REPROCESSING OF PLASTICS

INTRODUCTION
The demand for the plastic raw material emanates fro the necessity of disposing the
used plastics as well as the cheaper rates of reprocessed materials which can be reused
for manufacturing several plastic articles. Reprocessed raw materials can be used either
wholly or mixed with virgin materials in varying proportions. First grade reprocessed
material can be used up to say 50% with the virgin material in film plants for packaging.
In agro plastics, reprocessed materials can be used up to say 70%, 100% RP can be
used for the production of box strapping. Consumer items such as buckets, mugs, soap
boxes, plates, tumblers and cups, toys, bottle caps, junction boxes etc., are some of the
products being made with even 100% reprocessed plastic raw materials.

MARKET
India will rise to become the world's third largest plastics producer by 2010. Already
Reliance Industries is a major player here. And Asian markets has the highest growth
potential," said Mr. Helmar Franz, member K 2001 Exhibitor Council.

He said the demand for plastic materials is expected to grow by 5.3 per cent over next
decade. This according to him would put the total global demand for plastic materials at
over 250 million tonne a year by 2010.

"By then the total consumption in South East Asian markets will have far outstripped that
of North American and Western Europe," he added.

When one compares the per capita plastics consumption of Asian countries, the huge
potential to be tapped is evident. While some 100-170 kg of plastics and rubber are used
per capita in the major European economies, in Japan and the US this number is just 90
kg, in Singapore, Malaysia, Australia and New Zealand accounting for 70-80 kg.

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The consumption is much lower in Thailand, China and India at 30, 10, and 13 kg
respectively. This potential is what is enticing investors to announce fresh commitments
in South East Asian region. As major user industries like automobiles, consumer
durables and electronics now becoming really global, it is but natural for them to look for
suppliers to supply locally.

The Indian Plastic Industry Has taken great strides in its quest for success. The last few
decades have seen it rise to the position of a leading force in the country with a sizable
base. The industry itself is growing at a fast pace and the per capita consumption of
plastics in the country has increased manifold as compared to the earlier decade.

Plastic has undoubtedly gained notable importance in every sphere of activities. It has
helped substitute and save scarce natural resources. It is an inseparable part of our
daily life.

Constant development in polymer technology, processing machinery, know how and

cost effective production is fast replacing plastics in every segment from its conventional
materials

Polymer demand in india to touch 7.3 million tons by 2006 - 2007 and 12.4 million
tons by 2010 - 2011.
India is expected to be the 3rd largest consumer of plastics after US and china by
2010.

Growth rate between 12% - 15%. Consistently outperforming GDP.

Major Raw Material Producers 15

Processing Units 22,000 Nos
Turnover Rs. 25,000 crores
Capital Asset Rs. 47,000 crores
Raw Material produced approx. 4.2 million tones

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Raw Material consumed approx. 3.7 million tones
Employment Direct / Indirect 2.5 million
Export value approx. USD 1104 million
Revenue to Government approx. Rs. 6000 crores

Demand estimates for major Polymers - INDIA (1000 Tones)

2003 2004
LDPE 281
3000
Linear PE / LLDPE / HDPE 1666
PP 1737 2569
PVC 986 1614
PS 246 402
PET Bottles 45 100
PET Film 55 100

Demand estimates for Engineering Thermoplastics

ABS 40 65
Polyamide ( 6 & 66) 20 32
PET / PBT Moulding
2 3
Material
Polycarbonate 20 32
Other Thermoplastics 26 40
Thermo sets 116 155

Demand estimates for Machinery

Injection Moulding 32350 Nos
Blow Moulding 5050 Nos
Extrusion 16700 Nos

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* Source : Task Force on Petrochemical / Industry Estimate

The per capita plastics consumption, which is currently at 3 kg, is projected to go up to

7.7 kg by the year 2007. While it is true that our consumption is below the world average
of 17 kg, per capita figures should be viewed in the context of our large population;
sometimes per capita figures are useful only for trend analysis and not in absolute
terms.

INSTALLED CAPACITY
Product Installed No of working Capacity per Capacity per
capacity hours per day day annum
per hour 300 days per
annum
Reprocessing 60 kgs 8 480 kgs 144 MT
of plastics

PLANT AND MACHINERY

Sl.no. Description Qty Amount
1 65mm Extruder with one set of reprocessing die and 1 250000
Pelletiser with accessories
2 Heavy duty plastic scrap grinder (18") 1 100000
3 Plastic colour mixer (22/24") 1 90000
4 Miscellaneous tools & equipments 1 60000
Total 500000

MANAFACTURING PROCESS
In the single process, the plastic waste/scraps are first segregated according to grade
and quality wise; then cleaned and washed, dried up and then ground with the aid of
scrap grinder. The grouped scrap is mixed with colour and then fed into extruder where

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it gets melted and comes out from the die as strands which is then dipped into water
bath. The strands are fed into a cutter unit where it gets cut and collected as granules.

In double process, the cleaned waste is fed into extruder where it gets melted and
collected as lumps. The lumps are ground and collected as scraps. The ground scraps
are fed into extruder and collected as strands which are chopped as granules.
The advantage of double process over single process is that the granules reportedly
have high bulk density which are preferred by film manufacturers. However, this double
process involves more labour and power.

RAW MATERIALS
For MTS 144
Qty-MTs Rate/MT Value Rs.Lakhs
Plastic scrap 151.20 12000 18.14
Colourants 2.00 80000 1.60
TOTAL 19.74
Packing materials 144 1000 1.44

LOCATION LAND AND BUILDING

Built up area-Sq.ft 1000
Rent p.m.-Rs per .5 per sq.ft 5000
Advance-10 months.Rs 50000

UTILITIES
Power- Hp
Three phase- KW 36.00
Power charges Rs.lakhs p.a 4.10
Water-For process-Litres per day 2000
For human consumption-litres/day 200

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MANPOWER
Nos Monthly wages Total
Manager 1 0 Self
Skilled 2 5000 10000
Unskilled 2 3000 6000
Accounts Assistant 1 4000 4000
Security 1 2000 2000
sub total 20000
Add benefits 20% 4000
Total per month 24000
TOTAL PER ANNUM-Rs. lakhs 2.88

SCHEDULE OF IMPLEMENTATION
The project can be implemented after making the financial arrangements and the
premises.

COST OF PRODUCTION AND PROFITABILTY

Assumptions

Installed capacity 144 MT of reprocessed plastic per annum

Capacity utilisation
Selling price
Raw materials
Packing materials
Power
Wages and salaries
Repairs and Maintenance
Year-1 -60%
Year -2 -70%
Year-3 onwards- 80%
Rs.28.00 per kg
As per the details given above
As per details given above
Rs.4.10 lakhs per annum at 100%
Rs. 2.88 lakhs with increase 5% every year.
Rs.0.60 lakh per annum

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Depreciation
Selling general and
administrative expenses
Interest on Term loan
Interest on working capital
Income tax
Written down value method -15 % on machinery
Rs.20000 per month
11% per annum
11 % per annum
33.66 % on profits

MACHINERY SUPPLIERS:

1. M/s Kolsite Machine Fabrik Ltd., Veera Desai Raod, P. O. Box No. 7368,
Andheri (W), Bombay-400 058.
2. M/s Jolite Industries, 5 Central Avenue Road, Kodungaiyur, Chennai-600 051.
3. M/s Venkateswara Engineering Industries, 42 Wood Wharf, III Lane,
Walltax Road, Chennai-600 079.
4. M/s Boolani Engineering Corporation, Prabhadevi Industrial Estate,
402, Veer Savarkar Road, Bombay-400 025.
5. M/s Brimco Plastic Machinery Corporation, Plot No. 55, Govt. Industrial Estate,
Kandivili, Bombay-400 097.
6. D. G.P. Windsor India Ltd, 2 J, Century Plaza, Teynampet, Chennai 600 018.
7. Europack Machines India Pvt Ltd, 52 Bindal Industrial Estate, Sakinaka, Andhari
East, Mumbai 500 072.
8. Ambica Engineering & Wire Products, L 45, GIDC Estate, Odher, Ahmedabad382415,
9. Hind Hydraulics & Engineers, Faridabad, Plot No. 13, Sector 74, Faridabad 121005.
10. Prasad Groups & Companies, Plot No. 14 16 GIDC Industrial Estate, Phase 1 Valva,
Ahmedabad 382445
11. HMT International Ltd, 59 HMT Bhavan, Bellary Road, Bangalore 560 032.

ADDRESSES OF RAW MATERIAL AND OTHER CONSUMABLE SUPPLIERS

Plastic Scrap
Local retail/wholesale plastic scrap dealers.

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FINANCIAL ASPECTS

1. COST OF PROJECT
[Rs.lakhs]

Land & Building (Advance) 0.50

Plant & Machinery 5.00
Other Misc. assets 0.50
Pre-Operative expenses 1.50
Margin for WC 0.76
8.26

2. MEANS OF FINANCE

Capital 4.51
Term Loan 3.75
8.26

3. COST OF PRODUCTION & PROFITABILITY STATEMENT

[Rs.lakhs]

Years 1 2 3

Installed Capacity-MTs 144 144 144

Utilisation 60% 70% 80%
Production/Sales-MTs 86 101 115

Selling Price per MT-Rs. 0.28 lakhs

Sales Value (Rs.lakhs) 24.08 28.28 32.20

Raw Materials 11.85 13.82 15.80

Packing Materials 0.86 1.01 1.15
Power 2.46 2.87 3.28
Wages & Salaries 2.88 3.02 3.17
Repairs & Maintenance 0.60 0.66 0.73
Depreciation 0.75 0.64 0.54

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Cost of Production 19.40 22.02 24.67
Selling, Admin, & General exp 2.40 2.52 2.65
Interest on Term Loan 0.41 0.36 0.26
Interest on Working Capital 0.22 0.22 0.22
Total 22.43 25.12 27.80

Profit Before Tax 1.65 3.16 4.40

Provision for tax 0.56 1.06 1.48
Profit After Tax 1.09 2.10 2.92
Add: Depreciation 0.75 0.64 0.54
Cash Accruals 1.84 2.74 3.46

Repayment of Term loan 0.00 0.94 0.94

4. WORKING CAPITAL:

Months Values % Margin Bank

Consumptions Amount Finance

Raw Materials 0.50 0.49 25% 0.12 0.37

Consumables 2.00 0.14 25% 0.04 0.10
Finished goods 0.50 0.81 25% 0.20 0.61
Debtors 0.50 1.00 10% 0.10 0.90
Expenses 1.00 0.30 100% 0.30 0.00
2.74 0.76 1.98

5. PROFITABILITY RATIOS BASED ON 80% UTILISATION

Profit after Tax = 2.92 9%

Sales 32.20

Profit before Interest and Tax = 4.88 48%

Total Investment 10.24

Profit after Tax = 2.92 65%

Promoters Capital 4.51

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6. BREAK EVEN LEVEL

Fixed Cost (FC):

[Rs.lakhs]
Wages & Salaries 3.17
Repairs & Maintenance 0.73
Depreciation 0.54
Admin. & General expenses 2.65
Interest on TL 0.26
7.35

Profit Before Tax (P) 4.40

BEL = FC x 100 = 7.35 x 80 x 100

FC +P 11.75 100

50% of installed capacity

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