balance Rs. 15.17
Crs. is proposed Margin Money. To start the operations, initial margin for
working requirement is estimated at Rs. 5.00 Crs.

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VII - ECONOMIC VIABILITY

7.1 Background
BIPL envisages upon setting up of a manufacturing facility to produce of Bitumen
based waterproofing products at Dahej SEZ in Bharuch District of Gujarat State.
The economic viability of proposed project is appraised on the basis of analysis of
projected profitability, projected cash flow, projected balance sheet, break even
analysis, debt service coverage ratio (DSCR), internal rate of return (IRR) and
sensitivity of selling price as well as raw material price on profitability. While
appraising economic viability of the project, the prevailing operating parameters
are considered as bases. The project will be fully implemented by March 2013
and will start operations on commercial scale from April 2013. The economic
viability is appraised as follows.

7.2 Projected Profitability

The detailed projected profitability is given in Annexure-III. The summary of
projected profitability is given below in Table 7.1.

Table 7.1
Summary of Projected Profitability
(Rs. In Lacs)
Particulars 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
Net Income 14736 17372 18722 20077 20664 20741
Operating Cost 12549 14810 16006 17214 17752 17870
EBDIT 2187 2562 2716 2863 2912 2872
PBT 848 1412 1746 2055 2254 2322
PAT 691 1151 1423 1675 1837 1893
Cash Accruals 1438 1776 1952 2125 2222 2221

It can be seen from the above that the operations of BIPL will earn increasing
profits and cash accruals. Profit after tax will increase from Rs. 691 Lacs in the
year 2013-014 to Rs. 1893 Lacs in the year 2018-19.

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7.3 Profitability Analysis

7.3.1 DSCR Analysis
The DSCR is analysed and gross DSCR as well as net DSCR have been worked
out as given in Table 7.2. It can be seen from the DSCR analysis that the
cumulative gross DSCR is 2.66 as well as cumulative Net DSCR is 3.28 which
are better than the normal standards.
Table 7.2
DSCR Analysis
(Rs. In Lacs)
Particulars 2013-14 2014-15 2015-16 2016-17 2017-18 Total
Cash Accruals 1438 1776 1952 2125 2221 9513
Interest on TL 372 304 220 136 53 1085
Total 1810 2080 2172 2262 2274 10597
Repayment 322 644 644 644 647 2900
Interest on TL 372 304 220 136 53 1085
Total 694 948 864 780 699 3985
Gross DSCR 2.61 2.20 2.51 2.90 3.25 2.66
Net DSCR 4.47 2.76 3.03 3.30 3.43 3.28

7.3.2 IRR Analysis

The IRR is analysed as given in Table 7.3. The IRR of 50% indicates good returns
over investment.
Table 7.3
IRR Analysis
(Rs. In Lacs)
Particulars 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
CAPEX -5252 0 0 0 0 0 0
Net CA 0 0 0 0 0 0 0
EBDI after Tax 0 2187 2562 2716 2863 2912 2872
Total -5220 2187 2562 2716 2863 2912 2872
Net Fixed
Assets 0 0 0 0 0 0 2157
Net CA 0 0 0 0 0 0 4543
Total -5220 2187 2562 2716 2863 2912 9572
IRR 50%

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7.3.3 Break Even Analysis

The analysis of break even point is given at Annexure IV. The summary of break
even analysis is given in Table 7.4.

Table 7.4
Break Even Analysis
(Rs. In Lacs)
Particulars 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
Cap. Utilisation 55% 65% 70% 75% 77% 77%
Net Income 14736 17372 18722 20077 20664 20741
Variable Costs 12424 14598 15718 16844 17340 17419
Contribution 2312 2774 3004 3234 3325 3323
Fixed Costs 1464 1361 1258 1178 1070 1000
BEP 35% 32% 29% 27% 25% 23%
Avg. BEP 35%

It can be seen from the above that the BEP at 35% in the year 2013-14 reduces up
to 23% in the year 2018-19. It can be seen from the above that the average BEP
works out to 35 %.

7.4 Projected Cash Flow

The analysis of projected cash flow is given at Annexure V. The summary of
projected cash flow is given in Table 7.5.

Table 7.5
Summary of Projected Cash Flow
(Rs. in Lacs)
Particulars 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
Sources of Funds 5220 6139 2875 2876 3024 2983 2882
Appln. of Funds 5220 5885 2290 1849 1824 1530 677

Surplus 0 255 584 1027 1200 1453 2205

Opening Balance 0 0 255 839 1867 3067 4520
Closing Balance 0 255 839 1867 3067 4520 6725

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It can be seen from the projected cash flow analysis that there will be adequate
cash surplus after all applications of funds. The cash surplus at the end of the year
2018-19 will be Rs. 6725 Lacs. The cash surplus is inclusive of working capital
allocation towards the “working expenses” needed to maintain for smooth
running of operations.

7.5 Analysis of Projected Balance Sheets

The analysis of projected balance sheet is given at Annexure VI. The financial
ratios worked out on the basis of projected balance sheet are given in Table 7.6.
The liabilities and assets are balanced evenly. The net worth remains positive and
financial ratios work out to be satisfactory.

Table 7.6
Financial Ratios (Analysis of Projected Balance Sheet)
* Rs. in Lacs
Particulars 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
Net Worth * 2320 3512 4663 6086 7761 9598 11491
Debt/Equity 1.25 0.73 0.41 0.21 0.08 0.00 0.00
Net FA/TL 1.80 1.74 1.99 2.57 NA NA NA
CA/CL NA 2.89 3.15 3.59 4.03 4.59 5.47
Net CA/WCL NA 1.95 2.62 3.39 4.26 5.18 6.49

7.6 Sensitivity Analysis

The sensitivity analysis has been carried out considering the following aspects as
given at Annexure VII.
 Decrease in selling price by 4%
 Increase in raw material cost by 4%
 Decrease in selling price by 4% plus increase in raw material cost by 4%
 Decrease in selling price by 4% plus 2% increase in interest cost
 Increase in raw material cost by 4% plus 2% increase in interest cost
 Decrease in selling price by 4% plus increase in raw material cost by 4%
plus 2% increase in interest cost

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Due to negative change up to 4% in selling and raw material prices and additional
interest cost of 2% the BEP goes up and DSCR as well as IRR declines. However,
the DSCR and IRR remain with in the range of normal standards and the
operations will generate cash accruals. Table 7.7 and 7.8 shows profitability
considering 4% negative change in selling price and raw material cost and along
with additional 2% interest cost respectively.

Table 7.7
Summary of Sensitivity Analysis: Selling Price Low by 4%
Plus Raw Material Cost High by 4%
(Rs. in Crores)
Particulars 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
Net Income 14147 16677 17973 19274 19838 19912
Operating Cost 12920 15248 16478 17720 18273 18393
EBDIT 1226 1429 1495 1554 1565 1519
Financial Exp. 1339 1150 970 808 658 549
PBT -113 280 525 746 907 969
PAT -113 228 428 608 739 790
Cash Accruals 634 853 957 1058 1123 1118
Cum Gr. DSCR 1.43
Cum Net DSCR 1.59
IRR 26%
Avg. BEP 58%

Table 7.8
Summary of Sensitivity Analysis: Selling Price Low by 4%
Plus Raw Material Cost High by 4% Plus Interest Cost High by 2%
(Rs. In Crores)
Particulars 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
Net Income 14147 16677 17973 19274 19838 19912
Operating Cost 12920 15248 16478 17720 18273 18393
EBDIT 1226 1429 1495 1554 1565 1519
Financial Exps 1430 1230 1038 863 699 583
PBT -204 199 457 691 865 935
PAT -204 162 372 563 705 762
Cash Accruals 542 787 901 1014 1089 1091
Cum Gr. DSCR 1.35
Cum Net DSCR 1.49
IRR 26%
Avg. BEP 61%

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7.7 Bases of Projected Profitability

The prevailing operating parameters of the industry are considered as bases for
projected performance of BIPL as given at Annexure VIII. Interest and term loan
repayment are given at Annexure-IX. Depreciation provision on WDV basis is
given in Annexure-X.

7.8 Observations and Conclusion

Observations
 The operations of BIPL will earn increasing profits and cash accruals.
Profit after tax will increase from Rs. 691 Lacs in the year 2013-014 to Rs.
1893 Lacs in the year 2018-19.

 The cumulative Gross DSCR will be 2.66 and cumulative Net DSCR will
be 3.28, which are satisfactory.

 IRR works out to be 50 %, which is satisfactory.

 The BEP at 35% in the year 2013-14 reduces up to 23% in the year 2018-
19. Average BEP works out to 35%.

 There will be enough positive cash surplus after all applications of funds.
The cash surplus at the end of the year 2018-19 will be Rs. 6725 Lacs.

 The liabilities and assets will be well balanced. The net worth remains
positive and financial ratios work out to be satisfactory.

 Due to negative change up to 4% in selling and raw material prices and

additional interest cost of 2% the BEP goes up and DSCR as well as IRR
declines. However, the DSCR and IRR remain with in the range of normal
standards and the operations will generate cash accruals.

Conclusion
Looking to the appraisal of various economic aspects of project proposed by
BIPL, it can be concluded that the operations of project proposed by BIPL will be
economically viable. Looking to the returns, the proposed investment is justified.

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VIII – SWOT ANALYSIS

Strengths
 The experience and expertise of the parent company in manufacturing
waterproofing products is one of its greatest strength. Established in 1999, MWC
today is one of the largest producers of waterproofing products in Egypt.
 The BIPL enjoys a strong brand reputation in the market due to its Indian market
presence since last 5 years.
 The Strategic location of proposed project would help it in easy sourcing of raw
materials. The raw materials would be easily available from the Koyali and
Jamunagar in Gujarat. Beside this Gujarat has good plastic refinery industry, so
polyester can be easily sourced from the site.
 BIPL has a competitive edge due to its strategy of sourcing bituminous from
India. This is because it will give the company a price advantage over its
competitors importing bituminous. The company may decide to transfer its price
advantage to its clients and hence may sell quality products at comparatively
cheaper price.
 The Dahej SEZ will help company in availing basic infrastructure facilities like
water and connectivity, labor accommodation, power in most efficient manner.
Besides this, being situated on the Delhi- Mumbai Highway the company would
have great connectivity to road, port and airway facilities.
 Being setup in the SEZ, BIPL would b able to avail the tax exemption under
Income Tax Act for 15 years.

Weakness
 Finding trained labor in highly specialized but nascent industries like
waterproofing could be difficult. However, BIPL over time would develop in-
house training facilities for its employees which will help it in retaining and
improving efficiency of its labor.

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Opportunities
 Increasing demand and supply gap in the waterproofing industry.
 Demand for roofing materials is projected to advance to 2.6 % per year. Rising
living standards in India will foster demand for new housing construction as well
as re-roofing with more durable or aesthetically pleasing materials.
 Indian water proofing industry still has not big indigenous players and most of the
players import the products and sell them in Indian markets post re-branding. This
poses first mover opportunity to the Company.

Threats
 BIPL may face competition from the existing Indian players and foreign big
competitors. However the price and quality advantage as mentioned above will
outcome the competitor from the market.

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IX - RISK ANALYSIS AND MITIGATION

RISK MITIGATION RISK MITIGATION

Management Risk The promoters of the Modern Waterproofing Co Ltd are well
conversant with the industry.
Pre-Completion Risk
Land Acquisition BIPL already has taken a piece of land in Dahej SEZ on lease for 30
years and extendable by another 30 years for the purpose of setting up
the project.
Construction Risk The construction of plant would be carried out by an experienced
contractor having considerable experience and knowledge in setting
Power Supply The power for the plant would be supplied by SEZ. However the
company plans to import Transformers from Egypt for power
Financial Closure The promoters are committed to bring in equity in the Debt-Equity
ratio almost at 49.5:50.5. BIPL is already in the process of
approaching banks to raise the required rupee term loan.
Raw Material The key raw material for the plant is bituminous, which is a by
Availability product in oil refining. BIPL plans to source bituminous from the
Koyali and Jamunagar refineries in Gujarat. Beside this, Gujarat has
good plastic industry, so polyester can be easily sourced for the
project.
Post Completion Risk
Environment Risk The SEZ has obtained all the necessary environmental clearances
required for setting up the plant. However, BIPL plans to set up an air
effluent treatment plant for the purpose of treatment of air coming out
of plant.

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Market Risk BIPL has a good reputation and visibility among its Indian and South
Eastern country clients. The presence of BIPL products in these
regions and current expansion plans will help in not only capturing
Indian market but increasing its presence in other adjoining Asian and
south eastern countries. BIPL already has a good order book from
these clients.
Competition Risk BIPL products have been in Indian market for about 5 years and thus
company has established a good network of distributors and retailers.
Companies like Pidlite are some of the major customers.

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X - OBSERVATIONS AND CONCLUSIONS

X.1 Observations

Background of BIPL
 M/s. Modern Waterproofing Company (MWC), incorporated Egypt
envisages upon setting up of a manufacturing facility at Dahej SEZ with
installed production capacity of 21.02 Million m2 in the name of M/s
Bitumode International Pvt. Ltd (BIPL).
 BIPL plant is being set up in India at Dahej SEZ in Bharuch District of
Gujarat with the main objective of manufacturing waterproofing products
in India and will operate as the subsidiary to MWC.
 The management of the BIPL has been involved in the Water Proofing
business for about 12 years and has an Indian market presence for nearly 5
years.
 The aggregate cost of the proposed project is estimated at Rs.57.20 Crs
and is proposed to be financed by a Term Loan of Rs. 29.00 Crs and
promoter’s equity participation of Rs. 28.20 Crs.

Products Overview
 BIPL has proposed to produce eight varieties Bitumen based
waterproofing products, shingles, and adhesive products at installed
production capacity of 21.02 million m2 bituminous of membranes. The
waterproofing method currently prevalent in India is Brickbat Coba.
 Bituminous method of waterproofing is much more advanced and long
lasting than the current brick bat coba method prevalent method in India.
 BIPL has envisaged projected sales turnover of Rs. 207.41 Crs. at
optimum capacity.

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Market Aspects
 Global demand for roofing materials is projected to grow 3.1% annually
through 2014 to 11.1 billion square meters.
 The demand for the roofing products can be categorized into six major
product categories including: bituminous, metal, plastic, tile and fiber
cement. Bituminous products commanded the lion’s share, accounting for
38.0% of FY 2009 global roofing sales in m2.
 Worldwide sales of modified bitumen roofing systems are forecast to
increase by 3.6% per year through FY 2014 to USD 810 million,
outpacing bituminous roofing as a whole.
 Demand for roofing in India is expected to increase 4.8 percent annually
through 2014 to 570 million square meters, among the fastest growth rates
of any nation in the world.
 The Indian water proofing industry is in its early growth stage. With the
emphasis now on building fast and building to last, there is lot for this
industry in the construction sector. In 2009, roofing demand in India
reached 450 million square meters, valued at $2.9 billion, representing the
second largest market in the Asia/Pacific region.
 India is emerging as the leading manufacturing centre for number of
multinationals, the sector is growing fast and demand growth is moving
upwards by the emergence of new market.
 According to the Freedonia International Roofing Study India’s demand
for bituminous membrane in 2010 is estimated to be 440 million square
meters, and is expected to increase to 563 million in 2015, and 613 million
by 2019.
 With the increase in GDP over the years the demand for Modified
bituminous membrane, which only represents 5.78% of the different types
of waterproofing methods used in India, is expected to grow by 15% over
the next 3 years.

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 Due to the fact that Modified Bituminous membranes are relatively new
products in India, the total market for Modified bituminous membranes
can be subdivided and categorized under three categories:
iv) Traditional non-membrane waterproofing and roofing
v) Traditional membrane waterproofing and roofing
vi) Modified Bitumen membranes
 Modified Bitumen membranes category is the fastest growing and is
rapidly grabbing market share from the other two categories. This
category is dominated by imports from Egypt, Europe, and Saudi Arabia,
out of which Imports from Egypt are the most dominant.
 Marketing Strategy
viii) BIPL plans to differentiate its products from its competitors in
quality rather than price.
ix) BIPL plans to utilize the same price structure available in India
while producing products at lower cost hence increasing its
margins.
x) BIPL plans selling its product under the brand name Bitumode and
to establish and expand its brand image.
xi) BIPL already has a strong presence in Indian market and has
gained enough market knowledge.
xii) Currently BIPL only utilizes its direct sales channels to client like
large clients like Pidilite, STP Pvt. Ltd and IWL and has no other
distribution channel of its own in the country.
xiii) BIPL plans to develop its own network of client and managers for
distributing its products in India. This distribution channel would
help the Company in expanding its upcoming lower priced version
of its products to smaller clients.
xiv) As per the initial plans of BIPL, it envisages a time period of 3-4
months for setting up its own distribution network. For quick
execution of these plans the BIPL plans to appoint best talent from
Indian industry.

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 BIPL has plan to target sectors of infrastructure projects as well as

commercial and public spaces in A and B category cities and industrial
projects.

Technical Feasibility
 BIPL envisages upon setting up of a manufacturing facility to produce
eight varieties of Bitumen based waterproofing products at Dahej SEZ at
Bharuch in Gujarat
 The plant would produce Bitumen based waterproofing products, shingles,
and adhesive products.
 Manufacturing process for the proposed products is well established.
 All the raw materials required to produce the proposed products are easily
available.
 The proposed Plant and Machinery are appropriate for the propose project.
 The plant will have installed capacity of 21.02 million m2 bituminous
membrane producing.
 The plant availability factor will be at 80%. The optimum plant operating
capacity will be at 77%.
 Land acquired for the proposed project is adequate for the requirements.
 The building construction and civil works as above will be adequate for
the requirement of the project.
 All the required infrastructure facilities are available at the project site.
 Manpower of 57 persons at the maximum will be required to carry out
operations of the proposed project. The necessary manpower will be
available.
 The proposed location is most suitable looking to various aspect
concerning to the proposed project.
 The project will be fully implemented by March 2013 and start
commercial production from April 2013.

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Project Cost and Means of Finance

 The cost of proposed project appraised at Rs. 57.20 Crs.
 Bank Term Loan is sought for Rs. 29.00 Crs. and Balance Rs. 28.20 Crs.
will be equity. Term Loan amounts to ~51% of the project cost.
 The proposed Debt/Equity ratio and Asset Coverage ratio work out to be
1.03 and 1.83 respectively.
 Net Working Capital is appraised at Rs. 32.17 Crs, out of which Bank
Working Capital Loan is sought for Rs. 17.00 Crs. and balance Rs. 15.17
Crs. is proposed Margin Money. To start the operations, initial margin for
working requirement is estimated at Rs. 5.00 Crs.

Economic Viability
 The operations of BIPL will earn increasing profits and cash accruals.
Profit after tax will increase from Rs. 691 Lacs in the year 2013-014 to Rs.
1893 Lacs in the year 2018-19.

 The cumulative Gross DSCR will be 2.66 and cumulative Net DSCR will
be 3.28, which are satisfactory.

 IRR works out to be 50 %, which is satisfactory.

 The BEP at 35% in the year 2013-14 reduces up to 23% in the year 2018-
19. Average BEP works out to 35%.

 There will be enough positive cash surplus after all applications of funds.
The cash surplus at the end of the year 2018-19 will be Rs. 6725 Lacs.

 The liabilities and assets will be well balanced. The net worth remains
positive and financial ratios work out to be satisfactory.

 Due to negative change up to 4% in selling and raw material prices and

additional interest cost of 2% the BEP goes up and DSCR as well as IRR
declines. However, the DSCR and IRR remain with in the range of normal
standards and the operations will generate cash accruals.

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X.2 Conclusions
 In view of the market potential of Bitumen based waterproofing products,
BIPL management’s marketing experience and group set up as well as
proposed marketing strategy, it can be concluded that it will be possible
for BIPL to achieve targeted turn over.
 Looking to the appraisal of various technical aspects of project proposed
by BIPL, it can be concluded that the project is technically feasible. With
the proposed manufacturing and infrastructure facilities, it will be possible
to achieve targeted production.
 Looking to the appraisal of various economic aspects of project proposed
by BIPL, it can be concluded that the operations of project proposed by
BIPL will be economically viable. Looking to the returns, the proposed
investment is justified.

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ANNEXURE – I
NARDINI PRODUCTION LINE : PROCESS FLOW CHART

Singles
Raw Bitumen Production
Mixing Section
Line

Fillers Mixers & Primary Secondary Coating Packing

Preparators Mixing Mixing Section Section

Other Auxiliary
chemical Machinery
additives
Motors

Oil heating
System
Recyclable Dry cleaning Plastic Plastic Recycling Chillers
Plastic Centrifugal Machine Densifier Extruder & Accessories
Compressors

Plastic Polymer Section Pumps

65
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ANNEXURE – II

PROJECTED WORKING CAPITAL REQUIREMENT

(Rs. in Lacs)
Sr 2013- 2014- 2015- 2016- 2017- 2018-
. Particulars 14 15 16 17 18 19
I Current Assets
Raw Materials (30 866 1021 1100 1180 1215 1220
1 Days)
Pack Materials (30 10 11 12 13 13 13
2 Days)
Finished Goods (30 909 1072 1155 1239 1275 1280
3 days)
4 Book Debts (75 Days) 3028 3570 3847 4125 4246 4262
Working Exps (30 155 185 203 221 230 235
5 Days)
Total 4969 5859 6318 6779 6980 7011
II Current Liabilities
Goods Creditors (60 1752 2065 2225 2387 2457 2468
Days)
Total 1752 2065 2225 2387 2457 2468
II 3217 3794 4092 4392 4523 4543
I Net Working Capital
IV Bank Loan 1700 1700 1700 1700 1700 1700
V Margin Money 1517 2094 2392 2692 2823 2843
Interest on WCL 221 221 221 221 221 221
VI (13%)

66
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ANNEXURE – III
PROJECTED PROFITABILITY

(Rs. in Lacs)
Sr. Particulars 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
Capacity
I Utilisation 55% 65% 70% 75% 77% 77%
II Production (M2) 9250560 10932480 11773440 12614400 12950784 12950784
III Income
Domestic Sales 11772 13878 14956 16039 16508 16569
Exports 6037 7117 7670 8225 8465 8497
Commission 356 420 453 485 499 501
Custom Duty 2717 3203 3451 3701 3809 3824
Net Income 14736 17372 18722 20077 20664 20741
IV Operating Costs
1 Raw Materials 10542 12423 13389 14361 14786 14849
2 Packing Materials 117 138 148 159 163 163
3 Power and Fuel 301 355 383 410 421 421
Other Mfg.
4 Expenses 104 123 132 142 146 146
Repairs &
5 Maintenance 85 94 103 113 125 137
6 Salaries and Wages 148 201 259 323 355 391
Selling, Admn,
7 Gen, Exp 516 608 655 703 723 726
Marketing
8 Expenses 737 869 936 1004 1033 1037
Total 12549 14810 16006 17214 17752 17870
V EBDIT 2187 2562 2716 2863 2912 2872
Financial
VI Expenses
1 Interest on TL 372 304 220 136 53 0
2 Interest on WCTL 221 221 221 221 221 221
3 Depreciation WDV 746 625 529 450 384 328
Total - 1339 1150 970 808 658
VI
I Profit Before Tax 848 1412 1746 2055 2254 2322
Tax Provisions
(18.50%) 157 261 323 380 417 430
VI
II Profit After Tax 691 1151 1423 1675 1837 1893
IX Cash Accruals 1438 1776 1952 2125 2222 2221

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ANNEXURE – IV

BREAK EVEN ANALYSIS

(Rs. in Lacs)
Sr. Particulars 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
Capacity
I Utilisation 55% 65% 70% 75% 77% 77%
II Net Sales 14736 17372 18722 20077 20664 20741
III Variable Costs
Materials Cost 10658 12561 13538 14520 14949 15012
Power (80%) 222 262 283 303 311 311
Fuel 23 27 29 32 32 32
Other Mfg Expenses 104 123 132 142 146 146
Repairs and
Maintenance (80%) 68 75 82 91 100 110
Selling, Mktg, Gen,
Admn.(90%) 1127 1329 1432 1536 1581 1587
Interest on WC Loan 221 221 221 221 221 221
Total 12424 14598 15718 16844 17340 17419
IV Contribution 2312 2774 3004 3234 3325 3323
V Fixed Costs
Power (20%) 56 66 71 76 78 78
Repairs and
Maintenance (20%) 17 19 21 23 25 27
Salaries and Wages 148 201 259 323 355 391
Selling, Mktg, Gen,
Admn.(10%) 125 148 159 171 176 176
Interest on Term
Loan 372 304 220 136 53 0
Depreciation 746 625 529 450 384 328
Total 1464 1361 1258 1178 1070 1000
VI Break Even Point 35 32 29 27 25 23
Average 35%

68
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ANNEXURE – V

CASH FLOW ANALYSIS

(Rs. in Lacs)
Sr. Particulars 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
I Sources of Funds
Equity 2320 500 0 0 0 0 0
Bank Term Loans 2900 0 0 0 0 0 0
Bank WC Loans 0 1700 0 0 0 0 0
Current Liabilities 0 1752 313 161 161 71 10
PBIT 0 1441 1937 2187 2413 2528 2543
Depreciation 0 746 625 529 450 384 328
Total 5220 6139 2875 2876 3024 2983 2882
Applications of
II Funds
CAPEX 5220 0 0 0 0 0 0
Current Assets 0 4813 860 441 443 192 26
Repayment of TL 0 322 644 644 644 647 0
Interest Payment 0 593 525 441 357 274 221
Taxation 0 157 261 323 380 417 430
Total 5220 5885 2290 1849 1824 1530 677

III Surplus 0 255 584 1027 1200 1453 2205

IV Opening Balance 0 0 255 839 1867 3067 4520
V Closing Balance 0 255 839 1867 3067 4520 6725

69
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ANNEXURE – VI

PROJECTED BALANCE SHEET

(Rs. in Lacs)
Sr. Particulars 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
I Liabilities
Equity 2320 2820 2820 2820 2820 2820 2820
Reserves and Surplus 0 691 1843 3265 4940 6777 8670
Bank Term Loans 2900 2578 1934 1291 647 - 0
Bank WC Loans 0 1700 1700 1700 1700 1700 1700
Current Liabilities 0 1752 2065 2225 2387 2457 2468
Total 5220 9542 10362 11301 12494 13755 15658
II Assets
Gross Block 5220 5220 5220 5220 5220 5220 5220
Depreciation 0 746 1371 1900 2350 2735 3063
Net Block 5220 4474 3849 3320 2870 2485 2157
Current Assets
Inventories 0 1785 2104 2268 2432 2504 2514
Book Debts 0 3028 3570 3847 4125 4246 4262
Cash & Bank Balance 0 255 839 1867 3067 4520 6725
Total Current
Assets 0 5068 6513 7981 9624 11270 13501
Total 0 0 0 0 0 0 0
Financial Ratios 5220 9542 10362 11301 12494 13755 15658
III Net Worth (Rs. Lacs) 2320 3512 4663 6085 7760 9598 11490
IV Debt/Equity 1.25 0.73 0.41 0.21 0.08 0.00 0.00
V Net FA/Term Loan 1.80 1.74 1.99 2.57 NA NA NA
VI CA/CL NA 2.89 3.15 3.59 4.03 4.59 5.47
VII Net CA/WC Loans NA 1.95 2.62 3.39 4.26 5.18 6.49

70
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ANNEXURE – VII
SENSITIVITY ANALYSIS:

1) SELLING PRICE LOW BY 4%

(Rs. in Lacs)
Sr. Particulars 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
Capacity
I Utilisation 55% 65% 70% 75% 77% 77%
II Production (M2) 9250560 10932480 11773440 12614400 12950784 12950784
III Net Income 14147 16677 17973 19274 19838 19912
IV Operating Costs 12498 14751 15943 17146 17682 17799
V EBDIT 1648 1926 2030 2128 2156 2113
Financial
VI Expenses 1339 1150 970 808 658 549
VI Profit Before
I Tax 309 777 1060 1321 1498 1563
VI
II Profit After Tax 252 633 864 1076 1221 1274
IX Cash Accruals 998 1258 1393 1526 1605 1602
X DSCR
Gross DSCR 1.97 1.65 1.87 2.13 2.37
Average Gross
DSCR 1.97
Net DSCR 3.10 1.95 2.16 2.37 2.48
Average Net
DSCR 2.34
XI
V IRR 36%
X
V BEP 45 41 38 35 32 30
Average BEP 45%

71
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SENSITIVITY ANALYSIS:

2) RAW MATERIALS PRICE HIGH BY 4%

(Rs. in Lacs)
Sr. Particulars 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
Capacity
I Utilisation 55% 65% 70% 75% 77% 77%
II Production (M2) 9250560 10932480 11773440 12614400 12950784 12950784
III Net Income 14736 17372 18722 20077 20664 20741
IV Operating Costs 12970 15307 16542 17789 18343 18464
V EBDIT 1766 2065 2180 2289 2321 2278
Financial
VI Expenses 1339 1150 970 808 658 549
VII Profit Before Tax 427 915 1210 1481 1663 1728
VIII Profit After Tax 348 746 986 1207 1355 1409
IX Cash Accruals 1094 1371 1515 1657 1740 1737
X DSCR
Gross DSCR 2.11 1.77 2.01 2.30 2.56
Average Gross
DSCR 2.12
Net DSCR 3.40 2.13 2.35 2.57 2.69
Average Net
DSCR 2.54
XIV IRR 38%
XV BEP 43% 39% 36% 33% 30% 28%
Average BEP 42%

72
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SENSITIVITY ANALYSIS:

3) SELLING PRICE LOW BY 4% PLUS RAW MATERIALS PRICE

HIGH BY 4%
(Rs. in Lacs)
Sr. Particulars 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
I Capacity Utilisation 55% 65% 70% 75% 77% 77%
II Production (M2) 9250560 10932480 11773440 12614400 12950784 12950784
III Net Income 12920 15248 16478 17720 18273 18393
IV Operating Costs 1226 1429 1495 1554 1565 1519
V EBDIT 1226 1429 1494 1553 1564 1518
VI Financial Expenses 1339 1150 970 808 658 549
VII Profit Before Tax -113 280 525 746 907 969
VIIIProfit After Tax -113 228 428 608 739 790
IX Cash Accruals 634 853 957 1058 1123 1118
X DSCR
Gross DSCR 1.45 1.22 1.36 1.53 1.68
Average Gross
DSCR 1.43
Net DSCR 1.97 1.32 1.49 1.64 1.74
Average Net DSCR 1.59
XIV IRR 26%
XV BEP 60% 54% 49% 46% 42% 39%
Average BEP 58%

73
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SENSITIVITY ANALYSIS:

4) SELLING PRICE LOW BY 4% PLUS INTEREST COST HIGH BY 2%

(Rs. in Lacs)
Sr. Particulars 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
I Capacity Utilisation 55% 65% 70% 75% 77% 77%
Producti 1295078
II on (M2) 9250560 10932480 11773440 12614400 12950784 4
III Net Income 14147 16677 17973 19274 19838 19912
IV Operating Costs 12498 14751 15943 17146 17682 17799
V EBDIT 1648 1926 2030 2128 2156 2113
VI Financial Expenses 1430 1230 1038 863 699 583
VII Profit Before Tax 218 696 992 1266 1457 1529
VIII Profit After Tax 178 567 809 1031 1187 1246
IX Cash Accruals 924 1192 1338 1482 1572 1575
X DSCR
Gross DSCR 1.80 1.55 1.77 2.05 2.31
Average Gross
DSCR 1.87
Net DSCR 2.87 1.85 2.08 2.30 2.43
Average Net DSCR 2.24
XI
V IRR 36%
XV BEP 48% 44% 40% 36% 33% 30%
Average BEP 47%

74
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SENSITIVITY ANALYSIS:

5) RAW MATERIALS PRICE HIGH BY 4% PLUS

INTEREST COST HIGH BY 2%

(Rs. in Lacs)
Sr. Particulars 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
Capacity
I Utilisation 55% 65% 70% 75% 77% 77%
II Production (M2) 9250560 10932480 11773440 12614400 12950784 12950784
III Net Income 14736 17372 18722 20077 20664 20741
IV Operating Costs 12970 15307 16542 17789 18343 18464
V EBDIT 1766 2065 2180 2289 2321 2278
Financial 1430 1230 1038 863 699 583
VI Expenses
VII Profit Before Tax 336 835 1142 1426 1622 1694
VIII Profit After Tax 273 680 931 1162 1322 1381
IX Cash Accruals 1020 1305 1460 1612 1706 1709
X DSCR
Gross DSCR 1.93 1.67 1.91 2.21 2.50
Average Gross
DSCR 2.01
Net DSCR 3.17 2.03 2.27 2.50 2.64
Average Net
DSCR 2.45
XIV IRR 38%
XV BEP 45% 41% 37% 34% 31% 29%
Average BEP 44%

75
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SENSITIVITY ANALYSIS:

6) SELLING PROCE LOW BY 4% PLUS RAW MATERIALS

PRICE HIGH BY 4% PLUS INTEREST COST HIGH BY 2%

(Rs. in Lacs)
Sr. Particulars 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
Capacity
I Utilisation 55% 65% 70% 75% 77% 77%
II Production (M2) 9250560 10932480 11773440 12614400 12950784 12950784
III Net Income 14147 16677 17973 19274 19838 19912
IV Operating Costs 12920 15248 16478 17720 18273 18393
V EBDIT 1226 1429 1495 1554 1565 1519
Financial 1430 1230 1038 863 699 583
VI Expenses
VII Profit Before Tax -204 199 457 691 865 935
VIII Profit After Tax -204 162 372 563 705 762
IX Cash Accruals 542 787 901 1014 1089 1091
X DSCR
Gross DSCR 1.29 1.14 1.29 1.46 1.63
Average Gross
DSCR 1.35
Net DSCR 1.68 1.22 1.40 1.57 1.68
Average Net
DSCR 1.49
XI
V IRR 26%
XV BEP 64% 57% 52% 47% 43% 40%
Average BEP 61%

76
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ANNEXURE – VIII
BASES OF PROJECTED PROFITABILITY
Sr. Particulars 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
I Capacity and Production
1 Total Production Capacity (m/year) 21024000 21024000 21024000 21024000 21024000 21024000
2 Plant Availability Factor 80% 80% 80% 80% 80% 80%
3 Capacity Utilization 55% 65% 70% 75% 77% 77%
Production 9250560 10932480 11773440 12614400 12950784 12950784
II Product Mix
1 APP Membrane -Polyester(CB)-PE//PE 70.00% 70.00% 70.00% 70.00% 70.00% 70.00%
2 APP Membrane -Polyester-PE//SLATES 5.00% 5.00% 5.00% 5.00% 5.00% 5.00%
3 APP Membrane -Glassfibre-PE//PE 15.00% 15.00% 15.00% 15.00% 15.00% 15.00%
4 SBS Membrane -Polyester-PE//PE 5.00% 5.00% 5.00% 5.00% 5.00% 5.00%
5 SBS - Self adhesive -Polyester-PE//PE 2.70% 2.70% 2.70% 2.70% 2.70% 2.70%
6 Shiengles - Polyester-PE//PE 0.30% 0.30% 0.30% 0.30% 0.30% 0.30%
7 Protection Boards 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%
Total 100% 100% 100% 100% 100% 100%
III Production Mix
1 APP Membrane -Polyester( CB)-PE//PE 6475392 7652736 8241408 8830080 9065548.8 9065548.8
2 APP Membrane -Polyester-PE//SLATES 462528 546624 588672 630720 647539.2 647539.2
3 APP Membrane -Glassfibre-PE//PE 1387584 1639872 1766016 1892160 1942617.6 1942617.6
4 SBS Membrane -Polyester-PE//PE 462528 546624 588672 630720 647539.2 647539.2
5 SBS - Self adhesive -Polyester-PE//PE 249765 295177 317883 340589 349671 349671
6 Shiengles - Polyester-PE//PE 27752 32797 35320 37843 38852 38852
7 Protection Boards 185011.2 218649.6 235468.8 252288 259015.68 259015.68
Total 9250560 10932480 11773440 12614400 12950784 12950784
8 Recycled Poly Propylene/TON 2000 2200 2420 2662 2928 3221

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Sr. Particulars 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19

IV Sales
A) Selling Price (Rs./Unit)
1 APP Membrane –Polyester( CB)-PE//PE 157.50 157.50 157.50 157.50 157.50 157.50
2 APP Membrane –Polyester-PE//SLATES 169.65 169.65 169.65 169.65 169.65 169.65
3 APP Membrane –Glassfibre-PE//PE 124.65 124.65 124.65 124.65 124.65 124.65
4 SBS Membrane –Polyester-PE//PE 193.50 193.50 193.50 193.50 193.50 193.50
5 SBS – Self adhesive –Polyester-PE//PE 198.00 198.00 198.00 198.00 198.00 198.00
6 Shiengles – Polyester-PE//PE 270.00 270.00 270.00 270.00 270.00 270.00
7 Protection Boards 202.50 202.50 202.50 202.50 202.50 202.50
8 Recycled Poly Propylene/TON 27,000 27,000 27,000 27,000 27,000 27,000
B) Sales Realization (Rs. Lacs)
1 APP Membrane –Polyester( CB)-PE//PE 10199 12053 12980 13907 14278 14278
2 APP Membrane –Polyester-PE//SLATES 785 927 999 1070 1099 1099
3 APP Membrane –Glassfibre-PE//PE 1730 2044 2201 2359 2421 2421
4 SBS Membrane –Polyester-PE//PE 895 1058 1139 1220 1253 1253
5 SBS – Self adhesive –Polyester-PE//PE 495 584 629 674 692 692
6 Shiengles – Polyester-PE//PE 75 89 95 102 105 105
7 Protection Boards 375 443 477 511 525 525
8 Recycled Poly Propylene/TON 540 594 653 719 791 870
Total Sales Realization 15092 17792 19174 20563 21164 21243
Sales Commission (2%) 302 356 383 411 423 425
Net Sales Realization 14790 17436 18791 20151 20740 20818

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Sr. Particulars 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19

V Raw Materials
A) Raw Materials Mix (m2)
1 Bitumen 23594478.34 27884383.49 30029336.06 32174288.64 33032269.67 33032269.67
2 Reinforcement 9253718.728 10936213.04 11777460.2 12618707.36 12955206.22 12955206.22
3 Polymer 1 5352374.016 6325532.928 6812112.384 7298691.84 7493323.622 7493323.622
4 Polymer 2 550408 650483 700520 750557 770572 770572
5 Polymer 3 153855 181829 195816 209803 215397 215397
6 Colored Slates 462528 546624 588672 630720 647539.2 647539.2
7 Additives 13875840 16398720 17660160 18921600 19426176 19426176
8 P.E.Film 18010840.32 21285538.56 22922887.68 24560236.8 25215176.45 25215176.45
9 Densified IPP Raw Material 2000 2200 2420 2662 2928.2 3221.02
Total 71256043.03 84211523.59 90689383.86 97167266.14 99758588.45 99758881.27
B) Raw Materials (Rs./Unit))
1 Bitumen 22.50 22.50 22.50 22.50 22.50 22.50
2 Reinforcement 10.80 10.80 10.80 10.80 10.80 10.80
3 Polymer 1 27.00 27.00 27.00 27.00 27.00 27.00
4 Polymer 2 58.50 58.50 58.50 58.50 58.50 58.50
5 Polymer 3 146.25 146.25 146.25 146.25 146.25 146.25
6 Colored Slates 8.10 8.10 8.10 8.10 8.10 8.10
7 Additives 11.25 11.25 11.25 11.25 11.25 11.25
8 P.E.Film 1.17 1.17 1.17 1.17 1.17 1.17
9 Densified IPP Raw Material 21,600 21,600 21,600 21,600 21,600 21,600

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Sr. Particulars 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19

C) Raw Materials Cost (Rs. Lacs)
1 Bitumen 5309 6274 6757 7239 7432 7432
2 Reinforcement 999 1181 1272 1363 1399 1399
3 Polymer 1 1445 1708 1839 1971 2023 2023
4 Polymer 2 322 381 410 439 451 451
5 Polymer 3 225 266 286 307 315 315
6 Colored Slates 37 44 48 51 52 52
7 Additives 1561 1845 1987 2129 2185 2185
8 P.E.Film 211 249 268 287 295 295
9 Densified IPP Raw Material 432 475 523 575 632 696
Total 10542 12423 13389 14361 14786 14849
VI Packing Materials
A) Packing Materials (Rs./Unit)
Packaging/ROLL 1.13 1.13 1.13 1.13 1.13 1.13
Other/Per Roll(Pallets) 0.45 0.45 0.45 0.45 0.45 0.45
Packing Materials Cost (Rs. Lacs)
Packaging/ROLL 104 123 132 142 146 146
Other/Per Roll(Pallets) 12 15 16 17 17 17
Total 117 138 148 159 163 163
VII Power and Fuel
Power 278 328 353 378 389 389
Fuel 23 27 29 32 32 32
Total 301 355 383 410 421 421

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Sr. Particulars 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19

VIII Other Mfg. Expenses (Rs.1.125/Meter) 104 123 132 142 146 146
IX Repairs and Maintenance 86 94 104 114 126 138
X Selling, Admn, Gen, Exps(3.5% of Sales) 516 608 655 703 723 726
XI Marketing Expenses (5% of Sales) 737 869 936 1004 1033 1037

XIII Manpower Requirements

Sr. Category No Scale PA Total PA
2012-13
1 General Manager 1 3000000 30.00
2 Plant Manager 1 1000000 10.00
3 Plant Engineers 2 600000 12.00
4 Lab Technicians 2 400000 8.00
5 Skilled Labors 30 100000 30.00
6 Sales Head 1 2000000 20.00
7 Zonal Managers 1 1000000 10.00
8 Regional Managers 4 700000 28.00
Total 42 148.00
2013-14
Incremental by 10% 162.80
Additional
1 Zonal Managers 1 1000000 10.00
2 Regional Managers 4 700000 28.00
Total 47 200.80

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Sr. Category No Scale PA Total PA

2014-15
Incremental by 10% 220.88
Additional
1 Zonal Managers 1 1000000 10.00
2 Regional Managers 4 700000 28.00
Total 52 258.88
2015-16
Incremental by 10% 284.77
Additional
1 Zonal Managers 1 1000000 10.00
2 Regional Managers 4 700000 28.00
Total 57 322.77

82
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ANNEXURE – IX
TERM LOAN INTEREST AND REPAYMENT
(Rs. in Lacs)
Particulars 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
Bank Term Loan
Quarter 1
Opening Balance 0 2900 2578 1934 1291 647 0
Interest @ 13% 0 94 84 63 42 21 0
Repayment 0 0 161 161 161 161 0
Closing Balance 0 2900 2417 1773 1130 486 0
Quarter 2
Opening Balance 0 2900 2417 1773 1130 486 0
Interest @ 13% 0 94 79 58 37 16 0
Repayment 0 0 161 161 161 161 0
Closing Balance 0 2900 2256 1612 969 325 0
Quarter 3
Opening Balance 0 2900 2256 1612 969 325 0
Interest @ 13% 0 94 73 52 31 11 0
Repayment 0 161 161 161 161 161 0
Closing Balance 2900 2739 2095 1451 808 164 0
Quarter 4
Opening Balance 2900 2739 2095 1451 808 164 0
Interest @ 13% 0 89 68 47 26 5 0
Repayment 0 161 161 161 161 164 0
Closing Balance 2900 2578 1934 1291 647 0 0
Annual Interest 0 372 304 220 136 53 0
Annual Repayment 0 322 644 644 644 647 0

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ANNEXURE – X
DEPRECIATION (WDV)
(Rs. in Lacs)
Sr
. Particulars/March End 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
1) Land
Value 169 169 169 169 169 169 169
Depreciation (0%) 0 0 0 0 0 0 0
Building and Civil
2) Works
Value 603 603 542 488 439 395 356
Depreciation (10%) 0 60 54 49 44 40 36
3) Plant & Machinery
Value 4261 4261 3622 3078 2617 2224 1890
Depreciation (15%) 0 639 543 462 392 334 284
4) Misc. Fixed Assets
Value 46.91 46.91 42.21 37.99 34.19 30.77 27.70
Depreciation (10%) 0.00 4.69 4.22 3.80 3.42 3.08 2.77
5) Vehicles
Value 93.81 93.81 79.74 67.78 57.61 48.97 41.62
Depreciation (15%) 0.00 14.07 11.96 10.17 8.64 7.35 6.24
6) Computers
Value 46.91 46.91 18.76 7.50 3.00 1.20 0.48
Depreciation (60%) 0.00 28.14 11.26 4.50 1.80 0.72 0.29

Total Block 5220 5220 4474 3849 3320 2870 2485

Total Depreciation 0 746 625 529 450 384 328

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