CHAPTER 1: Introduction

1.1. Background of Acetaldehyde

Acetaldehyde, CH3CHO is an important intermediate in industrial organic
synthesis. Acetic acid, acetic anhydride, n-butanol, and 2-ethylhexanol are the
major products derived from acetaldehyde. Smaller amounts of acetaldehyde are
also consumed in the manufacture of pentaerythritol, trimethylolpropane,
pyridines, peracetic acid, crotonaldehyde, chloral, 1,3-butylene glycol, and lactic
acid.
Acetaldehyde (ethanal) was first prepared by Scheele in 1774, by the action of
manganese dioxide and sulfuric acid on ethanol. Liebig established the structure of
acetaldehyde in 1835 when he prepared a pure sample by oxidizing ethyl alcohol
with chromic acid. Liebig named the compound aldehyde from the Latin words
translated as al (cohol) dehyd (rogenated). Kutscherow observed the formation of
acetaldehyde by the addition of water to acetylene in 1881.

Fig 1: STRUCTURE OF ACETALDEHYDE

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1.2. Pertinent Properties

PROPERTIES
Molecular formula
Molar mass
Appearance

C2H4O
44.05 gmol1
Colourless liquid
Etherial odor

Density

0.784 gcm3 (20 C)

Melting point
Boiling point
Solubility

0.79040.7928 gcm3(10 C)
123.37 C (190.07 F; 149.78 K)
20.2 C (68.4 F; 293.3 K)
Miscible with ethanol, ether,
benzene, toluene, xylene, acetone
slightly soluble in chloroform

Vapor pressure

740 Hg (20 C)

1.3. Consumption Pattern

Fig 2: World Consumption Pattern of Acetaldehyde

The main use of acetaldehyde is as an intermediate for the synthesis of other

chemicals. The main derivatives of Acetaldehyde are the oxygenated solvent Ethyl
Acetate, Pentaerythritol (used in the production of synthetic resins for the paint industry)
and Pyridines. Acetaldehyde is used in the production of perfumes, polyester resins, and

2|Page

basic dyes. Acetaldehyde is also used as a solvent in the rubber, tanning, and paper
industries, as a fruit and fish preservative, as a flavouring agent, for hardening gelatin, as
a denaturant for alcohol and in fuel compositions.

1.4. Market of Acetaldehyde

Production of pyridine and pyridine bases, pentaerythritol, and acetate esters
accounted for 16%, 16%, and 14%, respectively, of 2012 global acetaldehyde
consumption. Pyridine and pyridine bases are important raw materials in the
production of agricultural chemicals.
As the chart shows, China is the largest consumer of acetaldehyde in the world,
accounting for almost half of global consumption in 2012. Chinese consumption is
heavily weighted toward the production of acetic acid. Overall Chinese acetaldehyde
consumption will grow only slightly at 1.6% per year through 2018.
The acetaldehyde market in Asia-Pacific is mainly driven by increasing demand from
developing countries especially India and China. Since it is being majorly used in
tanning, paper industry, preservation purposes etc.

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CHAPTER 2: Methods of Production of Acetaldehyde

Ethanol, an 85-wt% solution in water is combined with 85-wt% ethanol recycle
stream from the ethanol recovery unit (later described). The resultant stream is then
pumped to 100 psig (6.89 bar) and heated to 626F in a reactor preheater before being fed
to an isothermal, catalytic, packed-bed reactor, where the ethanol is dehydrogenated to
form acetaldehyde. The reactor effluent is then cooled in heat exchanger. The resultant
two-phase stream is then separated in flash vessel. The vapour stream is sent to an
absorber where it is contacted with water, which absorbs the acetaldehyde and ethanol
from the vapour stream. The resulting vapour effluent is then sent for further processing
and recovery of valuable hydrogen. Alternatively, this stream could be used as fuel. The
liquid is combined with the liquid effluent from flash vessel and sent to second reactor.
The liquids enter the second reactor where the crude acetaldehyde exits as the
distillate. This crude acetaldehyde is then sent to distillation column where the
acetaldehyde is purified to 99.9-wt %. The bottom products are sent to distillation
columns for the purification process of ethanol which will be later used to produce
acetaldehyde by the same process. Ethyl acetate and some water are removed as waste
products which are sent for waste treatment. Ethanol has to be separated from other
products like butanol and ethyl acetate which is done by the method of distillation. The
distillate is made to about 85% of ethanol so that it can be refluxed back in to the reactor
for further use. All waste streams contain some valuable chemical or the other which can
be further separated and used as valuable by products of the process.

Necessary Information and Simulation Hints

The following reactions occur during the dehydrogenation of ethanol:
CH3CH2OH CH3CHO + H2 (main reaction)
2CH3CH2OH CH3COOC2H5 + 2H2

CH3CH2OH CH3CH2CH2CH2OH + H2O

CH3CH2OH + H2O CH3COOH + 2H2

The conversion of ethanol is assumed to be 60.8%. The yields for each reaction are as
follows:
(1) Acetaldehyde 91.7%
(2) Ethyl acetate 3.8%
(3) Butanol 2.4%
(4) Acetic acid 2.1%

4|Page

References are not available for these values. Since reaction kinetics were not
available, the above conversions were assumed in the design of the process. NRTL
thermodynamics was used for K-values, as suggested by the Chemcad.

2.1. Raw Materials Required

Ethanol:
Ethanol, also commonly called ethyl alcohol, drinking alcohol, or
simply alcohol is the principal type of ethanol found in alcoholic beverages, produced by
the fermentation of sugars by yeast. It is a neurotoxic psychoactive drug and one of the
oldest recreational drugs used by humans. It can cause alcohol intoxication when
consumed in sufficient quantity. Ethanol is used as a solvent, an antiseptic, a fuel and the
active fluid in modern (post-mercury) thermometers (since it has a low freezing point). It
is a volatile, flammable, colourless liquid with a strong chemical odour. Its structural
formula CH3CH2OH, is often abbreviated asC2H5OH, C2H6O or EtOH.
Ethanol is the main raw material for our production of acetaldehyde. It is the only
raw material we have to worry about when we are toy produce acetaldehyde by the
chosen process. It can be seen from all of the four reactions that the reactant in each case
is none other than ethanol. Thus the availability of ethanol producers is of major concern
for the process to be feasible (or the business to run successfully in other words). Later on
a list of the ethanol producers of India is mentioned. Medically, ethanol is a soporific,
i.e., sleep-producing; although it is less toxic than the other alcohols, death usually occurs
if the concentration of ethanol in the bloodstream exceeds about 5%. Behavioural
changes, impairment of vision, or unconsciousness occur at lower concentrations.

2.2. Products Obtained and Their Uses

Acetaldehyde
Acetaldehyde is an important intermediate in the production of acetic acid, acetic
anhydride, ethyl acetate, peracetic acid, pentaerythritol, chloral, glyoxal, alkylamines, and
pyridines. Acetaldehyde was first used extensively during World War I as an
intermediate for making acetone from acetic acid.
Commercial processes for the production of acetaldehyde include: the oxidation or
dehydrogenation of ethanol, the addition of water to acetylene, partial oxidation of
hydrocarbons, and the direct oxidation of ethylene. It is estimated that in 1976, 29
companies with more than 82% of the worlds 2.3 megaton per year plant capacity use
the Wacker Hoechst processes for the direct oxidation of ethylene.

5|Page

Ethyl Acetate
Even though it is not the main product in the manufacturing process it is a
valuable chemical and thus if recovered properly may also be sold as a by-product to
industries that require ethyl acetate as their raw materials or anywhere else in their
manufacturing process.
Ethyl acetate (systematically Ethyl Ethanoate, commonly abbreviated EtOAc or
EA) is the organic compound with the formula CH3-COO-CH2-CH3, simplified to
C4H8O2. This colourless liquid has a characteristic sweet smell (similar to pear drops) and
is used in glues, nail polish removers, decaffeinating tea and coffee, and cigarettes). Ethyl
acetate is the ester of ethanol and acetic acid; it is manufactured on a large scale for use
as a solvent.

Butanol
Butanol (also butyl alcohol) refers to a four-carbon alcohol with a formula of
C4H9OH. There are four possible isomeric structures for butanol, from a straight-chain
primary alcohol to a branched-chain tertiary alcohol. It is primarily used as a solvent, as
an intermediate in chemical synthesis, and as a fuel. It is sometimes also
called biobutanol when produced biologically.
Butanol sees use as a solvent for a wide variety of chemical and textile processes,
in organic synthesis and as a chemical intermediate. It is also used as paint thinner and a
solvent in other coating applications where it is used as a relatively slow evaporating
latent solvent in lacquers and ambient-cured enamels. It finds other uses such as a
component of hydraulic and brake fluids.
Butanol is considered as a potential biofuel (butanol fuel). Butanol at 85 percent
strength can be used in cars designed for gasoline (petrol) without any change to the
engine (unlike 85% ethanol), and it contains more energy for a given volume than ethanol
and almost as much as gasoline, so a vehicle using butanol would return fuel
consumption more comparable to gasoline than ethanol. Butanol can also be used as a
blended additive to diesel fuel to reduce soot emissions.

6|Page

CHAPTER 3: Plant Description

3.1. Selection of Plant Site
The acetaldehyde plant should be set up near an ethanol plant because ethanol is the raw product of the plant. It is required
that the place to build the plant should not be have an easy access to getting the raw materials but should also be able to reach
the prospective customers easily. It is only logical to manufacture at a place where the consumers will be nearby. Thus
distance wise two conditions need to be satisfied. But, there is much less consumer, or rather market is poor in Uttar Pradesh
for acetaldehyde. A bulk of the ethanol producing plants are present in Maharashtra. Thus the best alternative based on the
following reasons was chosen to be Pune.
Two ports are available in the state of Maharashtra and national highways are nearby.
Ethanol manufacturers in the vicinity.

3.2. Plant Layout

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Process Flow Diagram

Fig: Process Flow Diagram : a) Compressor; b) Saturator ; c) Reactor;

d)Absorption column ,e) Mixing condenser; f) Acetaldehyde distillation column; g)
Ethanol distillation column.

2|Page

CHAPTER 4: Material and Energy Balance

We produce acetaldehyde by dehydrogenation of ethanol.
Reaction:
C2H5OH CH3CHO + H2
Catalyst:
Cu-Co-Cr2o3
Temperature:
280 3500 C.
Basis: One hour of operation.
Amount of acetaldehyde to be produced = 200 TPD = 8334 kg/hr.
Molecular weight of ethanol = 46 kg/kmol.
Molecular weight of acetaldehyde = 44 kg/kmol
Molecular weight of hydrogen = 2 kg/kmol.
Therefore, amount of acetaldehyde to be produced = 8751.20kg/hr.
Moles of acetaldehyde to be produced = 198.89 kmol/hr.
Let conversion be 90%.
Amount of ethanol required for 90% conversion = 10165.54 kg/hr.
Amount of hydrogen produced =0.90 * 2* 10165.54 / 46 = 397.78 kg/hr.
Amount of unreacted ethanol = 10165.54-(8751.20+397.78) kg/hr
= 1016.56 kg/hr

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Vaporizer:
1000 C, superheated stream of ethanol Steam

(Heating fluid)

Condensed steam
300 C, ethanol

As shown in the figure,

Ethanol liquid inlet temperature = Ti =30 C. Ethanol leaves as superheated steam at 100 C =
To
Heating fluid is assumed to be saturated steam here and to provide sufficient temperature

gradient; it is taken to be about 3 atm pressure. At this pressure it condenses at 133.89 C

and because process streams are normally available at this pressure.
Condensing temperature of ethanol = 133.89 C.
From steam table enthalpy of steam at this temperature=Hsteam= 514.9kcal/kg.
Boiling point of ethanol = Tb = 78.4 C.
Specific heat of ethanol, at 30 C = C = 0.5976 kcal/kg C.
pi

at 100 C = Cpo = 0.4382 kcal/kg C.

Latent heat of vaporization of ethanol =ethanol = 200.6kcal/kg.
From heat balance we have,

2|Page

Msteam * Hsteam + E * Cpi * (Ti Tb) = E * ethanol + E * Cpo*(To Tb)

Msteam = E * [Cpi * (Tb Ti) + ethanol + Cpo * (To Tb)]/Hsteam
Msteam = 10165.54 * [0.5976 * (78.4 30) + 200.6 + 0.4382 * (100 78.4)] /514.9

= 4718.30 kg.
Reactor:

The reaction in the reactor:

C2H5OH CH3CHO + H2

Optimum reaction temperature = 310 C

Conversion = 90%.
From material balance we have,
Amount of acetaldehyde produced = 10165.54
Amount of hydrogen produced = 397.78 kg.
Amount of ethanol unreacted = 1016.56 kg/hr
If it is decided to use saturated steam at 133 atm. (steam at this pressure condenses at
335.5 C, it means that the reactor should be a

pressure condenses at 335.5 C), it means that the reactor should be a

pressure vessel. This proposition is rejected because of high costs
and it is decided to use saturated vapours of dowtherm, condensing at
350 C,for heating purposes.
dowtherm = 56.5 kcal / kg.
Heat of reaction = Hr = 332.64 kcal / kg.
Assuming ethanol vapours enter the reactor at 200 C.
From heat balance we can found amount of dowtherm required = Md
Specific heat capacity of ethanol = 0.539 kcal / kg C.
Md * dowtherm = E * Cp * (310 200) + E * Hr * 0.94
Md = 10165.54 * [0.539 * (310 200) + 332.64 * 0.94] / 56.5
= 64.53 * 103 kg.

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Heat exchanger:

1000 C, ethanol

T=3100 C.
A= 6500 kg.
H = 295.45 kg.
2000C

E = 433.75 kg.

This is used only for heat recovery. Since it is assumed vapour is heated
upto 200 C by the product stream of the reactor at 300 C.
Let outlet temperature = T C.

Cp of ethanol at 310 C = 0.549 kcal / kg C.

Cp of acetaldehyde at 310 C = 0.528 kcal / kg C.
= 2.485 kcal / kg C.
Cp of hydrogen at 310 C
From heat balance we can find the outlet temperature.
E*Cp, ethanol*(200 100) = E*Cp,ethanol*(310 T) + H*Cp,hydrogen*(310 T ) + A*Cp,acet
1017.06*0.471*(200-100)

= 1017.06*0.549*(310-T) + 397.78*2.485*(310-T)+10165.54*0.528
Therefore, T = 282.48 C

Condenser 1
In condenser 1 it is decided to use cooling water at 3000 C. the outlet temperature
of cooling water is not allowed to go above 500C, because above this temperature, there
is a problem of vaporization. Normally the approach temp difference is about 100C.
Since the product can at best be cooled to 400C, at this temperature the product stream
would be a two-phase mixture and the mixture composition can be found out from VLE
data.
We make an approximate that; the information given at 699 mmHg is taken. At 4000C,
Ethanol in vapour phase = 4.1 mole %.

4|Page

Ethanol in liquid phase = 55 mole %.

Let, ml = moles of liquid consisting of ethanol and acetaldehyde.
mv = moles of vapour consisting of ethanol and acetaldehyde.
Therefore from mole balance we have,
0.55 ml + 0.041 mv = 22.1
0.45 ml + 0.959 mv = 198.9
=amount of acetaldehyde produced
On solving above two equations we get, ml = 26.55 kmole.
mv = 195.03 kmol.
Vapour phase composition,
Acetaldehyde = 187.03 kmol = 8229.32 kg.
Ethanol = 7.99 kmol = 367.54 kg.
Liquid phase composition,
Acetaldehyde = 11.95 kmol = 525.8 kg.
Ethanol = 14.60 kmol = 67.6 kg
Cooling water at 300C
T = 232.690C

Vapours at 400C.

H = 295.45 kg.

H = 295.45 kg.

E =433.75 kg.
A = 6500 kg.

E = 433.75 kg
A =295.45 kg
T= 50 0C

Liquid at 40 0C
E= 148.46 kg
A= 116.186 kg

Heat given out by hydrogen = 397.78 * 2.485 * (282.48 40) = 239.69 *

3
10 kcal.

Heat given out by acetaldehyde = 8750.7* 0.417 * (282.48 40) + 525.8 * 139.5
= 958.17 * 103 kcal.
Heat given out by ethanol = 1017.06* 0.5415 * (282.48 40) + 671.6 * 200.6
= 268.27 * 103 kcal

5|Page

Total heat given out = 1466.13*103 kcal.

Let, Mw = mass flow rate of cooling water. Cp of water = 1 kcal / kg C Therefore, Mw =
1466.13 * 103 / (1 * (50-30)).
= 73.31 * 103 kg.

Condenser 2
In condenser 2, it is desired to condense all ethanol and acetaldehyde. If the
working pressure is 1atm from the equilibrium data it is seen that for temperatures
below 30 C, there is going to be no ethanol in vapour phase and acetaldehyde would exert
its vapour pressure at that temperature. If it is desired to achieve about 97% recovery of
acetaldehyde, the outlet temperature of the product stream should be about 25 C. This is
because at 22.6 C, its vapour pressure is 100 mmHg and the vapour phase will consists of
13.15mole%. In view of this, the cooling fluid chosen is saturated NH3 at 1 atm. At which it
boils at 33.6 C.
Liquid ammonia at 33.860C.

Vapours at 400C
295.45 kg = H
E = 285.32 kg
A = 6383.52 kg.
H = 295.45 kg

6|Page

Vapors at 250
191.5 kg =A

Heat balance, At 40 C,

Cp, hydrogen = 3.399 kcal / kg C. Cp, acetaldehyde = 0.347 kcal / kg C.

Cp, ethanol = 0.616 kcal / kg C. Aacetaldehyde = 139.5 kcal / kg. Aethanol = 200.6 kcal / kg.
Aammonia = 590 kcal / kg.
Heat given out by hydrogen = 397.78 * 3.399 * (40 + 25) = 87.88 * 103 kcal.
Heat given out by acetaldehyde = 8229.32* 0.347 * (40+ 25) + 79824 * 139.5
= 1299.16 * 103 kcal.
Heat given out by ethanol = 367.54* 0.616 * (40+25) + 367.54 * 200.6
= 88.44 * 103 kcal.
Total heat given out = 1475.48 * 103 kcal.
Let Mammonia = mass flow rate of ammonia.
Therefore, Mammonia = 1475.48 * 103 / 590.
= 2500.81 kg

Preheater:
The preheater to the distillation column is necessary because the feed plate will be
completely chilled if the feed is not heated. The water stream from condenser c1 is
available at 50 C and is used in the preheater. If the maximum approach temperature

difference is 10 C, the product stream can at best be heated to 40 C. The distillation

column pressure is chosen to be 1158 mmHg so that pure acetaldehyde is obtained as
liquid product at 40 C. In view of this, the stream coming out of the preheater is liquid.

7|Page

Heat balance,
At 400C,
Cp, acetaldehyde = 0.347 kcal/kg 0C. Cp, ethanol = 0.616 kcal / kg 0C.

Let, Mw = mass flow rate of cooling water.

By heat balance we are getting,
Mw = 10316.19 kg.

Distillation column
In distillation column acetaldehyde condenses at 400C. Since vapour pressure
datas of pure gas is not available, it is estimated using Antoines equation.
ln P = A + B/T
Where, A and B are constants, they can be determined from boiling point data at Pressures
760 mmHg and 400 mmHg.
At 760 mmHg T = 20.2 C= 293.2K
400 mmHg T = 4.9 C = 277.9K
Therefore, ln 760 = A + B/293.2
ln 760 = A + B/277.9
On solving above two equations we get,
A = 18.29 and B = -3418.2
Therefore, ln P = 18.29 3418.2/T
Therefore at 400C, P = 1586.41mmHg.
Assume 99% acetaldehyde recovery in overhead product.
Assume xd = 0.99
In overhead:
Acetaldehyde = 8153.22kg.
Ethanol = 82.36 kg.
Total D = 8235.58 kg.

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In bottom:
Acetaldehyde = 28.65 kg. Ethanol = 448.77 kg. Total W = 477.42 kg.
F=D+W
F * xf = D * xd + W * xw
Therefore, xw = 0.06
Assume reflux ratio = 0.3
Therefore L / D = 0.3
L = 0.3 * 8235.58 = 2470.67 kg.
Vapour going to the condenser = L + D = 10706.25kg
Of this 99% is acetaldehyde.
Therefore, vapour composition going to the condenser:
Acetaldehyde =10492.13 kg.
Ethanol = 214.117 kg.
Heat load to the condenser
=Methanol * Aethanol + Macetaldehyde * Aacetaldehyde
= 214.117 * 200.6 + 10492.13 * 139.5
= 1506.604 * 103 kcal.

Reboiler load
Let m be the amount of liquid vaporized. Let L be liquid going into
the reboiler.
Let L/ W = 10
Therefore, L = 477.42 * 10 = 4774.2 kg.
Therefore, m = L W
= 4774.2 - 477.42 = 4296.78 kg.
Of which about 10% is acetaldehyde.

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Therefore, Acetaldehyde = 429.68 kg.

Ethanol = 3867.1 kg.
Therefore, heat load in the reboiler
= Methanol * Aethanol + Macetaldehyde * Aacetaldehyde
= 3867.1 * 200.6 + 429.68 * 139.5
= 776.309 * 103 kcal.

10 | P a g e

CHAPTER 5: Cost Estimation

5.1. Project Implementation Schedule
While assessing the time required for implementation of the project each major
activity and the time required for its completion are considered. It is estimated that the plant
will be ready to produce after 12 months from the zero date. The zero date is defined as the
date on which sanction of the term loan financial institution received.
The delivery period of the main plant equipment lies between 6-7 months from the
placement of Orders to achieve the months target adequate manpower should be mobilized
by the promoters Consultant, and contractors for carrying out the activities, suitable funds
should be allocated at Proper times. The schedule of various activities is to be followed
strictly by the project manager and he/she should be alert to tackle unforeseen delays. The
estimated duration of individual activities are tabulated below.

Serial no

Activities

Duration (months)

1.
2.
3.
4.
5.

Land and site development

Appointment of engineering consultants
Preparation of basic engineering package
Preparation of civil design and drawing
Floating of tender, Qcs preparation & order placement

0.5
0.5
2.5
5
2.5

6.
7.
8.

Completion of civil construction

Preparation of mechanical design & drawing
Floating of tender, Qcs preparation & order placement

9
3
3

9.
10.
11.
12.
13.

Receiving of equipment at site

Completion of site fabrication work
Electrical insulation
Piping and instrumentation
Erection and commissioning of individual equipment

4
3
4
4
3

11 | P a g e

5.2. Description of Land Area Equipment

Sl. No.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21

12 | P a g e

Description
Main Plant
Raw material storage
Water Storage tank
Pump house
Pond
Power Substation
Final Product inventory
Fire Fighting
R&D
Garden
Administrative Building
Medical Room
Guard room
Worker's room
Cycle Stand
Canteen
Toilet Block
Gate
Internal Road(6 m wide)
Surface Drain(500 mm wide)
Future expansion and others
Total

Area (m2)
1000
350
120
30
80
120
400
50
150
80
250
80
60
30
20
60
20
50
400
100
2500
5950
1.47028

2
m
Acres

5.3. Estimation of Cost for Building/ Civil Works

Sl. No.

Description
1 Main Factory Buinding
2 Buildings for auxiliary services
a.
b.
c.
d.

Area (m2) Rate (Rs/m2)

Total Cost (Rs. In Lakhs)
1000
4305
43

Pump House
Laboratory
Fire Fighting
Power Substation

35
50
50
120

3 Non Factory Building

a. Medical Room
b. Guard Room
c. Worker's Room
d. Cycle Stand
e. Canteen
d. Toilet block

80
60
30
20
60
20

Administrative building
4 Stores/Godowns/Warehouses etc
5 a. Raw materials storage
b. Final product storage

3200
3200
3200
3200
Sub Total(2)

1.12
1.6
1.6
3.84
8.16

3500
3000
3000
2500
3500
3000
Sub Total(3)
250
4000

2.8
1.8
0.9
0.5
2.1
0.6
8.7
10

350
400

3000
3000
Sub Total(5)

10.5
12
22.5

80 Rs. 150/m2
80
1500
Sub Total (6)
200 Rs. 10000/m3
Total (1 to 7)

0.12
1.2
1.32
35
169.36

6 Miscellaneous Buildings/ Civil works

a. Pond
b. Garden
7 Water Reservoir

13 | P a g e

5.4. Particulars of Equipments

Sl no.
1
2
3
4
5
6
7
8
9
10
11

Description
No of Required equipments
Reator
Preheater
Heat Exchanger
Absorber
Distillation Column
Alcohol storage Tank
Acetaldehyde Storage Tank
Reboiler
Condenser
Vaporiser (Flash)
Pumps
Sub Total (10)

1
3
3
1
4
1
1
1
4
1
5

Cost ( Rs. In Lakhs)

35
10.3
17.54
40
120
20
22
15
28
45
2.5
355.34

5.5. Requirements of Raw Materials And Utilities

Sl.no.

1.

Name of raw materials

and chemicals

Raw Materials:
a. Ethyl alcohol
b. Copper- cobultchromium catalyst

2.

Power

3.
4.

Water
Packing (10kg/bottle)

14 | P a g e

Specific
consumption
per kg of
product
1.16 kg
0.012

Annual
Delivered Price
Requirement
(Rs/Ton)
s
( Tons)
19140
198

4000
6.60E+07
KWH/ton
10 kg
5.54E +04
5000/day
1650000 No.

Total Price
(Rs in lakhs)

35000
90500

6699.0
179.2

Subtotal
4.0 /KWH

6878.2
2.64E+03

6.5/ton
20/Bottle
Total (1-4)

1.07E+01
21.6
16428.7

5.6. Estimated Cost of Project

Sl.no.

Description
1 Land and site development
a. Land @ 13.5 lakh/acre
b. Cost Of levelling,land filling etc. (filling depth 0.8m); @ Rs. 35/m3

Cost ( Rs. In Lakhs)

19.87

c. Gate
d. Surface Drains @Rs.300/m
e. Internal Roads @Rs.800/m
Sub Total (1)
Buildings/ Civil Works
2 a. Main Factory Buildings
b. Factory Building for auxiliary services
c. Adminstrative building
d. Non-factory Buildings
e. Stores, Godowns and Warehouses etc.
f. Water Reservoir
e. Miscellaneous Buildings/ Civil works
Sub Total (2)

43
8
10
4
18
30
0.52
113.52

Sub Total (3)

355.34
88.84
17.76
56.85
14.21
14.21
17.76
53.3
35.53
653.8

3 Plant Machinery and Equipment cost

a. Total purchase cost of equipments
b. Purchased equipment installation (@2.5% of basic price)
b. Freight/Delivery (@ 5% of basic price)
c. Excise duty ( @ 16% of basic price)
d. Sales Tax ( @ 4% of basic price)
e. Machinery stores ans spares (@ 4% of basic price)
f. Foundation Cost ( @ 5% of basic price)
g. Cost of piping, intrumentation (@ 15% of basic price)
h. Commisioning (10% of basic price)
4 Miscellaneous Fixed Cost
a. Furniture
b. Office machinery
c. Car/ Van
d. Fire-fighting equipments
e. Laboratory Equipments
Sub Total (4)
Total Direct Production Cost
5 Preliminary Expenses
6 Pre-operative Expenses
a. Engineering and supervision cost(@8% of total direct cost)
b. Interest during construction [@ 1% of Plant m/c cost; i.e. (3+4)*0.01]
c. Mortgage Expenses [@ 1% of total asset; i.e. (2+3+4)* 0.01]
d. Contractor's Fees [@50% of engineering ans supervision cost]
e. Travelling expense
f. Cost of feasibility report
Sub Total (6)
7 Contingency(@10% of 1 to 6)
Total Indirect Cost
Total Fixed Capital Investment
8 Working Capital Investment ( @18% of Fixed Capital Investment)
Total Capital Investment

15 | P a g e

0.544
0.8
8
40
69.214

5
3.5
1.5
1.6
1.6
13.2
1076.774
2.5
86.08
8.13
9.41
43.04
2
4
152.66
115.18
270.34
1347.114
237.72
1584.834

5.7. DEPRECIATION
A. DECLINING BALANCE METHOD
SL.NO.

ITEM

DEPRECIABLE COST RATE AS PER DBM (%) OPERATING YEARS

1st

1 BUILDING
a. Factory
b. Non-factory
2 PLANT EQUIPMENT
3 MISC. FIXED ASSET
4 FURNITURE AND OFFICE
5 VEHICLES
TOTAL

2nd

3rd

4th

5th

6th

7th

8th

10
5

4.3
2.03

3.87
1.73

3.48
1.65

3.13
1.56

2.12
1.49

2.54
1.41

2.28
1.34

2.05
1.28

1.85
1.21

1.65
1.15

355.34
3.2
8.5
1.5
452.06

25
25
10
20
95

88.84
0.89
0.85
0.3
97.21

66.63
0.66
0.77
0.24
73.9

49.97
0.49
0.7
0.19
56.48

37.48
0.37
0.62
0.15
43.31

28.1
0.28
0.56
0.12
32.67

21.08
0.21
0.51
0.1
25.85

15.81
0.16
0.45
0.08
20.12

11.85
0.12
0.41
0.06
15.77

8.89
0.09
0.37
0.05
12.46

6.67
0.07
0.33
0.04
9.91

ITEM

DEPRECIABLE COST RATE AS PER DBM (%) DEPRECIATION PER YEAR ( Rs. In lakhs)

1 BUILDING
a. Factory

43

3.34

1.4362

40.52

1.63

0.66

2 PLANT EQUIPMENT

355.34

8.48

30.13

3 MISC. FIXED ASSET

3.2

8.48

0.27

4 FURNITURE AND OFFICE

8.5

3.34

0.28

b. Non-factory

5 VEHICLES
TOTAL

16 | P a g e

10th

43
40.52

B. STRAIGHT LINE METHOD (SLM)

SL.NO.

9th

1.5

6.78

0.1

452.06

32.05

32.8762

5.8. Provision for Taxation

Particulars
Sl.no
.
1.
Profit Before Tax
2.
Add Depreciation (SLM)
3.
Less Depreciation (DBM)
4.
Taxable Income (1+2-3)
1
5.
Cumulative Taxable Income
6.
Income Tax
(@30% cumulative taxable
income )

17 | P a g e

st

1370.92
32.87623
97.21
306.59
1306.59
391.98

nd

rd

1307.85 1760.58
2.8762 32.8762
73.9
56.48
1266.83 1736.97
1266.83 1736.97
380.05 521.09

th

Operating Years
5
6th
th

2234.75 2256.14 2781.07

32.8762 32.8762 32.8762
43.31
32.67
25.85
2224.32 2256.35 2788.17
2224.32 2256.35 2788.17
667.29
676.91
836.45

7th
2895.27
32.8762
20.12
2908.03
2908.03
872.41

8th
3419.88
32.8762
15.77
3436.99
3436.99
1031.10

9th

10th

4004.78
32.8762
12.46
4025.19
4025.19
1207.56

4660.90
32.8762
9.91
4683.87
4683.87
1405.16

5.9. Estimated Cost of Production

18 | P a g e

5.10. Salary and Wages of Manpower

Department

Designation

No.

Salary(Rs./month)

Annual
Expenses(Rs. In
Lakhs)

1.Administration
a.

General Manager

50000

6.0

b.

Personal Manager

26000

3.12

c.

PA of GM

12000

1.44

d.

Typist/PC Operator

10

5000

6.0

e.

Peon

12

4400

6.34

f.

Security officer

20000

9.6

g.

Production
manager

40000

4.8

SUB TOTAL(1)

37.30

2. Production
a.

Work Manager

30000

3.6

b.

Skilled Operator

20

10000

24

c.

Shift Engineer

14

15000

25.2

d.

Security Staff

15

5000

e.

Purchase Officer

20000

2.4

f.

20000

4.8

g.

Maintenance
Manager
Electrician

8000

4.8

h.

Mechanic

5000

SUB TOTAL(2)

76.8

3. Sales
a.
b.

Sales Officer
Sales Assistant

2
4

50000
13500
SUB TOTAL(3)

12
6.5
18.5

a.

Chief Accountant

20000

2.4

b.

Accountant

15000

3.6

c.

Cashier

12000

4.32

SUB TOTAL(4)

10.32

4. Accounts

. Laboratory & Others

19 | P a g e

a.

Chief Chemist

12000

1.44

b.

Chemist

8000

2.88

c.

Lab Assistant

5000

1.2

d.

Sweeper

2000

1.44

e.

Gardener

2000

0.48

f.

Driver

3000

1.8

SUB TOTAL(5)

9.24

15000
8000
SUB TOTAL(6)

1.80
2.88
4.68

6.Material Handling
And Development
Material Manager
Material Executive

1
3

SUB TOTAL(1 to 6)

20 | P a g e

156.6

R.

5.11. Estimate of Working Result

Sl.no.
A.
B.

C.

D.
E.
F.

H.
I.
J.
K.
L.
M.
N.
O.
P.
Q.

Description
COST OF PRODUCTION
ADMINISTRATIVE EXPENSES
1. Administrative salary with 5%
increase per year
2. Light postage etc. [15% of 1]
3. Insurance, taxes on office
property [1% of Furniture+
car/van + office mach. cost]
4. Travelling and conveyance
[10% of administrative salary]
TOTAL ADMINIST. EXPENSES
SALES EXPENSES
1. Sales salary with 5% increase
per year
2. Publicity commission travel
etc. [0.1% of sales realisation]
3. Packing cost

2nd (80%)
7845.10

3rd (80%)
7852.489

4th (80%)
7860.246

37.30

39.17

41.13

43.17

45.33

5.595
0.1

5.876
0.1

6.169
0.1

6.48
0.1

3.73

3.917

4.113

46.725

49.063

18.5
8.856

21.6
TOTAL SALES EXPENSES
48.956
7452.405
TOTAL COST OF PRODUCTION
(A+B+C)
8856
SALES REALISATION
1403.595
GROSS PROFIT BEFORE INT &
DEP.
(E-D)
32.8762
DEPRECIATION (SLM)
1370.72
OPERATING PROFIT (F-H)
0
OTHER INCOME (IF ANY)
0.2
Preliminary Expenses Written Off
1370.92
PROFIT/LOSS BEFORE TAX (I+J+K)
391.98
PROVISION FOR TAXATION
0
TURNOVER TAX
978.94
PROFIT AFTER TAX (L-M-N)
Add depreciation (SLM)
32.8762
Less preliminary expenses
0.2
1012.01
GROSS CASH ACCURAL
Less instalment
0
012.01
NET CASH ACCURAL

21 | P a g e

Operating Years
5th (80%)
6th (85%)
8347.59
8356.165

1st (75%)
7356.724

7th (85%)
8854.252

8th (90%)
8863.684

9th (90%)
8873.587

10th (90%)
8883.984

47.59

49.97

52.47

55.09

57.84

6.79
0.1

7.138
0.1

7.496
0.1

7.871
0.1

8.264
0.1

8.676
0.1

4.317

4.533

4.759

4.997

5.247

5.509

5.784

51.512

54.067

56.753

59.587

62.563

65.688

68.963

72.4

19.425

20.396

21.416

22.487

23.611

24.791

26.03

27.33

28.69

9.285

9.749

10.24

10.748

11.286

11.85

12.442

13.064

13.714

21.6
50.31
7944.47

21.6
51.745
7955.746

21.6
53.256
7967.572

21.6
54.835
8459.18

21.6
56.497
8472.249

21.6
58.241
8922.056

21.6
60.072
8989.444

21.6
61.994
9024.544

21.6
64.004
9020.424

9585
1640.53

9749
1793.254

10240
2272.428

10748
2288.82

11286
2813.751

11850
2927.944

12442
3452.556

13062
4037.456

13714
4693.576

32.8762
1607.65
0
0.2
1607.85
380.05
0
1227.6
32.8762
0.2
1260.68
683.62
77.06

32.8762
1760.38
0
0.2
1760.58
521.09
0
1239.49
32.8762
0.2
1272.57
683.62
88.95

32.8762
2234.55
0
0.2
2234.75
667.29
0
1567.46
32.8762
0.2
1600.53
683.62
16.91

32.8762
2255.94
0
0.2
2256.14
676.91
0
1579.23
32.8762
0.2
1612.3
683.62
28.68

32.8762
2780.87
0
0.2
2781.07
836.45
0
1944.62
32.8762
0.2
1977.69
683.62
294.07

32.8762
2895.07
0
0.2
2895.27
872.41
0
2022.86
32.8762
0.2
2055.93
683.62
372.31

32.8762
3419.68
0
0.2
3419.88
1031.10
0
2388.88
32.8762
0.2
2421.95
0
421.95

32.8762
4004.58
0
0.2
4004.78
1207.56
0
2797.22
32.8762
0.2
2830.29
0
830.29

32.8762
4660.70
0
0.2
4660.90
1405.16
0
3254.84
32.8762
0.2
3287.91
0
287.91

5.12. Profitability Analysis

1. PAY BACK PERIOD
Production cost = 1584.834 Lakhs
Operating Year
st

1.
2.

nd

Opening
Balance
0
1011.816

Profit After
Depreciation
Tax
(SLM)
978.94
32.8762
1227.6 32 32.8762

Closing Balance
1011.816
2272.29

The Pay Back Period is within the 2nd year of operation

2.

BREAK-EVEN CAPACITY
Basis: 2nd year operation at 80% capacity
Sl.No.
A.
B.

Particulars
SALES REALISATION
VARIABLE COST
1. Raw Materials
2. Utilities
3. Packing (10 kg/bottle)
4. Interest on working capital

C.

Total Variable Cost

FIXED COST
1. Salary & Wages
2. Factory Overhead
3. Administrative Expenses
4. Depreciation (SLM)
Total Fixed Cost

Let, u be the Break-even output.

Selling price per unit = 47.93
Variable cost per unit = 38.10
Fixed cost = 236.62
47.93 *u = 38.10* u + 236.62
Therefore, u = 24.07

22 | P a g e

Value
9585
5502.56
2.12E+03
17.3
221.35
7.62E+03
164.43
29.42096
9.893
32.8762
236.62

Break- Even Capacity = Maximum capacity Break Even output

= 200 24.07
= 175.928

5.13Executive Summary:
Pay Back Period: Within the 2nd year of operation.
Break-Even Capacity: 175.928
From this thorough analysis we can conclude that this project is feasible.

23 | P a g e