Organic Jaggery Production from Sugarcane
Executive Summary:
Sugar industry in India is a well-developed industry and one of the largest after textiles. It provides rural employment opportunities and plays an important role in Indian economy.
Jaggery is also manufactured from sugarcane juice and is very widely used not only in individual households but also in many eateries, restaurants, clubs and hostels and it has certain industrial applications as well. Manufacture of sugar involves many technical aspects and the capital investment is also on the higher side. Compared to this, production of jaggery is very simple and the capital cost is also very limited. Due to its wide applications, the market for jaggery is continuously growing. Also the
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/MT Value
Sugarcane 2,000 500 10.00
Soda Ash/Bhindi Juice -- -- 1.00
Gunny Bag Cloth and strings etc. -- -- 1.00
Total 12.00
Utilities
The per season cost of utilities at 100% capacity level would be Rs.1.00 lac. Interest:
Interest on term loan of Rs.7.50 lacs has been calculated @ 12% per annum assuming repayment in four years including a moratorium period of one year and on working capital from bank, it is computed @ 14% per annum.
Depreciation:
Depreciation on building has been worked out @ 10% p.a. The depreciation on plant and machinery as well as miscellaneous assets is assumed @ 20% per annum. The method applied is WDV.
PROJECTED PROFITABILITY (Rs. in lacs)
No Particulars 1st Year 2nd Year
A Installed Capacity ---200 Tonnes --- ---200 Tonnes --- Capacity Utilisation 60% 75%
Sales Realisation 15.60 19.50
B Cost of Production Raw and Packing Materials 7.20 9.00 Salaries 1.60 1.90 Stores and Spares 12.00 18.00 Repairs and Maintenance 15.00 21.00 Selling Expenses @ 12.5% 1.95 2.45 Administrative Expenses 0.30 0.36 Total 11.62
...and the useful life of the machine should be calculated. Then, depending on the method used, the total cost of the machine is considered as a long term asset and depreciated over the life expectancy of the asset.
In SIVMED’s case, based on the definition of WACC, all capital bases should be included in its WACC. These include its common stock, preferred stock, bonds and long-term borrowings. In addition to being able to compute for the costs of capital, the WACC also determines how much interest SIVMED has to pay for all its activities. The value of the firm’s stock, which we want to maximize, depends of the after-tax cash flow. Hence, after-tax values for WACC are also needed. Furthermore, cost of capital is used to determine the cost of each debt, stock or common equity. Being able to analyze these will be essential into deciding what and how new capital should be acquired. Hence, the present marginal costs are ideally more essential than historical costs.
First of all an analysis of the packaging machine investment’s hurdle rate is required. I will use comparable firm parameters approach to figure out the hurdle rate (WACC) of the firm using the information provided in Exhibit 5. The cost of debt should be calculated using the bond information given in footnote 2 of case under Exhibit 2. The cost of equity should be calculated using the Capital Asset Pricing Model.
After calculating the Net Present Value (NPV) and the Internal Rate of Return (IRR) for each project, I have determined that both the dishwasher and the trash compactor projects should be pursued. Both of them have shown positive NPVs at the new discount rate of 11.58% (WACC). Another indicator that told me that these two projects should be pursued by Star was that they both yielded IRRs greater than the given hurdle rate. The disposal did not meet these requirements and therefore should not be undertaken.
a. The cost of debt is the money company has to pay for using the funds. In our case, annual cost of debt is kd: kd/2 = r = 5.0%. kd/2 = (47.5 + [1000-891] / 30) / ((2*891 + 1000) / 3) = 5.5% We have to multiply t...
Jenkins, G.H. 1966. Introduction to cane sugar technology. Elsevier Publishing Co., New York. 478 pp.
Top portion of sugarcane of age varying from 4-10 months is used as initial explants however sugarcane of more than 6 months was not preferred. The sugarcane (Co86032) explants were collected from experimental fields of MB & GE department at VSI, Pune. The parameters used for selection of the explants were apparently healthy condition and vigorous growth.
Secondly land was a major thing that drove the sugar trade. In document 1, its shows a map of the West Indies. The West Indies is where a lot of the sugar was grown, Why? Because in order to grow sugar you need hot, humid climate, the West Indies have that hot, humid climate to produce sugar.
principle balance at 22.50% interest while paying $32.71 a week for 208 weeks (4 years) will cost a total amount of $6,803.68. That is over $2,000.00 in
Sugarcane is an important industrial crop for the tropical and subtropical region of the world. It is produced in more than 100 countries, with global production of 174 million tonnes sugar. It accounts for about 80 percent and sugarbeet for about 20 percent of total sugar produced (FAOSTAT, 2008). In 2010, 1,682 million metric tonnes (MT) of sugarcane were produced worldwide in a total area of 23.8 million hectares (ha). Brazil is the largest sugarcane producer, contributing with 40% of the world production (719 MT) followed by India (278 MT), China (111 MT), Thailand (68 MT), Pakistan (50 MT), Colombia (38.5 MT), Australia (31 MT), Argentina (30 MT), United States (27.5 MT), Indonesia (26.5 MT) and the Philippines (23 MT) (FAOSTAT, 2011). India rank second among the sugarcane growing countries of the world in both area and production. Globally it is cultivated over an area of 20.1 million hectare, with annual production of 1381.1 million tonnes and productivity of 65.5 tonnes per ha. In India sugarcane is cultivated over an area of 4.36 million ha, with an annual production of 281.8 million tonnes and productivity 64.6 tonnes per ha. Uttar Pradesh, Maharashtra, Karnataka, Tamilnadu and Andhra Pradesh are the important sugarcane
i.e. 8 years after closing of the loan and 6 years after funding of the loan
In “Bank Debt” alternative, a sum of $3.5 million will be injected to the company through bank loans. However, the company will have to pay an additional amount of $33,750 in interest and a principal payment of $300,000 to the bank annually over the course of 7 years. Net income will come to $489,187.50 and EPS will be 0.49.
To begin the analysis on Krispy Kreme, the first analysis is that of the depreciation analysis. There are three different methods to calculate depreciation and they are straight-line, units-of-production and double-declining-balance (Larson, Wild, & Chiappetta, 2005). The Krispy Kreme Company uses the straight-line method to calculate their depreciation on building, machinery, equipment and leasehold improvements. The breakdown of the depreciation on property and equipment consist of land, buildings, machinery and equipment, leasehold improvements and construction in process (Larson, Wild, & Chiappetta, 2005). Krispy Kreme’s total gross property and equipment in 2002 was a total of $156,484,000 and in 2003, it was a total of $252,770,000. The accumulated depreciation for the year 2002 was a total of $43,907,000 and for the year 2003, the total was $50,212,000. To find the net property and equipment amount, taking the gross property and equipment and subtracting the accumulated depreciation is the equation used. The net property and equipment for the year 2002 would be $112,577,000 and 2003 would be $202,558,000. Once b...
Expenditure on fixed assets can be divided into capital expenditure and revenue expenditure. Capital expenditure includes costs incurred to get a fixed asset and any subsequent expenditure that increases the earning capacity. The cost of get a fixed asset not only includes the cost of purchases, it also includes additional costs incurred in bringing the fixed asset into its condition. Take for example, a delivery costs. Capital Expenditure was include the purchase costs that less any discount received, installation costs, delivery costs, replacement costs, legal charges, and up gradation costs. Capital expenditure will increase in the fixed assets, so the accounting entry is as: