ASSIGNMENT: 3

Problem 17: Page 80 : Prakash Steel Ltd. - Problem Solving using Excel Sheet
Submitted to: Prof. Shuaib Fakih
Name : Alok Kumar Pandey
(IGTCEBMP12MU002)

Details specific to problem:

Plant Capacity as problem point 1 20000 TPA

Sales in first year 60% of capacity
Sales in second year 80% of capacity
Sales in third year 100% of capacity
Sales in 4th year 100% of capacity
Sales in 5th year 100% of capacity
Sales in 6th year 100% of capacity
Sales in 7th year 100% of capacity
Sales in 8th year 100% of capacity
Sales in 9th year 100% of capacity
Sales in 10th year 100% of capacity

Equipment Cost 2.4 Cr

Payment in first year
Payment in second year

Plant Erection Cost 0.2 Crores

Building and Other Cost 0.3 Crores
Interest During Construction Period 0.1 Crores
Preoperative Expenses 0.15 Crores
Total of plant, machinary and building
Contingency 5% of plant, machinary and
building

Selling Price /tonne in Rs

For 1 ton of output raw material required in ton

cost of raw material per ton

Utilities and Consumables per toone of output in Rs

Employee Expenses First Year

Second Year
Third Year

Selling and Distribution Expenses for 3 years in %age

Administrative and other overheads First Year

 Second Year
Third Year

Depreciation rate on capital cost

Interest on Working Capital Financed through banks

Corporate Tax

Cost of capital of exisiting business

Creditors is half a month of raw material stock

Rate of margin for Net Working Capital

 20000 TPA 1 Ton = 1000 kg
12000
16000
20000
20000
20000
20000
20000
20000
20000
20000

24000000
12000000
12000000

2000000 Time Duration 6 months

3000000
1000000
1500000
29000000
1450000

10000

1.1
5300

700

10000000
12500000
15000000

5%

10000000
10000000
10000000

10%

11%

35%

12%

0.5 of RM

25%
Step 1:

Calculate Break Up of Project Cost

Component Year 1 Year 2 Total

Equipment 12000000 12000000 24000000
Plant Erection 0 2000000 2000000
Building and Other cost 0 3000000 3000000
Interest during construction period 0 0 0
Preoperative Expenses 0 1500000 1500000
Contingency 0 1450000 1450000

Sum Total 31950000

Margin of networking Capital 0 5365781.3 5365781.25

Sum Total 12000000 25315781.25 37315781.25

Step 2:

Projected P&L Statement

Component Year 1 Year 2 Year 3

Sales 120000000.00 160000000.00 200000000.00
Expenses:
Raw Material Cost 69960000 93280000 116600000
Utilities 8400000 11200000 14000000
Employee Expenses 10000000 12500000 15000000
Depreciation 3195000 3195000 3195000
Selling and Distribution Expenses 6000000 8000000 10000000
Administrative Overheads 10000000 10000000 10000000
Interest on Working Capital 1770707.8125 2297126.5625 2823545.3125
Total 109325707.8125 140472126.5625 171618545.313
PBT = Sales - Expenses 10674292.19 19527873.44 28381454.69
Less: Corporate Tax 3736002.265625 6834755.703125 9933509.14063
PAT = PBT-Tax 6938289.92 12693117.73 18447945.55
Operating Cash Inflow = PAT+Depriciati 10133289.92 15888117.73 21642945.55
Step 3:

Calculation of Net Working Capital

Component Year 1 Year 2 Year 3

Raw Material Stock 5830000.0 7773333.3 9716666.7
Finised Good Stock 3814791.7 5007291.7 6199791.7
Recievables 10000000.0 13333333.3 16666666.7
Cash Balance 4733333.3 5616666.7 6500000.0
Gross Working Capital 24378125.0 31730625.0 39083125.0
Less: Creditors 2915000.0 3886666.7 4858333.3
Net Working Capital 21463125.0 27843958.3 34224791.7
Margin for Net Working Capital 5365781.3 6960989.6 8556197.9
Book Borrowing 16097343.8 20882968.8 25668593.8

Step 4

Cash Flow Statement

Year Cash Outflow Cash Inflow Net Cash Flow

1 12000000
2 25315781.3
3 16097343.8
4 6380833.3
5 6380833.3
6 0.0
7 0.0
8 0.0
9 0.0
10 0.0
11 0.0
12 0.0
0 -12000000
0 -25315781.25
10133289.92 -5964053.8281
15888117.73 9507284.40104
21642945.55 15262112.2135
21642945.55 21642945.5469
21642945.55 21642945.5469
21642945.55 21642945.5469
21642945.55 21642945.5469
21642945.55 21642945.5469
21642945.55 21642945.5469
55867737.21 55867737.2135
 No of months in an year 12
One month of raw material For first year 5830000
for second year 7773333.3
for third year 9716666.7

When calculated half a month in an year 24

finished goods stock half a month For first year 3814791.7
for second year 5007291.7
for third year 6199791.7

Cash Balance to be maintained at 2 months ie no of times 6

NPV IRR
44392396.80 28%
ASSIGNMENT: 3
Problem 17: Page 80 : Prakash Steel Ltd. - Problem Solving using Excel Sheet
Submitted to: Prof. Shuaib Fakih
Name : Alok Kumar Pandey
(IGTCEBMP12MU002)

Details specific to problem:

Plant Capacity as problem point 1 20000 TPA

Sales in first year 60% of capacity
Sales in second year 80% of capacity
Sales in third year 100% of capacity
Sales in 4th year 100% of capacity
Sales in 5th year 100% of capacity
Sales in 6th year 100% of capacity
Sales in 7th year 100% of capacity
Sales in 8th year 100% of capacity
Sales in 9th year 100% of capacity
Sales in 10th year 100% of capacity

Equipment Cost 2.4 Cr

Payment in first year
Payment in second year

Plant Erection Cost 0.2 Crores

Building and Other Cost 0.3 Crores
Interest During Construction Period 0.1 Crores
Preoperative Expenses 0.15 Crores
Total of plant, machinary and building
Contingency 5% of plant, machinary and
building

Selling Price /tonne in Rs

Selling price is lower by 10%
For 1 ton of output raw material required in ton
cost of raw material per ton

Utilities and Consumables per toone of output in Rs

Employee Expenses First Year

Second Year
Third Year

Selling and Distribution Expenses for 3 years in %age

Administrative and other overheads First Year
Second Year
Third Year

Depreciation rate on capital cost

Interest on Working Capital Financed through banks

Corporate Tax

Cost of capital of exisiting business

Creditors is half a month of raw material stock

Rate of marging for Net Working Capital

 20000 TPA 1 Ton = 1000 kg
12000
16000
20000
20000
20000
20000
20000
20000
20000
20000

24000000
12000000
12000000

2000000 Time Duration 6 months

3000000
1000000
1500000
29000000
1450000

9000

1.1
5300

700

10000000
12500000
15000000

5%
10000000
10000000
10000000

10%

11%

35%

12%

0.5 of RM

25%
Step 1:

Calculate Break Up of Project Cost

Component Year 1 Year 2 Total

Equipment 12000000 12000000 24000000
Plant Erection 0 2000000 2000000
Building and Other cost 0 3000000 3000000
Interest during construction period 0 0 0
Preoperative Expenses 0 1500000 1500000
Contingency 0 1450000 1450000

Sum Total 31950000

Margin of networking Capital 0 5115781.3 5115781.25

Sum Total 12000000 25065781.25 37065781.25

Step 2:

Projected P&L Statement

Component Year 1 Year 2 Year 3

Sales 108000000.00 144000000.00 180000000.00
Expenses:
Raw Material Cost 69960000 93280000 116600000
Utilities 8400000 11200000 14000000
Employee Expenses 10000000 12500000 15000000
Depreciation 3195000 3195000 3195000
Selling and Distribution Expenses 5400000 7200000 9000000
Administrative Overheads 10000000 10000000 10000000
Interest on Working Capital 1688207.8125 2267289.0625 2605882.8125
Total 108643207.8125 139642289.0625 170400882.813
PBT = Sales - Expenses -643207.81 4357710.94 9599117.19
Less: Corporate Tax -225122.73437501
Corporate Tax Payable 0 1300076.09375 3359691.01563
PAT = PBT-Tax -643207.81 4357710.94 9599117.19
Operating Cash Inflow = PAT+Depriciati 2551792.19 7552710.94 12794117.19

Step 3:

Calculation of Net Working Capital

Component Year 1 Year 2 Year 3

Raw Material Stock 5830000.0 9716666.7 7773333.3
Finised Good Stock 3814791.7 5007291.7 6199791.7
Recievables 9000000.0 12000000.0 15000000.0
Cash Balance 4733333.3 5616666.7 6500000.0
Gross Working Capital 23378125.0 32340625.0 35473125.0
Less: Creditors 2915000.0 4858333.3 3886666.7
Net Working Capital 20463125.0 27482291.7 31586458.3
Margin for Net Working Capital 5115781.3 6870572.9 7896614.6
Book Borrowing 15347343.8 20611718.8 23689843.8

Step 4

Cash Flow Statement

Year Cash Outflow Cash Inflow Net Cash Flow

1 12000000
2 25065781.3
3 15347343.8
4 7019166.7
5 4104166.7
6 0.0
7 0.0
8 0.0
9 0.0
10 0.0
11 0.0
12 0.0
0 -12000000
0 -25065781.25
2551792.19 -12795551.563
7552710.94 533544.270833
12794117.19 8689950.52083
12794117.19 12794117.1875
12794117.19 12794117.1875
12794117.19 12794117.1875
12794117.19 12794117.1875
12794117.19 12794117.1875
12794117.19 12794117.1875
44380575.52 44380575.5208
 No of months in an year 12
One month of raw material For first year 5830000
for second year 9716666.7
for third year 7773333.3

When calculated half a month in an year 24

finished goods stock half a month For first year 3814791.7
for second year 5007291.7
for third year 6199791.7

Cash Balance to be maintained at 2 months ie no of times 6

NPV IRR
6704872.11 15%
ASSIGNMENT: 3
Problem 17: Page 80 : Prakash Steel Ltd. - Problem Solving using Excel Sheet
Submitted to: Prof. Shuaib Fakih
Name : Alok Kumar Pandey
(IGTCEBMP12MU002)

Details specific to problem:

Plant Capacity as problem point 1 20000 TPA

Sales in first year 60% of capacity
Sales in second year 80% of capacity
Sales in third year 100% of capacity
Sales in 4th year 100% of capacity
Sales in 5th year 100% of capacity
Sales in 6th year 100% of capacity
Sales in 7th year 100% of capacity
Sales in 8th year 100% of capacity
Sales in 9th year 100% of capacity
Sales in 10th year 100% of capacity
sales in 11th year 100% of capacity
sales in 12th year 100% of capacity

Equipment Cost 2.4 Cr

Payment in first year
Payment in second year

Plant Erection Cost 0.2 Crores

Building and Other Cost 0.3 Crores
Interest During Construction Period 0.1 Crores
Preoperative Expenses 0.15 Crores
Total of plant, machinary and building
Contingency 5% of plant, machinary and
building

Selling Price /tonne in Rs

For 1 ton of output raw material required in ton

cost of raw material per ton
increase in cost of raw material by 10%
Utilities and Consumables per toone of output in Rs

Employee Expenses First Year

Second Year
Third Year

Selling and Distribution Expenses for 3 years in %age

Administrative and other overheads First Year

 Second Year
Third Year

Depreciation rate on capital cost

Interest on Working Capital Financed through banks

Corporate Tax

Cost of capital of exisiting business

Creditors is half a month of raw material stock

Rate of margin for Net Working Capital

 20000 TPA 1 Ton = 1000 kg
12000
16000
20000
20000
20000
20000
20000
20000
20000
20000
20000
20000

24000000
12000000
12000000

2000000 Time Duration 6 months

3000000
1000000
1500000
29000000
1450000

10000

1.1
5830

700

10000000
12500000
15000000

5%

10000000
10000000
10000000

10%

11%

35%

12%

0.5 of RM

25%
Step 1:

Calculate Break Up of Project Cost

Component Year 1 Year 2 Total

Equipment 12000000 12000000 24000000
Plant Erection 0 2000000 2000000
Building and Other cost 0 3000000 3000000
Interest during construction period 0 0 0
Preoperative Expenses 0 1500000 1500000
Contingency 0 1450000 1450000

Sum Total 31950000

Margin of networking Capital 0 5511531.3 5511531.25

Sum Total 12000000 25461531.25 37461531.25

Step 2:

Projected P&L Statement

Component Year 1 Year 2 Year 3

Sales 120000000.00 160000000.00 200000000.00
Expenses:
Raw Material Cost 76956000 102608000 128260000
Utilities 8400000 11200000 14000000
Employee Expenses 10000000 12500000 15000000
Depreciation 3195000 3195000 3195000
Selling and Distribution Expenses 6000000 8000000 10000000
Administrative Overheads 10000000 10000000 10000000
Interest on Working Capital 1818805.3125 2361256.5625 2903707.8125
Total 116369805.3125 149864256.5625 183358707.813
PBT = Sales - Expenses 3630194.69 10135743.44 16641292.19
Less: Corporate Tax 1270568.140625 3547510.203125 5824452.26563
PAT = PBT-Tax 2359626.55 6588233.23 10816839.92
Operating Cash Inflow = PAT+Depriciati 5554626.55 9783233.23 14011839.92
Step 3:

Calculation of Net Working Capital

Component Year 1 Year 2 Year 3

Raw Material Stock 6413000.0 8550666.7 10688333.3
Finised Good Stock 4106291.7 5395958.3 6685625.0
Recievables 10000000.0 13333333.3 16666666.7
Cash Balance 4733333.3 5616666.7 6500000.0
Gross Working Capital 25252625.0 32896625.0 40540625.0
Less: Creditors 3206500.0 4275333.3 5344166.7
Net Working Capital 22046125.0 28621291.7 35196458.3
Margin for Net Working Capital 5511531.3 7155322.9 8799114.6
Book Borrowing 16534593.8 21465968.8 26397343.8

Step 4

Cash Flow Statement

Year Cash Outflow Cash Inflow Net Cash Flow

1 12000000
2 25461531.3
3 16534593.8
4 6575166.7
5 6575166.7
6 0.0
7 0.0
8 0.0
9 0.0
10 0.0
11 0.0
12 0.0
0 -12000000
0 -25461531.25
5554626.55 -10979967.203
9783233.23 3208066.56771
14011839.92 7436673.25521
14011839.92 14011839.9219
14011839.92 14011839.9219
14011839.92 14011839.9219
14011839.92 14011839.9219
14011839.92 14011839.9219
14011839.92 14011839.9219
49208298.26 49208298.2552
 No of months in an year 12
One month of raw material For first year 6413000
for second year 8550666.7
for third year 10688333.3

When calculated half a month in an year 24

finished goods stock half a month For first year 4106291.7
for second year 5395958.3
for third year 6685625.0

Cash Balance to be maintained at 2 months ie no of times 6

NPV IRR
12750253.28 17%
ASSIGNMENT: 3
Problem 17: Page 80 : Prakash Steel Ltd. - Problem Solving using Excel Sheet
Submitted to: Prof. Shuaib Fakih
Name : Alok Kumar Pandey
(IGTCEBMP12MU002)

Details specific to problem:

Plant Capacity as problem point 1 20000 TPA

Sales in first year 60% of capacity
Sales in second year 80% of capacity
Sales in third year 100% of capacity
Sales in 4th year 100% of capacity
Sales in 5th year 100% of capacity
Sales in 6th year 100% of capacity
Sales in 7th year 100% of capacity
Sales in 8th year 100% of capacity
Sales in 9th year 100% of capacity
Sales in 10th year 100% of capacity

Equipment Cost 2.4 Cr

Payment in first year
Payment in second year

Plant Erection Cost 0.2 Crores

Building and Other Cost 0.3 Crores
Interest During Construction Period 0.1 Crores
Preoperative Expenses 0.15 Crores
Total of plant, machinary and building
Contingency 5% of plant, machinary and
building

Selling Price /tonne in Rs

For 1 ton of output raw material required in ton

cost of raw material per ton

Utilities and Consumables per toone of output in Rs

Employee Expenses First Year

Second Year
Third Year

Selling and Distribution Expenses for 3 years in %age

Administrative and other overheads First Year

 Second Year
Third Year

Depreciation rate on capital cost

Interest on Working Capital Financed through banks

Corporate Tax

Cost of capital of exisiting business

Creditors is half a month of raw material stock

Rate of marging for Net Working Capital

 20000 TPA 1 Ton = 1000 kg
12000
16000
20000
20000
20000
20000
20000
20000
20000
20000

24000000
12000000
12000000

2000000 Time Duration 6 months

3000000
1000000
1500000
29000000
1450000

10000

1.1
5300

700

10000000
12500000
15000000

5%

10000000
10000000
10000000

10%

11%

35%

12%

0.5 of RM

25%
Step 1:

Calculate Break Up of Project Cost

Component Year 1 Year 2 Total

Equipment 12000000 12000000 24000000
Plant Erection 0 2000000 2000000
Building and Other cost 0 3000000 3000000
Interest during construction period 0 0 0
Preoperative Expenses 0 1500000 1500000
Contingency 0 1450000 1450000
Project Cost Up by 10% 1200000 1995000 3195000
Sum Total 12000000 19950000 35145000

Margin of networking Capital 0 5369109.4 5369109.375

Sum Total 12000000 25319109.4 40514109.375

Step 2:

Projected P&L Statement

Component Year 1 Year 2 Year 3

Sales 120000000.00 160000000.00 200000000.00
Expenses:
Raw Material Cost 69960000 93280000 116600000
Utilities 8400000 11200000 14000000
Employee Expenses 10000000 12500000 15000000
Depreciation 3514500 3514500 3514500
Selling and Distribution Expenses 6000000 8000000 10000000
Administrative Overheads 10000000 10000000 10000000
Interest on Working Capital 1771806.09375 2298224.84375 2824643.59375
Total 109646306.09375 140792724.8438 171939143.594
PBT = Sales - Expenses 10353693.91 19207275.16 28060856.41
Less: Corporate Tax 3623792.8671875 6722546.304688 9821299.74219
PAT = PBT-Tax 6729901.04 12484728.85 18239556.66
Operating Cash Inflow = PAT+Depriciati 10244401.04 15999228.85 21754056.66
Step 3:

Calculation of Net Working Capital

Component Year 1 Year 2 Year 3

Raw Material Stock 5830000.0 7773333.3 9716666.7
Finised Good Stock 3828104.2 5020604.2 6213104.2
Recievables 10000000.0 13333333.3 16666666.7
Cash Balance 4733333.3 5616666.7 6500000.0
Gross Working Capital 24391437.5 31743937.5 39096437.5
Less: Creditors 2915000.0 3886666.7 4858333.3
Net Working Capital 21476437.5 27857270.8 34238104.2
Margin for Net Working Capital 5369109.4 6964317.7 8559526.0
Book Borrowing 16107328.1 20892953.1 25678578.1

Step 4

Cash Flow Statement

Year Cash Outflow Cash Inflow Net Cash Flow

1 12000000
2 25319109.4
3 16107328.1
4 6380833.3
5 6380833.3
6 0.0
7 0.0
8 0.0
9 0.0
10 0.0
11 0.0
12 0.0
0 -12000000
0 -25319109.375
10244401.04 -5862927.0859
15999228.85 9618395.51823
21754056.66 15373223.3307
21754056.66 21754056.6641
21754056.66 21754056.6641
21754056.66 21754056.6641
21754056.66 21754056.6641
21754056.66 21754056.6641
21754056.66 21754056.6641
55992160.83 55992160.8307
 No of months in an year 12
One month of raw material For first year 5830000
for second year 7773333.3
for third year 9716666.7

When calculated half a month in an year 24

finished goods stock half a month For first year 3828104.2
for second year 5020604.2
for third year 6213104.2

Cash Balance to be maintained at 2 months ie no of times 6

NPV IRR
44886534.33 29%
ASSIGNMENT: 3
Problem 17: Page 80 : Prakash Steel Ltd. - Problem Solving using Excel Sheet
Submitted to: Prof. Shuaib Fakih
Name : Alok Kumar Pandey
(IGTCEBMP12MU002)

Details specific to problem:

Plant Capacity as problem point 1 20000 TPA

Sales in first year 60% of capacity
Sales in second year 80% of capacity
Sales in third year 100% of capacity
Sales in 4th year 100% of capacity
Sales in 5th year 100% of capacity
Sales in 6th year 100% of capacity
Sales in 7th year 100% of capacity
Sales in 8th year 100% of capacity
Sales in 9th year 100% of capacity
Sales in 10th year 100% of capacity

Equipment Cost 2.4 Cr

Payment in first year
Payment in second year

Plant Erection Cost 0.2 Crores

Building and Other Cost 0.3 Crores
Interest During Construction Period 0.1 Crores
Preoperative Expenses 0.15 Crores
Total of plant, machinary and building
Contingency 5% of plant, machinary and
building

Selling Price /tonne in Rs

For 1 ton of output raw material required in ton

cost of raw material per ton

Utilities and Consumables per toone of output in Rs

Employee Expenses First Year

Second Year
Third Year

Selling and Distribution Expenses for 3 years in %age

Selling and distribution cost is higher by 30%
Administrative and other overheads First Year
 Second Year
Third Year

Depreciation rate on capital cost

Interest on Working Capital Financed through banks

Corporate Tax

Cost of capital of exisiting business

Creditors is half a month of raw material stock

Rate of margin for Net Working Capital

 20000 TPA 1 Ton = 1000 kg
12000
16000
20000
20000
20000
20000
20000
20000
20000
20000

24000000
12000000
12000000

2000000 Time Duration 6 months

3000000
1000000
1500000
29000000
1450000

10000

1.1
5300

700

10000000
12500000
15000000

7%

10000000
10000000
10000000

10%

11%

35%

12%

0.5 of RM

25%
Step 1:

Calculate Break Up of Project Cost

Component Year 1 Year 2 Total

Equipment 12000000 12000000 24000000
Plant Erection 0 2000000 2000000
Building and Other cost 0 3000000 3000000
Interest during construction period 0 0 0
Preoperative Expenses 0 1500000 1500000
Contingency 0 1450000 1450000

Sum Total 31950000

Margin of networking Capital 0 5365781.3 5365781.25

Sum Total 12000000 25315781.25 37315781.25

Step 2:

Projected P&L Statement

Component Year 1 Year 2 Year 3

Sales 120000000.00 160000000.00 200000000.00
Expenses:
Raw Material Cost 69960000 93280000 116600000
Utilities 8400000 11200000 14000000
Employee Expenses 10000000 12500000 15000000
Depreciation 3195000 3195000 3195000
Selling and Distribution Expenses 7800000 10400000 13000000
Administrative Overheads 10000000 10000000 10000000
Interest on Working Capital 1770707.8125 2297126.5625 2823545.3125
Total 111125707.8125 142872126.5625 174618545.313
PBT = Sales - Expenses 8874292.19 17127873.44 25381454.69
Less: Corporate Tax 3106002.265625 5994755.703125 8883509.14063
PAT = PBT-Tax 5768289.92 11133117.73 16497945.55
Operating Cash Inflow = PAT+Depriciati 8963289.92 14328117.73 19692945.55
Step 3:

Calculation of Net Working Capital

Component Year 1 Year 2 Year 3

Raw Material Stock 5830000.0 7773333.3 9716666.7
Finised Good Stock 3814791.7 5007291.7 6199791.7
Recievables 10000000.0 13333333.3 16666666.7
Cash Balance 4733333.3 5616666.7 6500000.0
Gross Working Capital 24378125.0 31730625.0 39083125.0
Less: Creditors 2915000.0 3886666.7 4858333.3
Net Working Capital 21463125.0 27843958.3 34224791.7
Margin for Net Working Capital 5365781.3 6960989.6 8556197.9
Book Borrowing 16097343.8 20882968.8 25668593.8

Step 4

Cash Flow Statement

Year Cash Outflow Cash Inflow Net Cash Flow

1 12000000
2 25315781.3
3 16097343.8
4 6380833.3
5 6380833.3
6 0.0
7 0.0
8 0.0
9 0.0
10 0.0
11 0.0
12 0.0
0 -12000000
0 -25315781.25
8963289.92 -7134053.8281
14328117.73 7947284.40104
19692945.55 13312112.2135
19692945.55 19692945.5469
19692945.55 19692945.5469
19692945.55 19692945.5469
19692945.55 19692945.5469
19692945.55 19692945.5469
19692945.55 19692945.5469
53917737.21 53917737.2135
 No of months in an year
One month of raw material For first year
for second year
for third year

When calculated half a month in an year

finished goods stock half a month For first year
for second year
for third year

Cash Balance to be maintained at 2 months ie no of times

NPV IRR
36412007.19 26%
 12
5830000
7773333.3
9716666.7

24
3814791.7
5007291.7
6199791.7