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The promoter’s background.

The promoter is a postgraduate from XLRI Jamshedpur and has over 30 years of industrial and other experience in business in Kerala and other states of India. He started his career in a TATA firm which had business division designing and operating large scale waste management systems for large municipalities and corporations. Thus, he has first-hand experience, international and domestic connections in this industry. Throughout his career he has handled various waste management projects for important entities like ISRO, Indian Navy, Lakshadweep Administration etc. At present he runs a rubber reprocessing unit in NIDA Palakkad.

Land requirement for the project

The project requires about 10 acres for its proper functioning. The land requirement is for 3 categories of operations:

  • The processing plant. Since the process includes, a large Raw material reception area, high pressure Hydrolysers, Blast freezers, Boiler, Pollution control equipments including an Effluent treatment plant Bio filter housing, the plant will require about 3 acres of land for its proper layout. The processing plant will be in red category zone the Industrial Estate.

  • The large transportation fleet and insulated boxes of the project which will have to be regularly cleaned and serviced for their proper maintenance. Sufficient repair facilities will have to be provided and hence an area of 2 acres is provided within the promoters Rubber Estate in Karuvarakund which is ideally situated in the middle of the Raw material collection area and is well connected by Road and Rail. The Rubber estate is situated within a large family holding of 2500 acres and is therefore sufficiently secluded posing no problems from neighbouring property owners. The land has been taken from the promoters for long term lease of 12 years in the name of the company.

  • The Solar plant which will power the entire electricity requirements of the project including the Electric Vehicle fleet will require about 5 acres of land. This will be in the Kottayam District of Kerala. This phase of the project will start during the second year of the project

Clearances and Permits.

Once the Financing route of the project has been finalised the following applications for the various compliances will be done:

  • The application for the project clearances will be through the DIC in a single window clearance mode, hence all the applications including the ones discussed below will done through DIC which speeds up the processes with the other departments.

  • Building permit application is made to the Panchayat through DIC. The application will have to be forwarded to the Town Planning Department who will process it. Since the plant is situated in an Industrial Estate, normally there will be no major impediments in the process.

  • An application will be made to Kerala Pollution Control Board Department for an initial permission to build the pollution control systems in the factory. This initial permission is usually given on application itself. The final permission is given upon the commencement of trial runs and the Board’s inspection and assessment of the operation.

  • An application will be made to Factories and Boilers Department in the Palakkad Collectorate. Since the project has a 5Ton Boiler the necessary compliance will have to be taken. The responsibility of this compliance permission is with the Boiler vendor itself and it will be done simultaneously with the erection of the plant itself. The final permission under Factories and Boilers will be given after the completion of the installation of all the equipments.

  • The Health Department must certify the labour amenities such as canteen, mess hall, rest area, separate toilets for men and women etc provided in the factory and the application will be made once the Building permit is received from the Panchayat.

  • The Fire and Safety Department of the Palakkad District collectorate sanctions the Fire and Safety approval. Once the Building permit from the panchayat is received Fire and safety Department will issue an initial permission commence building the factory. Once the factory building is completed an inspection will be conducted by the fire department to ensure compliance of all precautionary measures, perimeter road and equipments etc. Final permission is given on the completion of the building structures and plant and machinery installation.

Subsidies and Government Interventions

The project is eligible for 3 types of subsidies: Agricultural processing subsidy which is around 35% of the investments with a cap of 5 crores, cold chain subsidy of its refrigeration system which is around 50% of the investments with a cap of 10 crores, and solar plant, Electric Vehicle subsidies. However, these cashflows have not been taken into the project’s financials at present. Because of the project’s strategic importance, possibility of Government guarantees, and recommendations is being explored. An experienced liaison agent has been appointed in Delhi for this purpose.

Financials of the project.

The project has a capacity of processing 50 tons of chicken offal per day which will be done in 10 batches. This will produce around 16 Tons of high concentrate protein and 3 Tons of Poultry oil. The plant will take around one year to 18 months to be commissioned.
The first phase of the project will be around 28 crores made up of land Rs 6 crores, Building Rs3 crores, Plant and machinery Rs 17 crores and working capital Rs 2 crores.
The product will be sold to fish feed manufacturing units and pet food manufactures in India. Since quality protein is in great demand selling the products will not be a big challenge. The price realisation for the protein has been increasing during the past few years. The demand for fish feed and pet food also shows an increasing trend. For project computation the price has been taken conservatively at Rs 35 per Kilogram, gradually increasing over the next 10-year period.
At present there is an income amount available for the collection of Raw material from the shops, but it has not been considered for the computation of project financials. In fact, raw material has been assumed to be at a cost from 5th year onwards.
Payback period for the project is around 4 years with an IRR of 17%. A summary of the financials are given below: