Behind the model
How the manufacturing model works
Every number in the model is worked out from your inputs; nothing is hidden. Below is each formula, paired with a worked example from the default 10,00,000-unit-a-year plant. Change any input in the model and the same formulas apply.
Output and capacity
The plant has a rated yearly capacity; what it actually makes in a year is capacity × that year’s utilisation (see the ramp-up below).
Rated capacity
annual capacity (units / yr)
10,00,000 units/yr
Units produced (year y)
capacity × utilisation(y)
stabilised: 8,00,000 units (80% util)
Yearly output, once busy
capacity × stabilised utilisation%
8,00,000 units/yr
Set-up cost (CapEx)
Land (plus stamp duty), building, machinery, utilities and other one-time costs, then a buffer for surprises (contingency) and interest during construction (IDC). Set-up cost per unit of capacity is worked out, never assumed.
Stamp duty on land
land × 6% (registration, by state 5–7%)
₹12 L
Base build cost
land + stamp duty + building + machinery + utilities + Σ line items
₹34.9 Cr
Buffer for surprises (contingency)
base × 5%
₹1.75 Cr
Subtotal (with buffer)
base + contingency
₹36.7 Cr
Interest during construction (IDC)
total × debt% × interest% × (months ÷ 12) × ½
12 mo → ₹1.1 Cr
Total project cost
sub-total + IDC
₹37.8 Cr
Set-up cost per unit of capacity
total project cost ÷ annual capacity
₹378 / unit
Running costs (OpEx)
Variable costs (raw materials, power) move with units made; fixed costs (labour, maintenance, other) are yearly and rise each year. Power cost is worked out from use × tariff, never typed in.
Raw materials (variable)
units × RM cost/unit × (1 + opexEsc)^(yr−1)
stabilised: ₹30.9 Cr/yr
Power cost per unit
kWh/unit × tariff = 3 × ₹8.5
₹25.50 / unit
Labour and power
annual labour + units × power cost/unit, escalated
stabilised: ₹7.49 Cr/yr
Maintenance
(base + contingency, pre-IDC) × 2.5% / yr
stabilised: ₹1.01 Cr/yr
Other fixed costs
other fixed annual, escalated
stabilised: ₹3.31 Cr/yr
Working-capital interest
see Working capital below: an opex line
stabilised: ₹85.6 L/yr
Total running costs
raw materials + labour & power + maintenance + other fixed + WC interest
stabilised: ₹43.5 Cr/yr
Yearly cost rise
base × (1 + 5%)^(yr−1)
5% / yr
Working capital: the standard bank method
Cash locked in raw material, work in progress, finished stock and unpaid customer invoices. Indian banks size it as days of sales, fund (1 − margin) through a cash-credit limit, and expect you to fund the margin yourself.
Amount needed (year y)
revenue(y) × cycle days ÷ 365 = revenue × 75/365
stabilised: ₹10.9 Cr
Bank cash-credit limit
requirement × (1 − 25% margin)
₹8.16 Cr
Your margin
requirement × 25%: funded from equity
₹2.72 Cr
Cash-credit interest (a running cost)
bank-funded share × 10.5%: reduces EBITDA
stabilised: ₹85.6 L/yr
Change in working capital (cash used)
requirement(y) − requirement(y−1); full Δ hits project cash flow, the margin share hits equity
year 1: ₹6.16 Cr
Returned at the end
final-year requirement returns as cash in the last year
₹16.9 Cr
Revenue, ramp-up and phasing
Revenue is units made × price, with the price rising each year. Utilisation climbs in a straight line from the year-1 level to a steady level; a phased build adds capacity one phase at a time.
Revenue (year y)
units(y) × price/unit × (1 + priceEsc)^(yr−1)
year 1: ₹30 Cr → stabilised: ₹52.9 Cr
Yearly price rise
price × (1 + 5%)^(yr−1)
5% / yr
Utilisation ramp-up (straight line)
start + (stabilised − start) × (age−1) ÷ (ramp yrs − 1)
50% → 80% over 3 yrs
Phased build
each phase commissions on its own year and ramps from scratch
leave blank for an all-at-once build
Loan, repayment holiday, tax and depreciation
A term loan with interest only during the repayment holiday (moratorium) while the plant ramps up, then principal repaid over the rest of the loan term. Straight-line depreciation on everything except land; tax with losses carried forward.
Loan and your money
debt = total cost × debt% ; equity = remainder
₹22.7 Cr debt · ₹15.1 Cr equity
Repayment holiday (moratorium)
interest-only for the first N years, then amortise
2 yr grace, 8 yr tenor
Equal-principal repayment
debt ÷ (tenor − moratorium) each amortising year
₹3.78 Cr / yr over 6 yrs
Fixed EMI option
debt × r ÷ (1 − (1+r)^−(tenor−moratorium))
level-payment alternative
Loan interest
outstanding balance × interest rate
year 1: ₹2.27 Cr (interest-only)
Depreciable base (land excluded)
total project cost − land − stamp duty
₹35.6 Cr
Depreciation (straight-line)
depreciable base ÷ 15 yrs
₹2.38 Cr / yr
Tax (losses carried forward)
max(0, PBT − losses) × 25% ; losses carry forward
shelters early-year losses
Capital subsidy: state and central schemes
Many state industrial policies subsidise 10–25% of eligible fixed investment (not counting land), paid after production starts. The model counts it as one-time cash in the first operating year; it never changes the loan size or the depreciation. Whether you qualify is decided by the department running the scheme.
Eligible investment (not counting land)
building + machinery + utilities + line items
₹32.8 Cr
Capital subsidy
eligible investment × 0%
₹0 (off by default)
Timing
received in the first operating year (post-commissioning disbursal)
boosts year-1 cash flow, payback and IRR
Returns and loan cover
Cash flows before any loan give the project return; cash flows to you give the return on your money. The project return uses tax without the loan-interest saving, so it doesn’t depend on how you borrow. A longer build pushes back the first sales and deepens the early dip in cash.
Operating profit (EBITDA)
revenue − total OpEx (incl. WC interest)
stabilised: ₹9.39 Cr (18% margin)
Project cash flow
EBITDA − project tax − CapEx − ΔWC (+ subsidy yr 1, + WC release at horizon)
Project IRR 12.6%
Cash to you
PAT + depreciation − principal − equity-funded CapEx − margin share of ΔWC
Equity IRR 19.7%
Build delay
first revenue deferred by ⌈months ÷ 12⌉ − 1 extra years
no extra lead year
Value above your hurdle (NPV)
Σ unlevered FCF ÷ (1 + discount)^t
@ 12% = ₹1.6 Cr
Payback
year cumulative unlevered cash flow first turns positive
7.2 yr
Loan cover (DSCR)
CFADS ÷ debt service ; CFADS = EBITDA − tax (amortising years only)
min 1.43× · avg 1.80×
Loan-life cover (LLCR)
PV(CFADS over loan life) ÷ debt
1.70×
Money back per ₹1 (equity multiple)
Σ equity cash returned ÷ equity invested
4.60×
Break-even utilisation
stabilised utilisation at which project NPV = 0
78%
Per unit, in a settled year
What each unit earns and costs once the plant is busy.
Revenue per unit
stabilised revenue ÷ stabilised units
₹662
Running cost per unit
stabilised OpEx ÷ stabilised units
₹544
Contribution per unit
(revenue − variable cost) ÷ stabilised units
₹248
Set-up cost per unit of capacity
total project cost ÷ annual capacity
₹378
Energy and carbon
What the plant uses and emits once it is busy.
Energy
annual units × power (kWh/unit) ÷ 1000
2,400 MWh/yr
Carbon
energy (kWh) × grid emission factor ÷ 1000
1,704 tCO₂/yr
Carbon per unit
power (kWh/unit) × grid emission factor
2.13 kgCO₂/unit
Contribution margin
(price − RM − variable power) ÷ price
37%
These are planning estimates you can check line by line, not a quote. The typical Indian figures are assumptions from public sources, not ClarWorks data, and every one can be changed in the model. Open the model →
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