₹75 Lakh–₹2 Crore Scale Recycling & Extrusion Plants: Project Economics & Working Capital

Establishing a medium-scale PET bottle flake or Polyolefin pellet recycling plant in India ($ext{₹}75 ext{ Lakhs}$ to $ext{₹}2.0 ext{ Crores}$ investment tier) requires balancing fixed capital expenditure (machinery, power substation, effluent treatment) with operating working capital. Operating at $500 ext{ kg/hour}$ feed capacity requires careful management of raw flake yield losses ($8$), power consumption, itemized variable costs, and inventory turn days to achieve sustainable cash flows.

By completing this lesson, you will be able to:

• Structure CAPEX and working capital across Conservative, Base, and Optimistic scenarios.
• Calculate yield-adjusted feedstock costs and itemized variable OPEX per kg.
• Derive line-by-line full manufacturing production costs per kg.
• Differentiate 80% Base Operating Working Capital vs 100% Peak Design Working Capital.

mermaid
graph TD
    A["Raw PET Bottle Bales Input (₹55/kg)"] --> B["Bale Breaker & Sorting (8% Contaminant Removal)"]
    B --> C["Wet Crushing & Hot Chemical Wash (Yield-Adjusted Flake ₹59.78/kg)"]
    C --> D["Extrusion Pelletization & Screen Filtering (Variable OPEX ₹7.00/kg)"]
    D --> E["Recycled RPET Granules Output (Selling Price ₹78.00/kg)"]
    E --> F["Net Contribution Margin (₹11.22/kg)"]

4.1 Fixed CAPEX Breakdown (₹140.00 Lakhs)

• Extrusion & Recycling Machinery: ₹95.00 Lakhs ($500 ext{ kg/hr}$ twin-screw degassing extruder + hot washer + pelletizer)
• Power Substation & Electricals: ₹18.00 Lakhs ($250 ext{ kVA}$ transformer + DG backup)
• Civil Utility & ETP Setup: ₹15.00 Lakhs (Effluent treatment plant + water recycling)
• Pre-Operating & Tooling Expenses: ₹12.00 Lakhs
• Total Fixed CAPEX: ₹140.00 Lakhs

4.2 Operating Schedule & Capacity Basis

• Scheduled Capacity: $300 ext{ operating days/year} imes 20 ext{ scheduled hours/day} = 6,000 ext{ scheduled operating hours/year}$.
• Hourly Feed Rate: $500 ext{ kg/hour}$ raw PET bottle bales ($8,000 ext{ kg/day}$ at 80% utilization; $10,000 ext{ kg/day}$ at 100% peak capacity).
• Staffing: 8 Plant Technicians across 2 shifts ($8 imes ext{₹}22,000/ ext{month} imes 12 = ext{₹}21.12 ext{ Lakhs/year}$).
• Fixed Annual OPEX (₹36.87 Lakhs/yr): Factory Rent (₹12.00L) + Technician Salaries (₹21.12L) + Maintenance & Insurance (₹3.75L).

4.3 Unit Economics & Itemized Variable Costs

• Raw Bales Purchase Price: ₹55.00/kg
• Resin Yield ($92$): Yield-adjusted raw flake cost = rac{ ext{₹}55.00}{0.92} = mathbf{ ext{₹}59.78/ ext{kg}}.
• Itemized Variable Operating Costs (₹7.00/kg Total):
  • Electricity ($0.45 ext{ kWh/kg} imes ext{₹}9.00/ ext{kWh}$): ₹4.05/kg
  • Water, ETP & Washing Chemicals: ₹1.20/kg
  • Screen Filter Mesh, Consumables & Packaging: ₹0.85/kg
  • Quality Lab Testing, Freight & Rejects Allowance: ₹0.90/kg
• Contribution Margin After Stated Variable Costs:

4.4 Line-by-Line Full Manufacturing Cost Derivation

• Base ($2,208,000 ext{ kg/yr}$): Allocated Fixed OPEX = rac{ ext{₹}36.87 ext{L}}{2,208,000 ext{ kg}} = ext{₹}1.67/ ext{kg} implies mathbf{ ext{₹}68.45/ ext{kg}}.
• Peak Capacity ($2,760,000 ext{ kg/yr}$): Allocated Fixed OPEX = rac{ ext{₹}36.87 ext{L}}{2,760,000 ext{ kg}} = ext{₹}1.34/ ext{kg} implies mathbf{ ext{₹}68.12/ ext{kg}}.

4.5 Working Capital Comparison: 80% Base Operating vs 100% Peak Design Basis

Conservative Peak Funding Comparison: Peak funding (₹247.72L) evaluated against base operating cash flow (₹158.15L/yr) yields a conservative payback of 1.566 Years (18.8 Months).

• RPET Granules for Textile & Packaging: Plant setup in Gujarat recycling cluster supplying fiber extruders and sheet plants. (Illustrative Indian industry scenario based on PET recycling operations).

• Yield-Adjusted Feedstock Cost: Cost per net usable kg accounting for unwashed bottle contamination losses.
• Finished Goods Stock Valuation: Valued at full manufacturing production cost per kg, not selling price.

1. CIPET Plastic Product Design & Costing Handbook, 2022.
2. MSME Development Act Guidelines, Ministry of Micro, Small and Medium Enterprises, 2021.