Medium Density Fiber Report

Techno-Economic Feasibility report of
Mott MacDonald
Medium Density Fibre Board
Rushil Dcor Pvt Ltd.
1, Krinkal Apartment,
Mahalaxmi Society, Paldi
Ahmedabad
Gujarat
380007
Techno-Economic
Feasibility Report of
Medium Density Fibre
Board
January 2007
Mott MacDonald
501, Sakar II
Ellisbridge
Ahmedabad, Gujarat
India
380001
Tel: +91-79-26575550
P:\Ahmedabad\AMC\USERS\PROJECTS\230431-Rushil -MDF -Feasibility\report\Final Report - Amended 26th Nov 2007.doc/
Mott MacDonald
Mott MacDonald
Techno-Economic
Feasibility Report of
Medium Density Fibre
Board
This document has been prepared for the titled project or named part thereof and should not be relied upon or used for any
other project without an independent check being carried out as to its suitability and prior written authority of Mott
MacDonald being obtained. Mott MacDonald accepts no responsibility or liability for the consequence of this document
being used for a purpose other than the purposes for which it was commissioned. Any person using or relying on the
document for such other purpose agrees, and will by such use or reliance be taken to confirm his agreement to indemnify
Mott MacDonald for all loss or damage resulting therefrom. Mott MacDonald accepts no responsibility or liability for this
document to any party other than the person by whom it was commissioned.
To the extent that this report is based on information supplied by other parties, Mott MacDonald accepts no liability for any
loss or damage suffered by the client, whether contractual or tortious, stemming from any conclusions based on data
supplied by parties other than Mott MacDonald and used by Mott MacDonald in preparing this report.
Mott MacDonald
List of Contents
Page
Executive Summary
Chapters and Appendices
1
Introduction
1.1
Study Background
1.2
Project Description
1.3
Background of the Firm
1.4
About the Promoters & Management
1.5
Consultants Background
1.6
The Scope of Work
1.7
Approach and Methodology
1.8
Caveats
Product Description
10
2.1
Medium Density Fibreboard
10
2.2
Prelam MDF Board
13
2.3
Laminate Flooring
14
2.4
Description of Substitutes
14
Market Study
20
3.1
Global Scenario for MDF
20
3.2
Laminate Flooring Market
24
3.3
Indian Market
27
3.4
Indian Scenario on Furniture
38
3.5
Other Relevant Issues
46
Raw Material Assessment
50
4.1
Raw material Types
50
4.2
Cotton Production
50
4.3
Cotton stalk
55
4.4
Bagasse as Alternate Raw Material
61
Technological Aspects
64
5.2
67
Manufacturing Process of Prelam Boards:
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5.3
Manufacturing process of Laminated Flooring
67
5.4
Location Aspects
68
5.5
Machinery Details
71
Strategic Analysis of the Firm
77
6.1
SWOT Analysis
77
6.2
Five-Force Model Analysis
79
Marketing Strategy
82
7.1
Present Marketing Set Up
82
7.2
Formulation of Marketing Strategy
85
Financial Modelling & Analysis
88
8.1
Estimation of Capital Cost
88
8.2
Means of Finance
92
8.3
Assumptions
93
8.4
Cash flows& Profitability Statement
97
8.5
Financial Indicators- NPV, IRR, DSCR, Pay back
101
8.6
Sensitivity Analysis
101
Conclusion and Recommendations
102
Appendix A:
Fixed Cost Allocation of Contingency and POP expenses
103
Appendix B:
Working Capital Statement
104
Appendix C:
Term Loan - Repayment & Interest
105
Appendix D:
Unsecured Loan - Interest
106
Appendix E:
SLM Depreciation
107
Appendix F:
WDV Depreciation
108
Appendix G: Tax Statement
109
Appendix H: Debt Service Coverage Ratio
110
Appendix I:
Pay Back Period & Internal Rate of Return
111
Appendix J:
Availability of Bagasse
113
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List of Figures
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1.1: Approach and Methodology

2.1: Substitutes of MDF
3.1: MDF Consumption in China
3.2: Global MDF Demand Supply Balance
3.3: Global Particleboard Demand Supply Balance
3.4: World Production of Laminate Flooring
3.5: Production of Laminate Flooring in Europe
3.6: Market Volumes of Laminate Flooring in North America
3.7: Market Volumes of Laminate Flooring in Asia Pacific
3.8: Furniture Productions in Billion Euros
3.9: Raw material used in furniture
3.10: Furniture Production Break up
3.11: Import Export of Furniture in India
3.12: Country wise break up of export of Indian furniture
3.13: Product wise break up of Indian furniture export
3.14: Country wise break up of imported furniture in India
3.15: Product wise break up of imported furniture in India
3.16: Break up of the round wood consumption in India
3.17: Imports of Veneer & plywood in India (In US $ 000)
3.18: Import of MDF/HDF & Particle Board in India (In US $ 000)
4.1: Cotton Production area and yields of India and U.S.
4.2: Indias Cotton Production and Production area
4.3: Indias Cotton Production Yield
4.4: Gujarats Cotton Production Yield
4.5: CCS Centre Mechanism
5.1: Techno Economic parameter for machinery selection
6.1: SWOT Analysis
6.2: Wood Products & competitors life cycles
6.3: Five Force Model
7.1: Present Marketing Set up
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2.1: Classification of Board based on Density

2.2: IS Specification of MDF Board
2.3: Wood& Agro-based products and their application
2.4: Characteristics comparison of different products
3.1: Region wise MDF production
3.2: Production and trade of MDF in the Middle East
3.3: Indian log production, imports & apparent consumption, 2003
3.4: Demand supply gap of wood
3.5: Indian imports of wood products, 2002 -2003
4.1: Cotton production
4.2: District wise cotton production in Gujarat
4.3: Cotton Productions in Surendranagar District
4.4: Cotton Production in different talukas of Surendranagar
4.5: CCS Centre locations
4.6: Sugarcane Productions in Gujarat
5.1: List of Imported Machinery
5.2: List of Indigenous Machinery
5.3: List of other plant and machinery
7.1: The present marketing zones of RDPL in India
7.2: The present marketing network of RDPL in world
8.1: Building and Civil Work
8.2: List of imported Machinery
8.3: List of Indigenous machinery
8.4: list of other plant and machinery
8.5: Preoperative and Preliminary cost break up
8.6: Inventory norms
8.7: Total Cost of Project
8.8: Means of finance
8.9: Capacity Utilisation in phase 1
8.10: Capacity Utilisation in phase 2
8.11: Operating norms for Fibre Board manufacturing
8.12: Operating norms for Prelam MDF Board manufacturing
8.13: Operating Norms for Laminated HDF Flooring Manufacturing
8.14: Repayment of Long Term Loan
8.15: Profitability Statement
8.16: Cash flow Statement
8.17: Financial Indicators
8.18: Sensitivity Analysis
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Executive Summary
Rushil Group (herein after referred to as client or RDPL) has a well established market in
the decorative laminate business in India and abroad. They are planning to make forays
into the manufacturing of MDF (Medium Density Fibreboard), laminate flooring and prelam
boards. This related diversification drive not only offers synergy in operation but also
provides a sea of opportunities in terms of value addition, import substitution, promotion
of rural economy, preservation of forests and employment generation.
Every year, MDF worth US$ 67.5 million are being imported to India which meets almost
75-80% of the total domestic demand. Based on market information, the market for MDF is
growing at an impressive rate of 20-25% p.a. There are only two players in the domestic
market that manufactures MDF. In the light of the above facts, Rushil can look forward to
reap the benefits of early mover advantage. Further to this, a well-established distribution
channel will help the firm to push their new products into the market in a cost effective
way.
Manufacturing MDF from cotton stalks will be the first of its kind in India that will offer
cost advantages in terms of production. RDPL is planning to set up manufacturing unit at
Surendranagar, which is famous for cotton cultivation. Also the surrounding areas are
cotton-abundant. Alternatively, bagasse is being considered as the raw material for MDF
production; which can be easily procured from South Gujarat and Saurashtra.
The client also plans to grow ailanthus excelsa or other kind of soft wood tree near the
factory premises in a vast expanse of land so that the wood from the same can be used as
raw material for MDF. Ideally 850 to 870 saplings can be planted per acre of land and will
be ready for felling in a span of 4 years. The typical yield is 100 tons per hectare. On an
average, 1.55 tons of trees are needed to produce 1 cubic metre of MDF.
The technology and major machinery will be sourced from Germany and China. Parameters
such as contemporariness of technology, energy efficiency, post-sales customer support,
scalability, etc had been taken into account while choosing the technology.
The long-term relationship the client enjoys with many dealers in India and around the
globe, especially in Europe can be leveraged further to sell/export the products from
India. In this respect, the cost-competitiveness and the established brand equity will play a
vital role. RDPL is envisaged to export nearly 60% of the product to favourable market
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destinations around the globe. The international marketing network of the RDPL is spread
in 34 countries including Canada, USA, Venezuela, Europe, Far East countries, Australia,
and Gulf countries with the strong brand name of Rushil Dcor.
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1.1
Introduction
Study Background
Since its inception in 1992, the Rushil Group of companies have created a niche for
themselves in the laminates business in India. Being a visionary company, it has tapped the
right opportunities so far in increasing the market share and the export volume, thereby
increasing the profits for the firm. At the same time, they have been continuously
innovating themselves in terms of product quality and services to the customers
worldwide, creating value for its stakeholders.
Indias impressive economic growth rate and the thrust on infrastructure development are
potential growth drivers for the construction materials in general and laminate in
particular. Rushil Group (herein after referred to as client or RDPL) is planning to make
forays into the manufacturing of MDF (Medium Density Fibreboard), laminate flooring and
prelam boards. This offers a sea of opportunities in terms of value addition, import
substitution, promotion of rural economy, preservation of forests, employment generation,
etc.
In the clients endeavour for related diversification into MDF manufacturing, Mott
MacDonald (herein after referred to as the consultant) would prepare a detailed technoeconomic feasibility report for the project. This study will focus on the issues of market
demand, raw material sourcing, technology selection, supply chain management, means of
finance, revenue modelling, risk management and strategy formulation.
1.2
Project Description
RDPL is planning to set up manufacturing unit of MDF and HDF board and their downstream
products like Prelam MDF board and Laminated HDF flooring.
The location identified for the project is Navalgarh village in Dhangadhra taluka of
Surendranagar district. The land acquisition process is finalized and RDPL has purchased 67
acres of land. RDPL has also finalized major machinery suppliers and purchase order has
been placed for MDF manufacturing plant, short cycle press, impregnation line and resin
plant. By considering the expertise of manufacturing machinery, quality and price
competitiveness, RDPL has selected foreign machinery suppliers for their requirement.
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The project will be implemented in two phases. In first phase, RDPL will manufacture
laminated flooring with imported High Density Fibre (HDF) board and in the second phase,
RDPL will manufacture Prelam MDF board and HDF laminated flooring with in-house
manufactured MDF and HDF board. The first phase will commence from October 2007,
while second phase is expected to be commissioned in October 2008.
The project has certain advantages due to its location and raw material used for
manufacturing Fibre board. The raw material selected for the project is agro waste like
cotton stalk and bagasse. RDPL is also considering social forestry route to meet its future
requirement of raw material. Due to the raw material selection, project come under the
agro industry and become eligible to get incentives from the Government of Gujarat.
1.3
Background of the Firm
Rushil Group of companies commenced operations in 1992, when Indian laminate industry
started serving to the global markets. Vir Laminate from the stable of Rushil Group is
one of best known brand in the laminate space and the company is one of Indias leading
decorative laminate manufacturing companies. Vir is a favourable brand for Indian
architects and interior designers. A large number of private & public sector corporate
companies spread across the length and breadth of the country are customers of the group.
Rushil pioneered Indian laminate industry into export market through the adoption of the
flexible global business practices that today enable the company to operate more
efficiently and to produce more value to its stakeholders. With a well-known product brand
Rushil dcor premium laminate, almost 34 countries are being served by our
comprehensive range of products as well as services.
The firm produces laminated sheets, prelam boards and door skins in their state-of-the-art
facilities at Mansa of Gandinagar District. The plant is capable of churning out 4.8 million
sheets per annum.
Milestones
1992 Rushil dcor Pvt. Ltd. (1st laminate manufacturing facility) established by
Mr. Ghanshyam Thakkar & his son Mr. Krupesh Thakkar
1992 - annual turnover of Rs. 2.5 crores in the first year
1993 - 100% increase in sales compared to the previous year
1994 companys first export to Bangladesh

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1.4
1997 - Rushil International established for export business
1998 - Groups sales graph on the upswing by export & domestic sales
1999 - Mica Rushil Pvt. Ltd. (2nd laminate manufacturing facility) established.
2003 - Rushil H.P.L. (3rd laminate manufacturing facility) established.
2003 Production capacity of 300000 sheets per month.
2003 Companys export reached to 34 countries.
2004 Laxmi Pandit & Samir Khan as brand ambassadors.
2005 Erection of short cycle laminates plant (1st prelam manufacturing facility).
2005 - Production of Vir Prelam boards started.
2005 Sridevi as a brand ambassador for Vir Laminate.
2006 (4th laminate manufacturing facility) established.
2006 production capacity reaches 4,00,000 sheets per month
2007- 2nd manufacturing facility for prelam started (Vertex Laminate Private Ltd,
Mumbai).
2007 Reorganisation of management structure
About the Promoters & Management
The promoters of the firm are Mr. Krupeshbhai G. Thakkar and Mr. Ghanshyam Thakkar
who possess indomitable spirit of entrepreneurship. The former has nearly 20 years of
experience in laminate manufacturing industry by working in areas of production, product
and project development, exports and sales. Mr. Ghanshyam Thakkar is the founder of the
company who has 46 years of experience in plywood trading and 20 years of experience in
laminate manufacturing business. They are very upbeat about the laminate and flooring
business and are ready to tap the huge potential in this segment that will come as a
consequence of economic boom and the concomitant increased activities in infrastructure
(construction of shopping malls, multiplex, IT parks, offices, etc).
They have a highly competent and forward looking team of professionals manning different
levels and functions. International Business Development is a thrust area that will help
RDPL to tide over any slack in domestic demand that may arise in future. Similarly it has an
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IT-enabled office environment that continuously monitor the work flow in vital functions
such as Accounting& Finance, Sales, Production, Purchase& Inventory, etc.
The firm boasts of Sales& Marketing Offices spread throughout the country and an
extremely networked trade set up that export products to 34 countries worldwide.
The Organogram is given below:
Director
CEO
______________________________________________________________
Account
Costing
Production
1.5
Finance
HR
Purchase
Export
Marketing &
Project &
Sales
Development
IT
Consultants Background
Mott MacDonald Private Limited (IMM) is a leading multi-disciplinary management and

engineering consultancy based in India, with offices nationwide.
As part of the global Mott MacDonald Group headquartered in U.K., IMM is able to draw on
world-class technical and managerial resources comprising over 5000 staff in more than 50
strategic centres world-wide. IMM is engaged in planning and development touching many
aspects of everyday life from water, energy, industry, environment and transport to
building, healthcare, tourism and social development. Across these sectors IMM works for
national and local governments, public and private utilities, industrial and commercial
companies, investors, developers, banks and financial institutions, international and
bilateral funding agencies and private entrepreneurs. IMMs strengths enable our clients to
realize their projects optimally from concept to commissioning. With 750 professionals, we
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take care of the entire process including providing advice on the best procurement route
and the optimum approach for maintaining the project once it enters service.
1.5.1
(i)
Services
Management Consultancy
IMM provides business planning and project management for a wide spectrum of clients in
industry, infrastructure and social development, including international development banks
and funding agencies. DMM also help clients such as accountancy practices, financial
institutions and industrial companies in making a realistic appraisal of their fixed assets,
and in preparing for disinvestment, mergers or de-mergers, acquisitions, takeovers,
insurance or liquidation, collaborations and joint ventures.
(ii)
Social Solutions
IMM has undertaken numerous studies and advisory roles for leading development banks
and funding agencies. Projects range from implementing vital AIDS eradication programmes
and pro-poor initiatives to studies for institutional strengthening, sector reform and impact
evaluation. DMM also offers specialist expertise in assisting with public consultation.
(iii)
Engineering Services
IMMs range of engineering services enables clients to realise optimal implementation of

projects. DMM takes care of every stage site evaluation, basic and detailed engineering,
contract preparation, project management, procurement, equipment inspection and
testing, site supervision and commissioning.
(iv)
Infrastructure
One of the key strengths of IMM lies in large-scale integrated urban infrastructure
development, encompassing water supply, drainage, solid waste, roads, sanitation, and
community buildings. Here our services range from planning and advisory assistance to
detailed engineering and construction management.
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(v)
Industry
IMMs skills and experience have earned it a leading reputation especially in chemicals,
textiles, oil and gas, agri& food processing and life sciences, as well as bulk drugs,
pharmaceuticals and biotechnology. DMM is known particularly for its expertise in process
engineering and licensing for speciality chemical production based on laboratory/pilot
plant know-how developed by R&D centres.
(vi)
Buildings
IMMs business covers all sectors from commercial and leisure to industry, education and
healthcare. DMM provides the full range of architectural, structural, mechanical and
electrical design skills, along with planning and project management expertise. Building
services are a special capability, notably building management systems, vertical
transportation, telecommunications and security.
1.6
The Scope of Work
The scope of work (SOW) includes
Assessment of raw material availability to ensure sustained operation of the

plant.
Market assessment to justify project rationale from the market point of view.
Technology Evaluation.
Plant location analysis.
Assessment of project cost, operating cost and revenue estimates.
Working out detailed financial analysis as desired by the financial institutions.
Sensitivity analysis to identify factors crucial for the commercial viability of the
project.
1.7
Approach and Methodology
The entire work (study) will be broken down into individual sets of mutually-exclusive and
collectively-exhaustible issues addressing market demand, availability of raw material,
technology, location aspects, economic and financial feasibility, etc.
Market study will broadly cover the demand- supply scenario prevailing globally and locally
for MDF, its competing products (substitutes), end use pattern, drivers that could spur the
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demand, etc. We would utilise our data bank and also refer to authentic and published
materials/literature etc for the purpose of collecting information on industry structure,
international demand-supply scenario, domestic and international prices and trends
thereof, price elasticity, past imports and exports from India, destinations and prices etc.
The availability and suitability of raw material (cotton stalk) for the production of MDF,
the sourcing of the same and related logistic issues will be covered in the next section.
Also contingency plans for alternative raw material (say, ailanthus and celsa) and the steps
to ensure hassle-free availability of the same will also be discussed.
Location Study will look into issues such as raw material availability, proximity to market,
availability of power, water, etc; and a host of other relevant issues like land, labour,
transportation, storage, etc.
Technology will cover the brief description of the process along with features such as
contemporariness of technology, local availability of plant and machinery, energy
efficiency of the process, ease of operation, modularity, scalability and flexibility in
technology/ operation, etc. The endeavour is to source the best available option in terms
of reliability and superiority of technology / plant and machinery.
The marketing strategy will look into the existing sales and marketing set up, need for reconfiguration if any, and addressing the issues holistically that goes beyond 4Ps.
The detailed revenue modelling will cover the means of finance, optimal debt-equity
structure, revenue streams, calculation of projected cash flows and the estimation of NPV,
IRR and debt service coverage ratio.
In addition, elaboration on certain strategic issues pertaining to the business will be
provided. This will throw light into the competitive landscape, the forces that act within
and outside, threats and opportunities, etc. Also specific strategies will be recommended
to tide over the challenges and surge ahead successfully.
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Figure 1.1: Approach and Methodology
Market Study
Marketing Strategy
Demand vs. Supply
Existing Setup
Growth Drivers
Distribution Channel
Substitutes
4Ps and Beyond
End Uses
Revenue Models
Major Raw Material Procurement
Means of Finance& Capital Structure
Contingency Options
Revenue Streams& Cash Flow
Other Issues
Proj. Balance Sheet& Income Summary

NPV, IRR, DSCR, etc.
Site Selection
Proximity to RM/Market
Availability of Water, Power, etc
Logistics& Distribution Issues
Track Record
Strategic Insights
Ease of Operation
5-Force Analysis
Scalability/Modularity
Competitive Strategy.
Energy Efficiency
Flexible Line of Operation
Source: MM Analysis
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1.8
Caveats
Since MDF market is a bit unorganised, it is very difficult to capture the exact under
currents in the market. Also a lot of these activities are not properly recorded. This poses
a lot of challenges for the consultant and the client alike. A judicious mix of desk research,
filed visits, interviewing of key personnel in the MDF/ related business and using some
clever conjectures based on our own experience was the method adopted to address this
issue.
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Product Description
2.1
Medium Density Fibreboard
Fibreboards are classified into low density, medium density and high density fibreboards
according to the density profile as shown below:
Table 2.1: Classification of Board based on Density

Fibreboard
Typical Density Range (Kg/m3)
LDF (Low Density Fibreboard)
160-450
MDF (Medium Density Fibreboard)
500-800
HDF (High Density Fibreboard)
800& above
MDF is a panel product manufactured from lignocellulosic fibres combined with a synthetic
resin or other binders. The specific gravity varies from 0.5 to 0.88. MDF has a homogeneous
structure with no identifiable grain or no variations in surface hardness. It can easily be
edge-machined to into many different profiles ready for subsequent direct finishing due to
its relatively uniform thickness density profile. MDF has a good capacity to hold screws and
nails on surfaces and edges.
2.1.1
Features of MDF
MDF is resistant to warping and compression. It has excellent screw-holding ability and
edge-finishing characteristics.
MDF is available in two grades, namely, interior grade and exterior grade and are available
in thicknesses ranging from 4mm to 50mm.The IS specifications are reproduced below:
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Table 2.2: IS Specification of MDF Board

Sr.
Specifications
No.
1
Water Absorption
a)
After 2 hours soaking
b)
After 24 hours soaking
Unit
Interior Grade
Exterior Grade
18
12
500-900
500-900
5.15
5.15
Thickness
Length
0.4
0.3
Width
0.4
0.3
28
28
25
25
Upto 20mm
0.7
0.8
>20mm
0.6
0.7
Face
1500
1500
Edge
1250
1250
Density
Kg/m
Moisture Content
Linear
Expansion
%
(24
hours soaking)
a)
General Absorption
N/mm2
Modulus of Rupture
Upto 20mm
>20mm
Tensile Strength
Screw
N/mm
Withdrawal
Strength
Dimensional Tolerance
Mm
Length
Width
Thickness
0.3
MDF offers better quality than particle board. It has lower tendency compared to particle
board for fibre pop which comes from larger particles in the surface that swell more
than adjacent particles. Fibre pop occurs when the board is exposed to high humidity.
MDF has better strength and stability than veneered particle board. The internal bond
strength of MDF is about 50% higher than the corresponding value for veneered particle
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board. MDF with a highly homogeneous construction and uniform density gradient does not
require a veneer overlay.
The distinct advantages of MDF are outlined below:
2.1.2
a)
It does not delaminate
b)
Excellent moulding abilities
c)
It can be joined, riveted, tongued and grooved.
d)
It can be calibrated and sanded on both sides.
e)
Lathe work can be done easily.
f)
It is free from overlays and gaps.
g)
It possesses homogeneous strength.
h)
It is free from knots and cracks.
i)
Humidity-resistant.
j)
It has low formaldehyde content.
k)
Very good screw-holding and edge-finishing properties.
l)
It needs no special tools or work methods.
m)
All kinds of paints, lacquers, stains and varnishes can be used on MDF.
n)
It is insect-resistant.
Applications
MDF is being used in residential, commercial buildings for partitions, panelling, false
ceilings and furniture.
Thin MDF has applications in beds, cabinets, chairs, panelling, drawer bottoms and centre
panels in framed doors. It can also be used as skins for flush doors, partitioning, office
screens, lightweight doors and exhibition paneling.
Novel application avenues are in shoe making, motor vehicle interior parts, toys, printed
circuit board production and blades for electric fans. Due to its excellent acoustic
properties, MDF is also being successfully used in Hi-Fi equipment.
Moisture-resistant varieties are being developed that can be used for exterior applications.
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Thick MDF boards can be used in buildings as columns and archways in place of solid wood
where the warp resistance, torsional stability, screw holding strength and edge finishing
characteristics are important. Thick MDF can be as a core substrate material for paneling
with veneers, printed surfaces, vinyl and low pressure laminates due to its dimensional
stability and smoothness. Thick MDF is also widely used as a base material for laminated
and veneered wood products for flooring and wall paneling and for foil wrapped mouldings.
It can also be used for a wide range of furniture such as tables, cabinets, windows, doors,
frames, handicraft items, display or exhibition stands and signs, ceiling, toys, carving,
partitions, maritime applications and educational equipment.
The entire versatility of MDF is yet to be utilised in a host of applications. In short, the
product has the potential to replace plastic, metals and wood in a wide variety of
applications which is only limited by our imagination.
2.2
Prelam MDF Board
To improve the aesthetic look and applicability, laminate paper is applied or fixed on the
fibre board with the help of a press. This board is known as pre laminated board or
prelam board. The prelam board has more than one paper on its surface like base paper
or balancing paper, decorative paper and other protective film. These papers help to
improve resistance to abrasion, temperature and water. As the prelam board is an
improved version of the MDF board, the specification of the Prelam board is completely
depend on the properties of the MDF board.
Prelam MDF board has certain distinct advantages, which are mentioned below:
Resistance to steam and stains
High abrasion resistance
Better strength for durability
Resistance to warping and sagging
Surface counter balanced for greater stability
Strong enough for load bearing applications
Termite, fungus & borer proof
Standard screw holding capacity
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Prelam MDF board used to manufacture the products mention below:
2.3
Cupboards, shutters & wardrobes.
Shelves
Table tops
Cabinets
Household & office furniture.
Computer furniture.
Panels in panel doors.
Beaded doors.
Partitions.
Precautions
Laminate Flooring
Laminate flooring is composed of several layers of impregnated paper and raw fibre board.
Papers are forming the surface layer of a core layer which stabilizes the floor. Flooring is
available in smaller size of planks. High density fibre board is preferred for core board of
the flooring as it has to bear the load. The basic properties of the laminate flooring are
depend on the properties of the HDF board and laminated papers.
The flooring can withstand with the normal load and provide good aesthetic load. It is not
100 % water-proof and scratch-proof but by using high grade quality paper water
absorption and scratch ability can be minimized to a great extent. Laminate flooring can
withstand the temperature variation and can be installed on any flooring like wood,
ceramic, concrete, particle board, vinyl, linoleum, etc.
2.4
Description of Substitutes
MDF closely competes with other product like plywood, hardboard, particle board and
plastic panels in a variety of applications. Apart from these products, chemically treated
wood, plantation timber, rubber wood, log wood and sawn wood find similar applications.
14
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Figure 2.1: Substitutes of MDF
Chosen Material
Wood or Wood Base
Agro Waste Base
Non Wood
Wood Based Panels
Timber Base Panels
Timber
Ply Wood
Block Board
Reconstd Wood Panels
Particles Board
MDF
Steel /
Aluminium
Source: MM analysis
15
Fibre Board
Gypboard
PVC
Acrylic / Fibre
glass etc.
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Table 2.3: Wood& Agro-based products and their application

Wood Product
Major Uses
Substitute
(Wood&
Types)
Plywood& Veneer
Agro
Substitute
waste
Construction-walls,
doors,
decorative
panelling.
Particle board
Packagingcrates,
boxes, tea chests.
Paper
Overlaypanelling& packaging.
Furniture.
Sawn wood.
(Non-wood Types)
Plastics
(furniture&
packaging).
Fibreboard
Fibreglass, concrete,
polyester overlay.
Vehicles-boats,
caravans.
Misc.- Toys, etc.
Sawn Wood
Construction-flooring,
walls,
joinery,
panelling& lining.
Plywood, veneer, &

MDFpanelling,
furniture.
Engineeringrailway
sleepers,
piling,
wharves,
bridges,
mining timbers.
Fibreboard-packaging
Plastics
(furniture&
packaging).
Paper & paperboard
(packaging).
Particle board.
Concrete,
bricks,
steel, aluminium.
Plywood, veneer, &

sawn wood- packaging,
construction&
furniture.
Steel&
aluminium
(furniture);
Furniture
Packaging-boxes,
crates, pallets, etc.
Vehicles
Particle Board
Construction-flooring,
walls, under floor,
panelling&
building
elements.
Plastics
(furniture&
packaging).
Fibreboard.
MDF
Furniture, packaging,
construction
(Flooring,
walls,
panelling, etc.)
Plywood,
veneer,
particle board& sawn
wood.
Steel&
aluminium
(furniture);
Plastics
(furniture&
packaging).
Source: MM Analysis
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Table 2.4: Characteristics comparison of different products

Sr.
No.
Comparison
characteristics
Plywood
Particle Board
Insects & Borers
Machining, carving &

post forming
Not Suitable
Suitable to a limited
extent
Density of the Board
Medium
Low
Medium and high
Edge
cutting
trimming
Suitable to a
limited extent
extent
Highly suitable
Nail & Screw holding

capacity
Medium
Low to Medium
High
Board strength
internal bond
Medium
Medium
High
Structural strength
Low due to
wood
layer
bonding
Low due to particle

bonding
High due
bonding
Moulding
Not possible
Not possible
Excellent
Joining & riveting
Not possible
extent
Highly suitable
10
Surface finish
Medium
Low
Excellent
11
Tensile strength
Medium
Low
High
12
Raw materials
100% wood
Agrowaste/wood
Agrowaste/wood
Dangerous
forest
resources
country
Boon for building

material industry due
to versatility of raw
materials usage like
agro waste & wood
waste.
Boon
for
building
material industry due
to versatility of raw
materials usage like
agro waste & wood
waste.
Eco friendly product
Eco friendly product
Prelam
Prelam
13
14
&
Environmental
aspects
Value added products
to
of
Plywood only
Does
not
borers
attract
Totally borer proof,

as only wood fibers
are bonded together
Attracts
borers
&
wood
MDF
boards,
Highly suitable
18
to
fiber
boards,
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15
Product Specification
G1 grade
modular furniture
modular
furniture,
embossed
doors,
carved surface doors,
painted boards
G2 grade
G3 grade
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3
3.1
Market Study
Global Scenario for MDF
In 2005, the global MDF production reached about 41 million m3, compared to 39 million in
2004. Large scale production facilities are concentrated in Asia, Europe and North
America.
Table 3.1: Region wise MDF production
Region
Asia
North America
Europe
Oceania (Australia and New Zealand)
South America
Total
Production (000 m3)

18936
5297.6
13300
1656
1758
40947.6
Source: Food and Agriculture Organization (FAO) stats
The table explains the regional production in 2005. China has grown to become a dominant
producer (14.66 million m3), followed by Europe. Production in Europe rose to 13.3 million
m3, showing a growth of 7% as compared to 2004. The total consumption also rose by 7.6%
to 12 million m3.
From 2004 to 2005, North American MDF production rose from 5.1 to 5.3 million m3, with
70% of the production concentrated in the United States. MDF production in the U.S.
increased from 3.6 to 3.7 million m3, while the Canadian production increased from 1.5 to
1.6 million m3 in the above period. MDF imports to North America (procurement sources:
Brazil, Argentina, Chile and Venezuela and Oceania) declined by 10% in 2005, to 1.7 million
m3.
MDF production in New Zealand increased to 861000 m3 in 2005. The country also has the
highest per capita consumption of the product.
MDF consumption since the past decade has well penetrated markets other than furniture
industry. But, owing to an earlier establishment of particleboard as a product, its
consumption in most countries was more than MDF before.
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In countries like Japan and Korea, manufacturers are replacing particleboard; particularly
where MDF properties like smoothness of surface is required. This is expected to spread
worldwide, as furniture manufacturers seek cost effective methods of production.
However, with huge capacity inclusions in China, MDF consumption rose to 16 million m3,
driven by furniture industry growth (2004), compared to particleboard consumption of 4
million m3.
The figure below highlights the MDF consumption break up by segment in China:
Figure 3.1: MDF Consumption in China
Other
10%
Decoration
12%
Furniture
78%
Source: China Academy of Forestry, China Wood
Continued innovations to customers need and to solve their problems, and the
development of Engineered Wood products lead to newer developments. Products like
Sawn wood and plywood are well past their prime, owing to these reasons.
Moreover, these products also compete with steel and other useful materials, widely used
in construction industry and furniture.
MDF Board Market in the Middle East
The Middle East regions comprise of developing countries like Algeria, Bahrain, Egypt, Iran,
etc. with growing young population, which point towards growing consumption of wood
based panels.
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The major constraint to growth in MDF industry in the Middle East is the scarcity of raw
material. Almost 70% of the total production in the region in 2005 (54000 m3) was from
Iran. Trade statistics point towards the fact that majority of the consumption is met
through imports.
With growing demand of MDF in the region, the imports have risen from a mere 332,611 m3
in 2000 to about 2.2 million m3 in 2005.
Table 3.2: Production and trade of MDF in the Middle East
Year
2000
2001
2002
2003
2004
2005
Production (m3)
53000
14000
14000
14000
40300
54000
Import (m3)
279663
422631
566531
762661
1514209
2186581
Export (m3)
52
139
336
144
913
1000
Source: Dieffenbacher Report
As evident from trade statistics, the export potential to Middle East region appears to be
worth exploring.
Future Outlook
The Commonwealth Scientific and Industrial Organization (Australia) predicts global MDF
demand to increase by 10% till 2010.
As per Jaakko Poyry Information Service, the demand for MDF in U.S., Europe, and Asian
countries (mainly China and South Korea) is expected to exceed the supply, driven by its
popularity in construction industry and furniture manufacturing in recent years. The figure
below shows region wise forecast of MDF surplus/deficits:
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Figure 3.2: Global MDF Demand Supply Balance
Global MDF Demand-Supply Balance

2000
1500
1000
North America
500
Europe
(1000 m
0 )
Asia
-500
1990
1995
2000
2005
2010 (F)
2015 (F)
Oceania
-1000
South America
-1500
Africa
-2000
-2500
-3000
-3500
1990
1995
2000
2005
2010 (F)
2015 (F)
Years
Source: Jaakko Poyry Information Service
Figure 3.3: Global Particleboard Demand Supply Balance
Global Particleboard Demand-Supply Balance

2000
1000
0
1990
1995
2000
2005
2010 (F)
2015 (F)
-1000
(1000 m3)
North America
Europe
-2000
Asia
-3000
Oceania
-4000
South America
Africa
-5000
-6000
-7000
1990
1995
2000
2005
2010 (F)
2015 (F)
Years
As evident from the figure above, particleboard deficits are anticipated in Europe, whereas
Asia, Oceania, South America are expected to have surplus capacities.
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Growth Drivers:
The demand of MDF is expected to show an upward trend, considering the following
macroeconomic factors:
1. Rapid economic growth at the world level (GDP growth rate - 4% till 2010).
2. Population growth and urbanization.
3. Trade and foreign investment deregulation.
4. Expanding wood processing capacity.
5. Anticipated growth in construction investment, furniture and decoration industry.
6. Increasing exterior use of wood based panels in European and American countries,
attributing to the suitability of climatic factors.
3.2
Laminate Flooring Market
The global production of laminate flooring from year 1990 to 2005 is depicted below.
Figure 3.4: World Production of Laminate Flooring

900
800
700
600
500
400
300
200
100
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
2
Production in million m
Source: Munksjo Paper
The production of laminate flooring has steadily grown at a rate of 34.09 % CAGR in the
last 15 years and has reached 815 million m2 in the year 2005.
Europe is the major producer of laminate flooring in the world and is a net exporter for the
last 15 years. Europe accounts for 65 % of total production of laminate flooring in the
world (year 2005).
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The production of laminate flooring in Europe is mentioned in the figure below:

Figure 3.5: Production of Laminate Flooring in Europe
600
500
in million m2
400
300
200
100
0
1995
1996
1997
1998
1999
Production for Europe
2000
2001
2002
2003
2004
2005
Production for Exports
Germany is the biggest producer of the laminate flooring and account for 28 to 33 % of
world production of laminate flooring in last 5 years. Other leading laminate flooring
manufacturing countries in Europe are France, Austria, Belgium, Poland, Switzerland, and
Great Britain.
In terms of import, North America is the leading continent to import the laminate flooring.
With the import, production of laminate flooring in America has also risen in the last 10
years.
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Figure 3.6: Market Volumes of Laminate Flooring in North America

160
140
in million m2
120
100
80
60
40
20
0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Import
Domestic Production
The production of laminate flooring in Asia is constantly rising for the last 10 years until it
became net exporter in the year 2005.
Figure 3.7: Market Volumes of Laminate Flooring in Asia Pacific
250
in million m2
200
150
100
50
0
1995
1996
1997
1998
Domestic Production
1999
2000
2001
2002
2003
Net Import
2004
2005
Net Export
The continuous increasing production of laminate flooring in China is the major reason
behind the spurt in Asian production of laminate flooring. From 11 % of production share of
total world production of laminate flooring in year 2001, China reached at 23 % of
production share in the year 2005, which is next to Germany only.
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3.3
Indian Market
3.3.1
Market Survey
The market study was carried out in various segments which influence the demand for
MDF. They were divided on the basis of similarity in response pattern and the factors
affecting the demand for MDF.
Competitors (including substitute products), institutional buyers, architects & interior
decorators, industrial buyers & converters and wholesalers & distributors were contacted
during the survey. Additionally, some actual users of MDF were also contacted. The study
was conducted in Ahmedabad, Bangalore, Calcutta, Chennai, Delhi, Hyderabad, Jaipur and
Kochi.
a)
Competitors:
They are the manufacturers of MDF and its substitutes. The substitutes are plywood,
particle board, hard board, etc. The regional offices and head offices of these
manufacturers were contacted during the survey.
(b)
Institutional Buyers:
They are the large buyers of MDF and its substitutes, with having fairly uniform application
areas and the quantity used being substantial. For example CPWD, where the requirement
is mainly of doors & windows but quantity being used is substantial. Large construction
companies also fit into this category. These are bodies where procedures for introducing a
new product are elaborate but volume of sales justifies it.
(c)
Architects & Interior Decorators:
This category represents the users of these products for a variety of applications. They are
also the innovators in finding new application areas for various products. This segment do
not form big market by them but help it grow.
(d)
Industrial Buyers / Converters:
This segment consists of the converters who use MDF and its substitutes for large scale
manufacture of end use products. They may be T.V. cabinet makers, flush door and knocked down furniture makers etc. Users of this segment have specific requirement and use
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various substitute products according to the requirement of end product and the cost of
alternative products.
(e)
Wholesalers / Distributors:
This is the most significant segment as they form a link between manufacturing company
and the actual end users. They are the members of distribution channel for various
substitute products (like plywood, particle boards etc.) and very often influence the end
users decision.
(f)
End users:
They are both actual buyers and users of MDF. They have used MDF in a particular
application and were contacted to know their views on MDF.
3.3.2
Summary of Findings
(i)
Plywood and Block board
Plywood and Block board collectively constitute a major segment of wood panel
market.
Plywood possesses good strength and mechanical properties, as well as firm,

easy nailing/screwing ability has given the product very good market
acceptance over the years.
Small scale manufacturers in unorganised sector constitute the major chunk of

the total plywood manufacturing. As these units do not pay any excise duty and
evade other local taxes, they give a tough fight to organised sector plywood
manufacturers.
This industry uses premium timber log veneers as input, which is in short supply.
Construction, furniture and packaging industries are the biggest end-users of

this product.
Plywood is considered first choice for the household furniture in India, but in
foreign countries where ready made and flexible furniture demand is increased
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in last decade, there preference gradually moves to other available alternate

products.
Plywood and Block board are available with phenol & urea formaldehyde
bonding for exterior and internal application.
Block boards are available in a density of 750
900kg/m3 and thickness varies
from 10 mm to 40mm.
Plywood offers several superior properties like bending, termite resistance,

ability to withstand varying conditions, etc. which makes it non-substitutable by
other wood panel products for some applications.
Most of the sale is on credit. The credit period varies between 30
60 days
Source: Capital Market
Manufacturer
Greenply Industries (plywood/particle board)
Kitply industries (plywood and boards)
National Plywood Industries (plywood / block
board) 4 mm basis
Century ply boards (plywood)
Installed capacity
1,18,50,000
14,750,000
Unit
M3
M2
11,350,000
M2
25200
M3
Marketing of these products is generally through the normal distribution channel

of company -> wholesalers/stockists -> dealers -> consumer. However,
sometimes the dealers purchase directly from the company.
Typically the Plywood is available in panel lengths of 5, 6, 7 & 8 ft., width of 3

and 4 ft. and thickness of 4, 6, 9 and 16 mm.
Fast moving size of Plywood and Block board is 8'x4'.
Prices of plywood have moved upwards at a rate of 10-15% in the last few years.
This can be primarily attributed to increased prices of raw materials.
Some plywood companies are also offering panel doors, flush doors, ceiling tiles
and Plywood with very distinctive and unorthodox surface veneers.
Plywood shuttering is preferred over wooden or steel shuttering because it is

lighter to handle, can be bent and finish is smooth, thus saving plastering cost.
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Particle Board
The market size for PB in India is roughly US$110 million, with a year-on-year
growth rate of 20%. Almost 90% of the demand is met by domestic production
and the rest is imported. Imports are chiefly from Nepal, Bhutan and Sri Lanka.
Particle boards are mainly used for partition/panelling and in the manufacture
of doors (as inserts in frame) and rarely used for table tops. Ready made
furniture manufacturer prefer particle board as main raw material.
PB suffers from the poor edge machinability, poor tensile strength and poor
screw/nail holding strength.
A substantial portion of particle board (around 65%) being marketed is

laminated and the remaining 35% are in the form of plain& veneer boards.
Industry uses a variety of raw material for the manufacture of particle board,
such as bagasse, wood chips, rice husk, etc. Wood accounts for 87% of the raw
material used in the manufacture of PB.
Standard sizes of particle board panels are 8' x 4', 9' x 4' & 10' x 4' and the
thickness ranging from 9 mm to 35 mm. 12 mm thickness particle board is used
as inserts in door frames, 18mm for modular furniture. The other sizes
commonly used are 15 and 25 mm sheets.
At present there are 15-16 players of particle board and the demand for the
same is nearly 2.55 lakh tons per annum.
Bhutan Board unit in Bhutan with an installed capacity of 21000 TPA has been
performing at 70% capacity utilisation. The unit is located in Bhutan. It markets
around 50% of its production in India.
Novopan is the market leader of particle board followed by Bhutan Board.

Novopan has two manufacturing units with capacities of 50,000 and 75,000
cubic m/year respectively.
Ecoboard,
Vision
Boards,
Aurobindo
Laminates
and
Trimurti
used
to
manufacture particle board using bagasse as raw material.
Nepal Boards, Bhutan Boards, Mysore Chip Boards, Uro, Decoboard (Bakelite
30
Mott MacDonald
Hylam) and Novopan manufactures PB from wood.

Medium Density Fibre (MDF) Board
MDF worth US$ 67.5 million are being imported to India every year that meets
almost 75-80% of the total domestic demand. Based on market information, the
market for MDF is growing at an impressive rate of 20-25% p.a.
There are two manufacturers of MDF in India. These are Mangalam Timber
Products Ltd. and Nuchem Ltd. The trade name of Mangalam's product is "DURA
TUFF" and that of Nuchem Ltd. is "NUWUD".
The plant capacity of Mangalam Timber is 57000 cubic m/year and that of
Nuchem Ltd. is 60000 cubic m/year (45,000 MTPA).
Duratuff is available in interior and exterior grade and also in pre-laminated

form whereas NUWUD does not have pre laminated boards.
Plywood is considered first choice for the household furniture in India, but in
foreign countries where ready made and flexible furniture demand is increased
in last decade, there preference gradually moves to other available alternate
products.
Pre-laminated boards of DURATUFF are preferred in the Southern and Western

regions, whereas the plain boards are dominant in Northern India. MDF market
in the Eastern region is negligible because of the easier & cheaper availability of
non-teak wood.
Greenply, one of the major players in plywood, particle board and decorative
veneer board manufacturer, is also entering in MDF market with pre laminated
boards, branded as Greenlam. Although Greenply not manufacturing MDF
board at present, it purchases MDF from outside and get it laminated in its unit.
Majority of sale is of 8 ft x 4 ft. panels and thickness prefer-red are 6, 12 and 18

mm.
MDF initially was not accepted positively by traditional carpenter because of

slightly different work practices requirement. However, at present the
carpenters find it easy to work with MDF.
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MDF manufacturers are trying to push the product directly to the institutional
buyers who are the large consumers. Company plays a promotional role only.
Manufacturers of MDF claimed that they are making exterior grade conforming
to international MDF specifications. They use Phenol Formaldehyde resins for
making exterior grade MDF.
MDF has been accepted by institutions like IOC, CPWD, DDA, HVDCO, IAAI, ITC
Ltd., Ministry of External Affairs, State Housing Boards, State PWDs, Taj Group
of Hotel, etc.
The major demand of MDF board in recent years created by the new emerged
industries in India like software, BPO, retail and banking. Corporate sector
prefers MDF because it provides good aesthetic look and fast erection of
furniture in office.
Plywood is considered first choice for the household furniture in India, but
gradually this preference is shifting towards ready made and flexible furniture,
which is made up of MDF board. The furniture industry, valued at almost INR
30,000 crores, is expected to witness a robust growth in the wade of upswing of
purchasing power of more than 400 million middle class populations.
The growth in furniture consumption has been attributed mainly to

unprecedented growth witnessed in construction and residential real estate
markets. The short term growth is anticipated at 7% - 8%.
Much of the domestic demand for furniture (65%) is from ten major cities viz.
Mumbai, New Delhi, Bangalore, Chennai, Hyderabad, Ahmedabad, Pune, Surat,
Kanpur and Jaipur.
With the rising income of middle class and willingness to change furniture often,
will also perk up the demand for MDF board.
Poor awareness about MDF board has been a deterrent, but this can overcome
by educating carpenters and the end user.
MDF is also being sold to original equipment manufacturers like Videocon, BPL &
Philips. These companies use MDF in the manufacture of speaker cabinets.
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Nuchem has a variety of downstream products of MDF like doors, windows,

mouldings, etc. These downstream products are manufactured by Nuchem on
contractual basis.
However, most people related to MDF expect it to perform better in panels and
doors compared to furniture. This is in contradiction with the international
trend, where majority of MDF is being used in furniture making only.
Manufacturers are quite optimistic about increase in share of MDF in the total
panel product markets and particularly plywood. Moreover, they expect it to
perform same function of timber in the manufacture of doors. They expect a
penetration level of over 30% of total panel product market in the future.
Others (Plastic Panels, Cement Bonded Particle Boards, etc.)
The plastic panels are made of PVC which is relatively costlier vis--vis the
other panel products. Thus, the acceptance level is low.
Sintex, the largest manufacturer of PVC panels, are focussing on direct

marketing to the end-users. Marketing through architects was not very
successful because of their high price.
These panels look very attractive, but over a period they fade due to
environmental effects.
Gujarat Synthwood claims to be making a scratch resistant product with integral

skin and appearance similar to wood.
The plastic panels are not very strong, thus, not suitable for use in external uses
like doors & windows.
Uses of plastic panels are limited to door & window frames, doors, windows and
partitions in commercial buildings.
Because of excellent water resistance properties these panels surpass all the
other similar products in performance. These products need no painting,
polishing, varnishing etc. because they are pre-finished on both the surfaces.
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Doors of PVC panels do not find easy acceptance because of psychological

preference for wooden door. Customer accepts frames and windows of material
other than timber more readily but customers still prefer wood or something
similar in appearance and texture.
The manufacturing companies have focussed on institutional markets where

volume is high and product requirement is standardised.
Gujarat Synthwood is trying to promote the product in household and residential

applications to expand the market. Because of its high price & preference for
wood or something similar to wood for doors and windows the penetration of
PVC panels in the total panel product market is quite low.
These products are also relatively new and are still trying to carve out a market
niche for themselves.
The major manufacturers of PVC panels are Sintex, Uniplas, Gujarat Synthwood,
Caprihans & Fixopan Industries. Jain Group manufactures polystyrene (trade
name "TIMBRON") 'based panel products.
Cement bonded particle boards are mainly used for flooring, ceilings and
partitions. The market for these is slowly developing. Cement bonded
particleboard at present is manufactured by NCL Industries (Bison Panel) in
India.
Laminated Flooring
Laminated flooring is widely used in household, corporate offices, restaurant,

hotels, and entertainment complexes. But still granite, marble, kota and
ceramics are the most preferred flooring for house flooring market in India.
Wooden flooring also getting acceptance slowly in Indian houses because of the
availability of the laminated wooden flooring.
Laminate floors are made up of a thin, transparent upper crust that is resistant
to wear and tear, and of high density fibre board inside. Laminate floor cheaper
than the real and hard wooden floor. Laminate floors available at Rs 200-300
per sq feet.
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Laminated floor provides good aesthetic look. It is available in different colours

and designs, which depends on the paper used in the surface of the wooden
floor.
At present, demand of the wooden flooring in India is 90 % met by import only.
More than 20 brands are selling in the Indian market presently. A large number
of these are importers. Amongst the well-known brands, there are Pergo (a
Swedish brand), Krono (a German brand), Eggar, Floormaster, etc.
Laminated floor can be installed on existing flooring of wood, ceramic,

concrete, particle board, vinyl, linoleum, etc.
The surface layer of laminate flooring is hard, compact and autistatic, so dirt
and dust do not adhere to it easily. It makes floor cleaning easy.
Laminate floor are less vulnerable than pure wooden flooring from water and
dust, but they also require great care to maintain sustainable life. Due to
improvement in technology, laminated flooring is available in market with the
warranty up to 50 years.
Technology has change laminate flooring from glue joints to mechanical click
joints; almost all laminate floors are glue-free today.
The Indian flooring market has witnessed a lot of changes in the last 50 years.
From the traditional stone flooring, people have moved to granite, ceramic,
marble and now its laminates flooring.
3.3.3
Institutional Buyers for MDF
SHIPPING INDUSTRY
MDF / Particle board can be used in the manufacture of furniture in ships for which at
present plywood is used. Currently marine plywood is used in this application.
B.
RAILWAYS
Research Design & Standards Organization (RDSO) is the research wing of Railways. They
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Mott MacDonald
promote the use of newer materials in coach building. New class of material is tested and
certified by them. This is communicated to all the nine zones of Railways so that field staff
can use them.
The two major coach factories namely Integral Coach Factory (ICF), Perambur and Railway
Coach Factory (RCF), Kapurthala opined that approval of RDSO is needed for using any new
material. At present MDF is not used in such building.
c.
SURFACE TRANSPORT
(i)
Presently wood, plywood and block board are being used in bus and truck body
building.
(ii)
Some bus/truck body manufacturers said that they do not know anything about MDF
and nobody has approached them for such a product.

(iii)
Gujarat State Road Transport Corporation tried MDF for passenger seats by
replacing plywood which was being used earlier. But the results of this experiment were
not satisfactory. However, the trials are still on.
D.
STATE AGENCIES
(i)
Central Public Works Department (CPWD) is quite favourable to the product. Their
Technology Application & Development Cell (TADC) has approved the material and they are
still conducting some tests on the product. For experimentation/trial purpose they have
used it in some of the construction and are observing its performance.
(ii)
Main use for CPWD is in door shutters followed by windows and frames. But the
Department is quite stringent on the Boiling Water Proof (BWP) grade product. They would
also prefer a pigmented exterior grade for easier identification.
(iii)
They find that exterior grade MDF is not easily available in the market
(iv)
Housing & Urban Development Corporation (HUDCO) another central government
body in housing is also giving MDF a trial by using it in some of the construction activity.
HUDCO has used MDF in its Type IV flats at Khelgaon Marg, New Delhi for joinery and
various interior
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E.
PRIVATE BUILDERS
(i)
Private Builders see a great possibility of MDF application in door shutters. For
frames, steel or aluminium is used and in windows steel, aluminium and PVC are preferred.
Door shutters traditionally have been of wood and they would continue to be made up of
similar material.
(ii)
Price-wise MDF is either on a bit higher side or equivalent to other material in their
assessment.
(iii)
Users have found availability of MDF as a constraint.
Points (ii) & (iii) are not weaknesses per se, but opportunities. RDPL can look forward to
leveraging the advantages arising out of domestic production at economies of scale.
3.3.4
Architects & Interior Decorators
(i)
Positive attitude about the product is reflected by various architects & interior
decorators contacted.
(ii)
MDF is recommended in the furniture which is painted for use. However, in the
cases where polishing arid teak ply lamination is required, MDF is not preferred
because of its poor adhesive properties compared to plywood and blockboard.
(iii)
Modular furniture is a new concept. It will be preferred by the people who want
economical stuff but for the class which believes in exclusiveness it is a preferred
material.
(iv)
Short supply of MDF especially NUWUD has also been reported by few.
(v)
MDF is preferred because of its appearance, price and versatility. Higher use of MDF
and other panel products is reported in the western and southern India.
(vi)
According to majority of respondents in this category, MDF is a success abroad and

in India direct marketing and promotion through architects is required. But
carpenters or workmen need to be educated about the product for better
penetration.
(vii)
Availability of larger sizes of MDF like 8'x6' (which is available in particle board) is
desired by some interior decorators.
(viii)
Everybody agrees that price, performance and awareness about the product will
influence the choice of customer and the penetration is expected to increase in the
future to over 30 to 35% of the panel product market.
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3.3.5
Industrial Buyers/Converters
(i)
Respondents of this group have been using plywood and particle board till now.
(ii)
As the modular furniture in India is not very popular, the use of MDF is very less.
(iii)
Until now furniture manufacturers have been using other panel products like
plywood, blackboard etc. Although MDF is cheaper than plywood, most furniture
makers have not given it a try as it, is a relatively new product. However, in places
like Muzaffarnagar, U.P., which is known for its furniture made from Sheesham
wood, demand for NUWUD based furniture, is picking up. Furniture (from NUWUD
includes tables, chairs, cabinets, wardrobes, racks with very good design creativity.
0
Cost of MDF is less than sheesham and teak wood.

(iv)
Handrails and margins (mouldings) made from MDF in a wide variety of designs are
gaining popularity. These are traditionally made from teak wood. A few furniture
makers, who have replaced particle board with MDF find this uneconomical.
However, the cost-benefit is not weighed in terms of MDF's durability, strength etc.
(v)
For simpler applications like TV trolleys, cabinets etc., particle board being a
cheaper product, is preferred. Also acoustic properties of particle board fit into the
requirement.
(vi)
In furniture making, requirement of moulded/carved edges can be easily met with

MDF, but users have minor worries about screwing properties on the edges of MDF.
(vii)
MDF is being used by ancillary units of some audio/video electronic equipments

manufacturing companies.
Some of regular users have complained about poor availability, which is forcing them to
use other panel products again. They make products on time bound order, so cannot afford
to wait.
3.4
Indian Scenario on Furniture
The Indian furniture industry is fragmented and 85 % of the furniture produced is by

handicraft. The contribution of the sector to the GDP is approximately 0.5 % only.
The furniture production trend in India is depicted below:
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Figure 3.8: Furniture Productions in Billion Euros
2150
2130
2100
2067
2050
2000
2026
2016
1986
1950
1913
1900
1850
1800
1996
1997
1998
1999
2000
2001
Source: European Furniture Manufacturer Federation
The industry grew almost 3% per annum annual growth rate in year 1996 to 1999 and then
slowed down by 10 % in year 1999. The slow down was the result of the cyclical situation of
the economy. Furniture sector recovered from the 1999 crisis and attained a 3 % growth
rate in the year 2000 and 2001.
The wood-based furniture ruled the Indian furniture industry with 65 % share, while metal
is accounted for 25% and plastic is accounted for 10 %.
Figure 3.9: Raw material used in furniture
10%
25%
Wood
Metal
Plastic
65%
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The household furniture is the major segment of the total furniture production, which
accounts for 65% of the production value.
Figure 3.10: Furniture Production Break up
15%
29%
15%
5%
8%
20%
8%
Upholstery
Bedroom Furniture
Dining room Furniture
Other Furniture
Corporate/Office
Hotel/contract
Kitchen Furniture
The household segment covers the upholstered furniture, bedroom, kitchen, and dining
rooms furniture. The upholstered furniture accounts for the 30 %, bedroom 20 %, and
kitchen and dining rooms furniture for the 7.5 % each. The second major segments in the
furniture industry are corporate/office and hotel furniture with the share of 15 % each.
Other furniture holds remaining 5 % share.
The office furniture segment is the one that boasts the most important companies, both
from the point of view of size and of the technological innovation of the production.
Import Export
The import and export of the furniture is given as exhibit below:
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Figure 3.11: Import Export of Furniture in India
160
in million Euros
140
120
100
80
60
40
20
0
1996
1997
1998
Import
1999
2000
Export
The exports of Indian furniture are ten times higher than imports of the furniture in India.
The exports are more in the form of cheap varieties at affordable costs whereas the
imports cater to the elite class who wants to own the best brands available in the market.
Export of Indian furniture
The United States is the biggest consumer of the Indian furniture outside India and
accounts for 24% of total export of the Indian furniture. After US, United Kingdom and
Germany are the biggest export destinations for the furniture with 14% share each.
Figure 3.12: Country wise break up of export of Indian furniture
5%
24%
10%
15%
2%
14%
2%
4%
5%
United States
Italy
others
5%
Germany
Denmark
Belgium
14%
United kingdom
Canada
Netherlands
France
Greece

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The indicative break up of export share of the furniture products is given below:
Figure 3.13: Product wise break up of Indian furniture export
5%
8%
8%
42%
1%
1%
4%
31%
Other Wooden Furniture
Kitchen Furniture
Other Metal Furniture
Office Furniture
Seating & Parts
Bedrooms
other Furniture & Parts

Plastic Furniture
Import of the furniture
Indian consumer prefers stylish and western furniture. The biggest import source of
furniture in India is Germany which account for the 16 % of total import of the furniture.
Germany followed by the Italy with 12 % and Korea with 10 % of import share.
Figure 3.14: Country wise break up of imported furniture in India
Germany
3%
20%
Italy
16%
12%
Korea
United Kingdom
United States
Irish Republic
7%
France
Japan
9%
10%
4%
5%
7%
7%
Poland
others
Switzerland
The indicative break up of import share of the furniture products is given below:
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Figure 3.15: Product wise break up of imported furniture in India
8%
5%
38%
Seating & Parts

Furniture Parts
11%
Plastic Furniture
Kitchen Furniture
3%
Bedrooms
3%
Other Wooden Furniture

3%
29%
Office Furniture
Other Metal Furniture
Indian wood scenario

India meets its wood required by natural production, plantation and imports.
Table 3.3: Indian log production, imports & apparent consumption, 2003
Volume(m3)
Logs
Production
- from natural forests
14,000,000
- from plantations & homesteads
43,000,000
Imports
3,000,000
Total apparent consumption
60,000,000
Source: American Forest and Paper Association.
Due to stringent government rules and environmental concern, the availability of woods
from the natural production is reduced in recent years considerably. The concept of social
forestry and plantation is well developed in recent year and few wood panel and paper
manufacturer have developed small forest to meet their own wood demand. Teak,
Eucalyptus and rubber wood are the preferred trees for social forestry.
Rest of the
demand of the wood is satisfied by the import of the wood logs.

The indicative break up of the round wood consumption is shown in table given below:
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Mott MacDonald
Figure 3.16: Break up of the round wood consumption in India
25%
12%
Construction
Furniture & Interior
25%
Joiniry
Sleepers
Packaging
8%
5%
Others
25%
In coming years the demand and supply gap of wood is expected to be widened.
Table 3.4: Demand supply gap of wood
Year
2000
2010
2020
Demand
58
950
153
Supply
29
70.55
100.7
Gap
29
24.45
52.3
% of demand gap
50
25.70
34
Source: Ganguly, 2003
Due to lack of supply of domestic natural wood, import of wood base products has increase
sharply in recent years.
Table 3.5: Indian imports of wood products, 2002 -2003
Logs
Sawn Lumber
Veneer
Plywood (incl. Veneered plywood)
MDF/HDF
Particleboard
Wooden Furniture
Total
2002 ($,000)
361,851
7,716
3,587
3,810
11,007
7,819
7,280
403,070
2003 ($,000)
692,582
12,777
3,736
4,359
13,555
13,740
12,713
753,462
Source: American Forest and Paper Association

44
% Change
91
66
4
14
23
76
75
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Decreasing tariffs of wood imports in India has also propelled the imports of wood in India.
The growth of the imports of veneer is lowest compared to other products; this may be
because of the high rise in the import of the sawn lumber. The sharp increase in the wood
pane l is observed in 2003, this shows the increasing trend of the wood panel based
furniture in India. With the wood panel, imports of the wooden furniture also increase by
almost 75 % in year 2003.
Indian wood panel scenario

The import of the wood panel is summarized in graph given below:
Figure 3.17: Imports of Veneer & plywood in India (In US $ 000)
12000
10000
8000
6000
4000
2000
0
1994
1995 1996
1997 1998
1999
2000 2001
2002 2003
Veneer Plywood
Source: Federation of Indian Panel & Plywood Industries (FIPPI)
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Figure 3.18: Import of MDF/HDF & Particle Board in India (In US $ 000)
14000
12000
10000
8000
6000
4000
2000
0
1994
1995
1996
1997
1998
1999
MDF/HDF
2000
2001
2002
2003
Particleboard
Source: Federation of Indian Panel and Plywood Industries (FIPPI)
The import of the MDF/HDF and particle board has outperformed the import of the veneer
and plywood. The import of the MDF has shown continuous rising trend of import in recent
years, which clearly depict the inclination of the Indian consumer towards the MDF in
recent years. This holds promise for the domestic manufacturers in terms of making
available MDF at competitive prices within India through domestic manufacturing.
3.5
Other Relevant Issues
To put it short, the major factors that determine the demand for MDF in the country will
depend on the following:
Economic Growth Rate.
Government policies on forest products.
Thrust on infrastructure projects and housing.
Product characteristics and the awareness of MDF.
Price differential of MDF and its substitutes.
Relative availability of MDF and its substitutes.
Taxation structure of MDF and its substitutes.

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Rate of Urbanisation.
Per Capita Income.
Changing life styles and perception.
Development of new substitutes.
Indias Economic Growth Rate: The country has been witnessing a consistent and
impressive growth rate in the range of 7-9% per annum. This coupled with the increased
thrust on manufacturing will have a multiplier effect on construction and infrastructure
projects, major growth driver for MDF also.
Government Policies on Forests: The world is experiencing global warming due to
increased emission of carbon dioxide and ozone-depleting substances. The forests, to a
large extent, can fight those problems (through photo synthesis using the CO2) and also
preserve the rich bio-diversity. The governments the world over has woken up to this
reality to prevent de-forestation by discouraging industries that use forest resources like
wood and timber. At the same time using non-conventional raw materials like bagasse,
wood wastes, lops& tops, barks, etc are encouraged.
The National Forest Policy, 1988 stipulates that the one-third of landmass should be tree
covered with at least 60% in the Himalayas. Within the broad parameters of the National
Forest Policy, each State should have its own forest policy statement, for the sustainable
management of its forest and wildlife resources.
To sum up, the government policy on forest products is the one that would promote the
use of MDF and thus enhance its demand.
Product characteristics and the awareness of MDF: Product characteristics determine
its suitability to a particular application. A compact look, smooth texture, rigidity and a
proper colour are the primary visual characteristics which play a major role in making or
breaking the success of a product.1
Good workability-
machining operations (sawing,
planing,
nailing,
screwing and
contouring), the quality of the machined edge thus obtained, the minimum level of
Use of a particular species of eucalyptus gave DURATUFF a dark, grey colour which made the dealers and carpenters to
mistake MDF for an inferior product. There was greater resistance during the promotion phase.
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operator skill required and the time to complete the task are all determining factors for
the acceptability of MDF.
It is ultimately the consumer who decides whether or not to accept a product. In addition
to the price factor, the decision is strongly influenced by;
a) Does the product come from a branded firm (Corporate Brand Name)?
b)
Does it have a quality certification (BIS mark, etc)?
c) Has the product been endorsed by industry professionals and bodies (leading
architects, builders, institutes, etc)?
As long as the product remains reasonable priced, acceptance at the above levels would
ensure that the product acceptance trickles down rapidly to its target segment.
Price differential of MDF and its substitutes: A favourable pricing of the product vis-vis substitutes is important to capture market share in the price-sensitive market.
However, this can be curbed to an extent by brand-building and by running awareness
programs on MDF.
Relative availability of MDF and its substitutes: Nearly 75-80% of the MDF demand in
India is being met by imports. There are only two manufacturers of MDF at present,
namely, Mangalam Timbers (SK Birla Group) and Nu Chem. The proposed plans of Bajaj
Biotec (Bajaj Hindustan Group) to set up three plants two for MDF in eastern and central
Uttar Pradesh and one for PB in western UP will result in a total production capacity of
2.10 lakh cubic metres per annum.
Rate of Urbanisation: The rate of urbanisation affects the demand as follows:
Migration of rural population to a urban environment seeking jobs results in greater money
flow as a result of employment. Over a period of time, the migrant family will start
investing in house or in buying furniture.
Per Capita Income: The rise in income levels and the per capita disposable income will
result in the procurement of new dwelling units, furniture and the like. Needless to say,
rising income levels will bring about increased economic activities.
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Changing Life Styles and Perception: The frenetic pace of life and special constraints in
the big cities would necessitate the adoption of modular furniture, cabinets, kitchen, etc.
MDF is a preferred choice for modular furniture.
Development of New Substitutes: The dwindling wood reserves and the increased R&D
efforts in the material science to find alternatives have led to the commercialisation of
acrylic, fibre glass and gypsum entering the furniture market. Another substitute called
Gypboard (gypsum panel) is being used increasingly as walls, false ceiling and partition.
Similarly, woodplast is being used in garden/beach furniture, TV cabin, etc.
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4
4.1

Raw material Types
Medium Density Fibre Board can be manufactured from soft wood or from agricultural
wastes like cotton stalk, bagasse, etc. Eucalyptus, poplar and pine are generally being
used as a raw material for MDF board. But due to dwindling forests and the stringent
government regulations to protect forests, manufacturers are looking for alternatives to
produce MDF Board. RDPL (herein after referred to as client) plans to use cotton stalk/
bagasse, which is primarily an agricultural waste left after the harvesting of cotton, as the
raw material for MDF Board manufacturing.
4.2
Cotton Production
As depicted below, the cotton cultivated area in India is nearly 9 million hectares (year
2005) with an average yield of 450 Kg/ha. The yield of cotton in the US is almost double of
this figure, owing to the increased usage of BT cotton and other improved varieties. Since
further elaboration on the subject is not relevant to our study, we may discuss issues
pertaining to India and Gujarat in particular.
Figure 4.1: Cotton Production area and yields of India and U.S.
Source: commodity intelligence Report, United states Department of Agriculture (USDA)
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India
India is the third-largest cotton producing country in the world after China and US. China
produced 5,704,436 MT and the US 5,203,665 MT of cotton in the year 2005, while Indias
cotton production in the same year was 3,984,396 MT. In terms of area of cotton
production, India has the largest land area (Statistics of the year 2005). At present around
84 lakh hectares area is being used for cotton cultivation, which is expected to grow to 90
lakh hectares by year 2006-07.
Figure 4.2: Indias Cotton Production and Production area
India's Cotton Production and Production area

250
200
150
100
50
0
2000-01
2001-02
2002-03
Area (Lakh hectares)
2003-04
2004-05
Production (Lakh Bales)
1 bale: 170 kilogram
Source: Cotton Corporation of India
Despite the largest land area in cotton cultivation, Indian cotton production is less than
that of China and the US because of the lower yield. But in recent years Indias cotton
production yield has improved steadily. Improved irrigation system and the adoption of BT
cotton are the main reasons for the improvement in yield (MT/hectare).
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Figure 4.3: Indias Cotton Production Yield

India's Cotton Production Yield
500
400
300
200
100
0
2000-01
2001-02
2002-03
2003-04
2004-05
Yield (Kg/ ha)
Source: Cotton Corporation of India
The central states of Maharashtra, Gujarat, and Madhya Pradesh continue to plant
approximately 63 percent of India's total cotton area.
Gujarat
Gujarat is the leading state of India in cotton production followed by Maharashtra and
Andhra Pradesh.
Table 4.1: Cotton production

(Area in Lakh hectare)
(Production in Lakh bales)
States
Gujarat
Maharashtra
Andhra Pradesh
2004-05
Area
Production
19.06
54.43
30.49
52.00
11.42
32.50
2003-04
Area
Production
16.41
40.26
27.66
31.00
8.25
26.00
2002-03
Area
Production
16.34
30.50
28.00
26.00
8.03
19.75
Source: CCI
In spite of lesser area for cotton cultivation than that of Maharashtra, Gujarats production
is higher than that of Maharashtra, This has happened due to higher yield of cotton in
Gujarat. Cotton production of Gujarat has steadily increased since year 2002, owing to two
major facts, namely, the increased adoption of BT cotton in place of desi varieties and the
improved irrigation facilities available to the cultivable land.
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Figure 4.4: Gujarats Cotton Production Yield
500
450
400
350
300
250
200
150
100
50
0
2000 - 2001
2001 - 2002
2002 - 2003
2003 - 2004
2004 - 2005
Yield in Kg/Ha
Source: Directorate of Agriculture
The cotton production area increased by 13.5% in year 2006, from 20.77 lakh hectares in
the year 2005 to 23.60 lakh hectares in the year 2006.
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The district wise cotton production in Gujarat is mention below:

Table 4.2: District wise cotton production in Gujarat
(Area in 00 hectare)
(Production in 00 bales)
(Productivity in kg/hectare)
Sr. No.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Name of District
Ahmedabad
Anand
Banaskantha
Bharuch
Dahod
Dang
Gandhinagar
Kheda
Mehsana
Narmada
Navsari
Panchmahal
Patan
Sabarkantha
Surat
Vadodara
Valsad
Amreli
Bhavnagar
Jamnagar
Junagadh
Kutch
Porbandar
Rajkot
Surendranagar
Total
Area
1680
13
45
1329
6
0
180
179
368
352
0
72
769
377
42
1581
0
1040
1901
320
192
402
37
1680
3845
16410
2003-2004
Production
2463
39
180
1919
17
0
506
398
804
621
0
184
774
1401
99
3164
0
3392
4116
1879
993
994
83
10118
6125
40269
Yield
249
552
680
245
415
0
478
378
371
300
0
434
171
632
401
340
0
554
368
998
879
420
381
1023
271
417
Area
1895
38
61
1297
18
0
327
206
467
435
0
104
1011
861
70
1728
0
1164
1987
467
249
547
32
2028
4071
19063
2004-2005
Production
3327
154
259
3350
73
0
1171
653
1122
1510
0
337
1101
2932
180
4499
0
2908
5159
2567
1401
1217
72
10683
9760
54435
Yield
298
689
722
439
689
0
609
539
408
590
0
551
185
579
437
541
0
425
441
934
957
378
383
896
408
494
Source: Directorate of agriculture, Gujarat
As shown in the above table, Surendranagar leads the pack in terms of the maximum
cultivable area and production of cotton.
Surendranagar also geographically connected with the Rajkot, Bhavanagar and Ahmedabad.
These are the second, third and fourth highest cotton cultivated district respectively in
Gujarat. Also Patan and Mehsana have good amount of cotton cultivation.
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The production of cotton in Surendranagar district is mention below in table:

Table 4.3: Cotton Productions in Surendranagar District
(Area in 00 hectare)
(Production in 00 bales)
(Productivity in kg/hectare)
Year
Unirrigated Cotton Production
Irrigated Cotton Production
Area
Area
Production
Yield
Production
Total Cotton Production
Yield
Area
Production
Yield
2000 - 2001
3249
1038
54
526
775
250
3775
1813
82
2001 - 2002
3442
2162
107
790
1799
387
4232
3961
159
2002 - 2003
3234
1050
55
967
1490
262
4201
2540
103
2003 - 2004
3100
4103
225
745
2022
462
3845
6125
271
2004 - 2005
3191
5925
316
Source: Directorate of Agriculture, Gandhinagar
880
3835
741
4071
9760
408
The yield of the cotton production is increased considerably in last two years in
Surendranagar. At present, major part of cotton cultivation area is unirrigated, which is
likely to get irrigation sooner in incoming years as Sardar Sarovar project is gained fast
execution in recent time. This will result in higher production of cotton stalk in
Surendranagar as it has very large area for cotton cultivation.
4.3
Cotton stalk
Cotton stalks production directly depends on the production of cotton. As per the Ministry
of Environment and Forests (Government of India), it is estimated that, on an average, the
rain fed crop gives about 2.5 tonnes per hectare of cotton stalk and the irrigated crop
gives about 5 tonnes per hectare. Generally 3 metric tons of cotton stalks is produced per
hectare production of cotton. Estimated weight of the cotton stalk is 300-400 gm per plant
with the average diameter varying from 1 to 1.5 inches. While the total Indian production
of cotton in the year 2005-06 was 23.8 million bales (1 bale equals 170 kg), Gujarat alone
produced around 7.6 million bales of cotton in the same period.
Taking cues from the table (section 4.2), the cultivated area of cotton in Surendranagar in
year 2004 - 05 is 4.07 lakh hectares, which can produce three times as much quantity of
cotton stalk. This translates into 1.22 million metric tons of cotton stalks. The requirement
of the plant is 100,000 tons which can be met by procuring the cotton stalks from the
Surendranagar area only. Also emergency provisions can be made to procure the same from
the adjoining districts like Rajkot, Bhavnagar and Ahmedabad.
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4.3.1
Cotton stalk usages
The stalk of the cotton plant is processed for the development of ethanol for petrol and
diesel blends and it is also used as a mulch to improve soil. Cotton stalk is also used to
prepare stock feed with the shell of the cotton seed. Cotton stalk can be used as direct
fire stock in boiler and for the purpose of household.
No major industrial and commercial utilization of cotton stalk is so far done in India.
Cotton stalk is mainly burned either as feed stock in small capacity boilers or as fuel in
household. Farmers use them to make composts in order to improve the soil fertility. Only
a small fraction of the available cotton stalk is used to prepare feed stock using the shell
of cotton seed. All these activities are done at a very low capacity and in unorganized
manner. Cotton stalk is not utilized so far in value added activities like the manufacturing
of MDF. As most of the cotton stalk is considered as waste and burnt by farmers, it can be
conjectured that a significantly large portion of cotton stalk could be made available to
manufacturing MDF board. This would also help farmers to earn extra money from selling
cotton stalks to the manufacturers of MDF, thereby creating a win-win for both.
4.3.2
Cotton Stalk Availability
Future availability of cotton stalk depends on the production of cotton. Cotton is Gujarats
one of the major revenue earning crop that supports the textile sector which is one of the
leading industry sectors of Gujarat.
The demand for cotton will increase due to growth of the textile industry. The major
growth drivers of the textile industry in India are mentioned below:
Abolition of Quota system and MFA (Multi Fibre Agreement).
Growing demand for apparels and clothing.
Established presence of Indian textiles in domestic and international market.
Growing urbanization, increase in disposable income levels and fashion-savvy

population.
Comparative as well as Competitive Edge of Indian Textile Industry.
Initiatives by Government to promote Textile Industry.
It is envisaged that cotton production will also increase in coming years to meet the
increased demand of cotton in Gujarat. The major factors that lead the rise in cotton
production in Gujarat are mentioned below:
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Improved irrigation
In past few years, the irrigation system of Gujarat has improved due to the increased
awareness of the citizens and also by the sustained effort of the Government of Gujarat.
The successful implementation of Sardar Sarovar Project makes Narmada water available
through the entire middle-Gujarat and Saurashtra for irrigation. Gujarat is the first state in
linking rivers across the state. Construction of check dam helps to store water for longer
time, to increase the ground water level and to recharge the dry well. Due to these
efforts, ample water will become available for irrigation to cotton crop, which in turn can
help increase the production of cotton.
Adoption of BT cotton
Gujarat is one of the states, which early-adopted the BT cotton and the rise in the
production of cotton crop is the result of that. BT cotton protects the plant from blow
worm. The height of the BT cotton plant is normally higher than the desi (non-BT) cotton
plant. The production of the cotton boll also increases in BT cotton plant. Due to higher
quality and large volume, BT cotton help farmers to fetch good price for their product.
This becomes the prime motivation for many farmers to move onto cotton production in
the state, which led to the higher cotton production in Gujarat.
At present cotton stalk is treated as agro waste product with no seemingly major industrial
and commercial applications. MDF board industry will not only utilize the cotton stalk in
value addition activity but it also provides opportunity for farmers to earn extra money by
selling cotton stalks. Going by the current economic condition and booming textile
industry, the demand for cotton in coming years is likely to go up with concomitant
increase in the cotton cultivation and hence the increased availability of cotton stalk in
Gujarat. In short, the cotton stalk will be largely available in future to support the MDF
board manufacturing industry.
4.3.3
Procurement Strategy & Design
Cotton stalk available from cotton plants are required to be processed in the following
stages, before they can be used in the MDF plant:
1. Removal of the ground
2. Removal of the dirt and soil sticking to the stalk
3. Removal of leaves and smaller branches
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4. Removal of lint sticking to the cotton stalk

5. Removal of cotton seeds sticking to the cotton stalk
6. Washing of the cotton stalk
7. Debarking of the cotton stalk
8. Chipping of the cotton stalk
9. Drying of chips
Cotton stalk would be available from the farms starting from the month of April to June.
From the farms, at least for another six months, there would be no substantial
deterioration in quality, if stored properly. Technically of course cotton stalk can be used
for a period up to one year, if they are protected and properly stored in chipped form.
RDPL can develop effective technology to procure cotton stalk for long time and
mechanism to lower the cost of cotton stalk by working with organisation like CIRCOT
(Central Institute of Research of Cotton), Mumbai. CIRCOT is leading institute doing
research on cotton and it had successfully carried out pilot project to manufacture board
from cotton stalk. Its expertise and technology knowledge would help RDPL to utilise
cotton stalk in efficient way.
RDPL planning to set up manufacturing unit at Dhrangadhra taluka, which is surrounded by
Lakhtar, Limdi, Muli, Chuda, Sayla, and Wadhwan. All these talukas are cotton growing
area and producing ample quantity of cotton in year. The production of cotton in these
talukas is provided in the table given below:
Table 4.4: Cotton Production in different talukas of Surendranagar
Sr. No.
1
2
3
4
5
6
7
8
Taluka
Lakhtar
Limdi
Muli
Chuda
Sayla
Dhrangadhra
Wadhvan
Halvad
Cotton Production
(in hectare)
47556
37000
32500
15432
28150
49900
43400
28158
cotton stalk in tones @ 1.5

tones / hectare
71334
55500
48750
23148
42225
74850
65100
42777
The planned capacity of the fibre board manufacturing unit is 30,000 CuM. The raw
material requirement for this capacity is easily meet by the cotton production of this
region.
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RDPL is planning to set up Collection-Chipping-Storage centre of cotton stalk in each of

these taluka. Each CCS centre will be established on a 5 Acre land. CCS centre equipped
with one Mobile chipping unit to chip the cotton stalk and one weighing machine (20 tones)
facilitated by software installed terminal.
Around 34 persons will be stationed at each CCS centre - 24 labourers required for chipping
machine operation, 6 persons required to operate weighing machine and an accountant
and a supervisor.
The proposed location of the CCS centre is mention in table given below:
Table 4.5: CCS Centre locations
CCS
No.
1
2
3
4
5
6
7
CCS Centres
(Proposed)
Adalsar
Samla
Sudamda
Gadhda
Lakhtar
Limdi
Sayla
Muli
Charadva
Dasada
Navalgarh
Halvad
Patdi
Dhangadhra
Talukas
Distance form
Dhangadhra
38
57
48
38
27
38
0
Talukas Covered
Lakhtar, Patdi, Limdi
Limdi, Wadhwan, Chuda
Sayla, Muli, Chuda, Chotila
Muli, Dhangadhra, Halvad, Chotila,
Vankaner
Halvad, Morbi, Naliya, Vankaner
Patdi, Bechraji, Viramgam
Dhangadhra, Halvad
Each CCS centre will cover almost 20 km of area surrounding it, while the distance of these
centres from the manufacturing unit is varied from 27 to 70 km.
Cotton growing farmers from the surrounding villages will transport cotton stalks to this
centre. Transportation cost up to CCS centre will be borne by RDPL. The collected cotton
stalk will be chipped and stored at the centre and will only be transported to the factory
whenever required. This would help to reduce required storage space at the factory, the
transportation cost and the overall operational burden. The strategy also provides
opportunity to create buffer stock to meet future demand and to control the price of raw
material.
The location of Collection-Chipping-Storage centre is diagrammatically represented as
follows:
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Figure 4.5: CCS Centre Mechanism
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(i)
Pricing
Our interaction with various agencies suggests that cotton stalk can be procured at a price
of INR 300 per metric ton. This can be channelised either through farmers co-operatives
or through direct buying from big farmers (RDPL is planning collection points at major
locations). As this is a seasonal item, the collected cotton stalks will be stored in
warehouses so that the operation of the plant can be sustained for the entire year. Besides
the basic purchase price of the cotton stalk, cleaning, handling and transportaion charges
should also to be considered for the calculation of the price of cotton stalk at MDF plant.
It is advisable that the client would make contract or create strong linkages with farmers
and co-operatives to procure cotton stalk at reasonable prices. Because there are chances
that once the MDF unit is set up based on cotton stalks, farmers would realise its value,
who in turn, would increase the price of cotton stalks. Moreover, due to price increase in
other types of domestic fuels like coal, wood etc, usage of cotton stalks as a regular
domestic fuel has received some serious attention. Some projects like White Coal have
been set up to convert waste cotton stalks into more usable configuration as fuel. All these
may put pressure on the prices of cotton stalks.
4.4
Bagasse as Alternate Raw Material
Bagasse is another option to be considered as a raw material for MDF production. Bagasse
is the matted cellulose fibre residue from sugar cane that has been processed in a sugar
mill. Most bagasse has moisture content between 45 and 55 percent by weight. Average
bagasse production is about 30 percent of the sugarcane crushed.
About 90 percent of bagasse produced is used as fuel. Another major use of bagasse is in
paper making. However, large quantities of bagasse are either thrown away or taken away
for use as fuel or for compost making. In a number of sugar manufacturing factories surplus
bagasse becomes a disposal problem.
India is the second largest producer of Sugar cane in world after Brazil, with an estimated
production of 258.0 million MT in the year 2005 and which is estimated to touch to 329.60
million tones by the year 2015. The major sugar producing States in the country are
Maharashtra, Uttar Pradesh, Tamil Nadu, Karnataka, Gujarat and Andhra Pradesh
considering total sugar production and area under sugarcane.
In India sugar production is undertaken practically throughout the country and there are
well-established factories in 18 out of 26 States. There are approx. 575 sugar mills
operating in India.
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Sugar production has emerged as one of the major agro industries in the rural areas of
India during the last few decades particularly in the irrigated region. Sugar production in
Gujarat is substantial since many of the factories are cooperatives and the producer
receives full benefit from sugar production.
Gujarat is one of the leading producers of the sugarcane. The southern region of Gujarat is
the biggest region of sugarcane production in Gujarat as it has good irrigation facility due
to presence of larger rivers like Narmada, Tapi, Mahi etc.
Table 4.6: Sugarcane Productions in Gujarat
Year
2000
2001
2002
2003
2004
- 01
- 02
- 03
- 04
- 05
Area
(in 00 Hectare)
1777
1758
2029
1764
1967
Production
(in 00 MT)
12695
12465
14071
12669
14570
Yield
(in kg/Hectare)
7142
7092
6934
7182
7407
Source: Directorate of Agriculture, Gujarat
The southern region of Gujarat also caters many sugar producing factories due to good
production of the sugarcane in this region. Out of 22 sugar factories in Gujarat, 19
factories are in South Gujarat and 3 are in Saurashtra. These factories are good source of
generating bagasse, which is generally transported to the Nagpur, Aurangabad.
4.4.1
Procurement of Bagasse
Bagasse can be purchased either from contractor or sugar mandi and its available either in
bails or loose. The average price range of the bagasse is 475 500 Rs. /ton. Usually sugar
factories crush sugarcane between October to April and hence bagasse is available for six
months only in a year. Nearly 421 Kilo tons per annum of bagasse is available from the
sugar factories of South Gujarat alone. RDPL will require a maximum of 60,000 MTPA of
bagasse.
Bagasse will be available in ample quantity from these factories to RDPL. RDPL has to
transport the bagasse from the south Gujarat to Surendranagar, the selected location for
MDF manufacturing facility. Due to good road network, transportation can be handled
efficiently and economically.
The survey of the sugar producing 15 factories in south Gujarat is summarized in Appendix
J.
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4.4.2
Contingency Plan for Raw Material Sourcing
The success of the project will depend on the availability of quality cotton stalks at
economical prices, chipping of stalks, their storage and transportation. Also it is very
important to explore better ways of storing the same (as cotton stalk is available only
during the harvest season) to sustain production of MDF on a continuous basis. It makes
immense sense to chalk out a strategy to procure or ensure the supply of raw material that
can substitute cotton stalk in case there is a scarcity for the latter or if the landed price of
stalk becomes unaffordable.
The client has plans to grow ailanthus excelsa or other kind of soft wood tree near the
factory premises in a vast expanse of land so that the wood from the same can be used as
raw material for MDF. Ideally 850 to 870 saplings can be planted per acre of land and will
be ready for felling in a span of 4 years. The typical yield is 100 tons per hectare. On an
average, 1.55 tons of the tree is needed to produce 1 cubic metre of MDF.
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5.1
Manufacturing Process of Fibre Board
Three major steps involved in the manufacturing of MDF are fiberising, fibre mat formation
and board pressing. MDF can be processed from a variety of raw materials such as agro
residues and annuals. After necessary cleaning and preparatory process, the raw material
is cut into small sizes or chips. These are screened and graded in sizes. Chips larger than
the pre-determined size are recycled and very small pieces are rejected.
The distinct operations involved in the MDF manufacturing are:
a. Raw material handling
b. Chip Preparation
c. Fibre Refining& Drying
d. Fibre Resin Blending
e. Forming Station
f. Hot Pressing
g. Board Finishing
5.1.1
Raw material Handling
Raw material consists of various types of cotton stalks (removed from the fields in the form
of chips). The mobile chippers have been chosen to be used either in the field or at the
factory. The chips are stored in piles and transported by front loader to the chip reclaim
hopper.
5.1.2
Chip Preparation
The chip reclaim hopper will be equipped with a multiple screw conveyor system that
feeds the chips for classification to the rolling screen. The screen has three decks. In the
first one, oversized chips are separated. From, deck two, the accepted material is
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conveyed by a belt conveyor to a chip washing system, which pumps the chips to the
digester feed bin. Unwanted fine material is taken out from the bottom of the screen and
can be used as fuel in boilers.
5.1.3
Refining of Fibre and Drying
The digester feed bin is equipped with a vibrator feeder and controls to maintain uniform
chip flow from the silos. Chips are fed from these silos to the digester at a controlled rate.
The steam digester operates on a controlled but adjustable steam pressure that cooks
(steam condition) the chips according to the adjusted time and then gets transported to
the refiner. In the refiner, the chips will be reduced to fibres. The disc type refiner will
have changeable grinding plates and adjustable disc clearance to provide the degree of
fiberisation required. From the digester-refining unit, the fibre is discharged under steam
pressure into the blow line for transportation either into the fibre drier or the start up
fibre dump.
During normal operation, the-fibre drying steam receives the fibre and steam from the
refiner blow line and dries the fibre to approximately 5% moisture content (bone dry). This
drier is of the flash tube type and does not employ a rotating drum. Large volumes of air
are blown through the heater section and are heated to a predetermined, controllable
temperature. Fibre and steam from the refiner are injected directly into this stream of
heated air at the inlet- of the flash tube drier. Operating on the principle of air suspension
drying, the fibre drier thus ensures that the fibre is maintained in suspension in a stream of
heated air until the final moisture level is reached. After the flash tube, the fibre and
steam are separated in the cyclone, with the fibre passing through a rotary valve airlock at
the bottom of the cyclone to a reversible out feed belt. The moisture vapor is extracted
from the cyclone with the transporting air and is discharged directly to atmosphere.
The reversible out feed conveyor transports the fibre either to the weigh belt conveyor or,
when reversed to a fire dump. This conveyor is reversed when fire has been detected in
the drier or other systems upstream of the fibre bin of the mat former. Fire detection and
control of the direction of this conveyor is fully automatic, but manual override is also
provided.
The weigh belt conveyor totalizes the fibre flow and also controls the resin and wax
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addition to the fibre. From the weigh scale the fibre is dropped into the fibre bin of the
mat former. The fibre bin acts as a buffer and storage device between the fibre
preparation and the forming and pressing line.
5.1.4
Fibre Resin Blending
Resin, hardener and other selected chemicals are automatically blended in electronically
equipped mixing units and then metered into the fibres in the blow pipe line.
5.1.5
Forming Station
Fibre is metered at a controlled rate out of the bin to the single forming head. The former
lays a continuous fibre mat down out to a wire screen. After the forming head a scalper
shaves off the layer of the fibre mat.
5.1.6
Hot Pressing
In the hydraulic hot press 12 mats are pressed simultaneously. 12 caul mats are stacked in
an elevating loading rack in front of the press and then simultaneously charged .into the
press. After the pressing they are discharged into a corresponding unloading rack behind
the press, while the following 12 mats are charged into the press.
The hydraulic hot press is of frame type and heated by means of steam. Pressing time,
pressure and temperature are automatically controlled according to a programme to be
pressed with regards to the actual type of board.
5.1.7
Trimming and Sanding
Unloaded boards are passing a thickness control on the roller conveyor in front of the
cooling wheel. The boards are shortly stored in the cooling wheel before they will be
trimmed and cut to size. After the trim saws the boards are automatically stacked.
From the stacker, the boards are taken into the intermediate storage to complete the
curing and equalizing of the board.
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5.2
Manufacturing Process of Prelam Boards:
5.2.1
Impregnation Section
In impregnation line, the base paper and balancing paper to be used for pre-lamination of
board are impregnated with MF resin. The roll of paper is un winded & fed into
impregnator, where resin of required grams is applied through rollers. The paper usually
weighs within a range between 80 to 140 gsm.
Normally the resin pickup is 100% of the weight of paper. The impregnation paper is then
dried, cooled & stored in air-conditioned room and then send for pre lamination section to
apply on MDF/particle board.
5.2.2
Short cycle Laminating Process
In short cycle laminating process, impregnated paper fix on the raw MDF board, with the
help of press. Heat and pressure play major role in this process.
The automatic board pushing device or handling system supported with hydraulic lifting
platform or scissor lift feeds raw MDF/Particle boards into the short cycle press device.
Raw board brushing machine cleans the surface before board enters into the short cycle
press.
Melamine impregnated paper is overlapped manually on to the raw board with best efforts.
Loading conveyor and board centering conveyor adjust the board inside the machine with
proper alignment of the board before pressing process. The next stage is the hot pressing
of paper applied raw board inside the press device. Surface of the board is applied with a
pressure of 30 +/- 2 Kg / cm2. The heat required for pressing cycle is 180 +/- 5 degrees
Celsius. Pressing cycle takes around 60 seconds for pressing one board.
The prepared, terms also as cooked, prelam board comes out from press with help of
unloading device. Roller conveyor, connecting the unloading device and stalking station,
brings the boards on the stalking station for natural cooling. Whole short cycle process runs
through the electrical control panel that is a PLC (programmable logical control) unit.
5.3
Manufacturing process of Laminated Flooring
The manufacturing process of laminate flooring starts from the prelam manufacturing
section. Short cycle laminate press prepares pre laminated MDF/HDF boards with heat and
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pressure application on melamine impregnated papers and base board assembly. Prelam
boards prepared out of this process are considered as raw material for laminate flooring
manufacturing process.
Raw material dimensions required for our process will be of W 1220 X L 2440 X T 6-10 mm.
Core material can be MDF/HDF or particle board with laminated surface by melamine
impregnated paper. Warp of panels can be considered within a tolerance limit of 2 mm /m
(max).
5.3.1
Cutting of pre laminated raw boards
Pre laminated boards are fed in the cutting line with two sliding table saws for the manual
crosscutting of boards in two pieces. These boards are stocked for stress release before
sending to manual length cutting line. Cross cut boards on the sliding table saw are
converted into individual planks. These planks are manually destacking and stocked for
profiling process. The dimensions of finished work pieces are 190 X 1208 mm.
5.3.2
Profiling of Planks
The cut panels are then manually fed into the profiling machine. This machine basically
turns groove or profile over the plank edges, both crosswise and lengthwise. Profiling
operation is meant with patented/non patented click profile tooling. This click profile
tooling creates profile first longitudinally and then crosswise on a single DET machine. The
profiled surface is then applied with PU coating layer to make the surface moisture
resistant. Profiled planks are considered as the ready to feet flooring products. These
planks are then moved for packing and storage.
5.4
Location Aspects
It is very important to select an appropriate location for any project and particularly for
this project owing to the following factors.
In order to ensure continuous supply of raw materials (E.g: cotton stalk)
Availability of man power (local availability of labour at affordable costs)
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Uninterruptible supply of electricity at cheaper rates as the process is energyintensive.
Hassle-free supply of water and other utilities.
To tap any incentives, if any, from the government that can help to improve the
bottom line of the business.
The selected location for setting up project is Navalgarh area of Dhangadhra Taluka in
Surendranagar district. The following parameters are being taken into consideration.
5.4.1
Raw Material Availability
The raw material is very crucial part of the project. As project is based on the agro waste,
the location must consider the different aspects of the agricultural product used as a raw
material. The selected location Navalgarh in Surendranagar district is surrounded by cotton
producing areas. As the project is planned based on the use of cotton stalk as a raw
material, the proximity of the cotton-producing region would help to reduce the
transportation cost of the raw material, improve flexibility in procuring raw material and
to control the price of raw material. The cotton stalk production quantity is higher in the
region than that is required for the project.
RDPL is also considering the bagasse as another option as raw material for the project. This
is abundantly available in south Gujarat. At present, bagasse is being shipped out of the
state to Maharashtra, etc. The distance from Valsad to the proposed site is 340 km by road
and the connectivity is very good. Also the 6 laning of the N.H. 8 from Baroda to Surat
(ongoing) and the extension of N.E.1 (Expressway) from Baroda till Mumbai will drastically
reduce the transportation bottlenecks.
RDPL is planning to import the raw material HDF board for the first phase of the
project. The Kandla port can act as the hub for import of the same. Connectivity to
Surendranagar from the port is reasonably good. The proposed infrastructure development
plans mooted for the state of Gujarat will further improve/streamline the transportation
network in the region.
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5.4.2
Manpower Availability
Problems related to obtaining trained manpower are not anticipated as RDPL is already
into manufacturing similar products and they have well-established factories functioning
smoothly in Gujarat. Re-shuffling of some staff from existing plants in order take care of
the commissioning activities of the new plant is envisaged. Also the proximity to
Ahmedabad city will help RDPL to recruit technically qualified staff. Other labour staffs
are also available in the region easily.
5.4.3
Strategic Location
The project is expected to export more than 60 % of their production. The proximity of
port will provide the easy accessibility to the international market. Surendranagar is also
connected with all the major cities of the Gujarat Ahmedabad, Surat, and Rajkot by state
highways. N.H.8 connects Ahmedabad to Mumbai via Vadodara, Surat and Valsad.
5.4.4
Other Advantages
Dhrangadhra in Surendranagar is well connected with the major cities of the state
Ahmedabad, Rajkot, Kandla through state highways.
The nearest port location is Navlakhi which is at a distance of 100 kms. Kandla/
Mundra ports are only 250 km away from the proposed site, which is well-connected
with Surendranagar through state highway.
Surendranagar has the highest cotton production in the state and is also surrounded
by the other major cotton producing districts like Rajkot, Patan, Bhavnagar and
Ahmedabad.
Proximity to developed towns like Dhrangadhra, Wadhwan & Halvad.
Water is available at depth of 650 700 ft and can be easily accessible through
bore wells
Selected location is within Industrial Environment of DCW (Dhrangadhra Chemical

Works, 1927) region.
Availability of GEB power supply with 66 KVA and 220 KVA substations.
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Qualified manpower available from Surendranagar and nearby cities like

Ahmedabad.
Well-established infrastructure of Dhrangadhra and Wadhwan cities
Established educational infrastructure of Wadhwan city that boasts of engineering

college, polytechnic, management schools, medical school, Pharmacy College, etc.
5.5
Machinery Details
All the major plant and machinery required for the production of MDF/HDF will be
imported from abroad. The following techno-economic parameters have been taken into
consideration while deciding the overall plant design and equipment suppliers.
Figure 5.1: Techno Economic parameter for machinery selection

Technical
Contemporariness
Proven
Modularity
Scalability
Energy Efficiency
Commercial
Cost Effectiveness
After Sales Service
Spare Parts Availability
Quality Certification of products
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The detailed list of major plant and machinery is mentioned in below with its suppliers
name.
Table 5.1: List of Imported Machinery
Description of Machines
Supplier Name
Harbin Lingzhi Mechanical & Electrical
Technology Co. Ltd, PRC
Sesa Press Plates,Italy
Sesa Press Plates, Italy
Marathon Belting U.K.
Holzbearbeitngssysteme AG, Germany
Longoni , Shanghai, PRC
Sufoma, China (PRC)
MDF + Refiner + Sanding line

Texture Press plates
Matt Press plates
Cushion pads
Flooring line
Impregnation line
Short Cycle Line
Table 5.2: List of Indigenous Machinery

Steam boiler-6 TPH
Thermic Fluid Heater 2500U * 3
Mobile chippers
Compressor with Dryer-Oil free 195 CFM
Short Cycle Line
Resin Plant
Tooling-diamond
Supplier Name
Cheema Boiler
Isotex Corporation
Surya energy
Ingersoll-rand
Master Handlers
Bhagsons
Leitz
Other plant and Machinery

Table 5.3: List of other plant and machinery
Generator set [second hand machinery]
Box packing Machinery
Air conditioning
Fork lifts
Trucks
Cooling towers
RO Plant
ETP
EOT crane 5 tones
Laboratory Equipments
Supplier Name
Zodiac Genset
Cabling, lighting, panel boards & fittings
Electrical
Chimney
Weighing machines with capacity 20 tones
Motors, Valves, Pipes & insulation, Exhaust, electrics & Automation
Darshini
Avery India
Local supply
Manilal Pack Plast Pvt. Ltd.

Hitachi
Godrej
TATA
Ganara Engineers Pvt. Ltd
Indian Ion Exchange
Enviroclean solution Pvt Ltd
Safex Equipment Pvt Ltd.
Gujarat test house
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RDPL has finalized foreign machinery manufacturers and suppliers for major machineries
required for the plant. Brief information regarding selected machinery supplier of major
machinery is mentioned below.
Harbin Lingzhi Mechanical & Electrical Technology Co. Ltd, China
The MDF plant with refiner and sanding line will be procured from the Harbin Lingzhi
Mechanical & Electrical Technology Co. Ltd, China (hereafter referred to as Harbin).
Harbin has experience of more than 12 years in supplying the wood-based and non-wood
panel machinery and it is the only company in China capable of supplying the technology
that is suited for MDF production from cotton stalk. In cooperation with design institutes
and universities, Harbin has obtained patents for more than ten products including serial
glue blender, dryer, etc. Harbin can supply machineries (for MDF production line) with
capacities ranging from 15,000 to 80,000 m3/annum.
The company was formed by Mr. Wang Xiaoling. Mr. XIaoling was student of Northeast
Forestry University, China and worked as Director of the design department of Harbin
Forestry Machine Factory from 1982 to 1994. With his immense knowledge about
machineries, he compiled a book named as Panel Machine & Equipment published by
Northeast Forestry University. He also served Harbin Xinglin Science & Technology
Development Company in 1994 for one year as Vice General Manager. In 1995, Mr. Wang
Xiaoling set up Harbin Lingzhi Mechanical and Electrical Technology Co. Ltd. and he holds
the post of General Manager.
Mr. Wang Xiaoling is engaged in the design and manufacture of panel machinery for more
than 20 years. He has rich work experience and has made remarkable contribution in the
field. He was an active participant in the design of press, hot press, loader & un loader, air
forming and heavy-duty machinery.
The company has good track record of client and had supplied more than thirty complete
set of machinery of particleboard, MDF, Short cycle laminate press, moulding press line
etc. in various Asian countries including Pakistan, Russia, Sri Lanka and Vietnam. Harbin
had successfully carried out the joint stock system transformation with Harbin Forestry
Machinery Factory, power-and-power union, and also set up the China Foma Group & Harbin Foma Machinery & Equipment Manufacturer Co., Ltd. Harbin holds Harbin Lingyu
Economy & Trade Co., Ltd., which is considered as the independent import-export trade
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power. It has also stakes in Shandong Hongfu Wooden Industry and Jiangsu Xinjinjiang
Wooden Industry.
Holzbearbeitngssysteme AG
The Homag is one of the leading engineering groups of the Germany. The group has
experience of more than 45 years in consulting and software system development,
engineering and installation of complex production line, and supplying technologically
leading edge products in both high end and standard segment along the entire customer
supply chain. RDPL is planning to procure the flooring line from Holzbearbeitngssysteme
AG.
Production facility of the group is present in Europe, Asia and America with worldwide
sales facility and after sales service network.
The homage group has supplied plants for the panel processing woodworking and furniture
industry, complete plants for parquet production, complete plants for door production.
Looking at the experience of the machinery supplier in the machine manufacturing, their
worldwide present, and their successful track record, both the machinery supplier seems
to be capable of supplying machinery of required capacity.
In short, the major machineries and equipment will be procured from proven vendors who
had set up similar plants in many parts of the world. The track record and contemporary
designs will further ensure quality and reliability of the systems. M/s Homag has a regional
office in Mumbai which will ensure a hassle-free engineering and after sales support.
Master Handlers Pvt. Ltd.
Master Handlers Pvt. Ltd is one of the leading manufacturers of paper Impregnation and
Lamination machinery, Material handling systems and Industrial Component Cleaning
solutions.
The manufacturing facility, situated at Pune, has sufficient resources to perform electric
engineering and programming task. The company entered in technical collaboration with
Always Engineering , U.K., Stewart-Gill Conveyers, U.K. (for overhead conveyors), Tochhio
(for Paper Impregnation lines), M/s Zippel (for Industrial Component Cleaning Solution) to
enhance its technical capabilities in respective fields. MHPL had also set up Software
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Company in 1991 named as Autovue Electronics and Automation Company in 1994 named as
Automech Handlers.
MHPL provides complete product technology, training of personnel, installation and start
up of production and their expertise in providing customised product and service is visible
from its strong client base, which includes TATA, Honda, Siemens, Escort, Bajaj, Delphi,
Hundai, Kirby, Alucon, Escorts etc.
In Paper impregnation line and lamination machinery, MHPL manufacture Short cycle
lamination line Paper impregnation line High pressure laminate
press line Laminate
furniture machines paper foil/ veneer press , post forming machine, Lab press & flow
press
MHPL Looking at the client list for paper impregnation and lamination machinery, RDPLs
decision to procure short cycle press from MHPL seems appropriate. The client list for
paper impregnation and lamination of MHPL is mentioned below:
Century
Pelit Arsian
Formica
Bloom
Greenply
Isofam
Merino
Neo-hy
Nepal board
ASD Orman
Space Wood Furnishers Pvt. Ltd.
Samrat
Egyptial industrial flooring co.
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Strategic Analysis of the Firm
6.1
SWOT Analysis
Figure 6.1: SWOT Analysis
Weaknesses
Strengths
Proven Presence in Laminates

Business
Brand Name
Robust Network of Dealers
Novice in MDF Manufacturing
Threats
Opportunities
Construction Boom
Proliferation of Modular Furniture
Rising Income Levels
Rapid Urbanisation
Forest Conservation
Import Substitution
Presence of Global Players& New

Entrants
Dumping from Abroad
Health concerns on resins use
New substitutes
Strengths
Well established presence in laminates business as well as strong brand value are
anticipated to be the key factors for development of domestic as well as export market.
Moreover, the product will penetrate deep into the market, in the wake of strong
network of RDPL dealers throughout the country.
Opportunities
Macro-economic factors like huge investments in construction sector have contributed to
growth in demand of modular furniture.
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Higher spending power of middle class population in the view of rapid growth in
economy, urbanization.
Conservation of forests due to Government policies to protect forests will increase
dependency on agro waste based products as a substitution to raw material, which will
aid MDF in achieving an edge over competing products like plywood and particleboard.
Weaknesses
MDF industry is dominated by presence of large players in the market. Hence, a strong
marketing strategy will be required by the company. However, the robust network of
distribution channels that RDPL boasts of will help to penetrate the market.
Threats
The negative impacts of using resins on human health, as well as probable Government
regulations of shifting towards environment friendly manufacturing technology can pose
a threat to the industry. RDPL is planning to replace UF resin with CARDENOL, which is a
bio resin that is environmentally-friendly.
The product also faces possibility of high level of substitution. Globally, large varieties
of products (wood plastic composites, steel framing, OSL/Parallam) are at a developing
stage and have recently been introduced in the market.
Figure 6.2: Wood Products & competitors life cycles
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Dumping from abroad as well as government regulations of relaxing import duties can
also affect the industry.
6.2
Five-Force Model Analysis
The five competitive forces acting on the external business environment is depicted below:
Figure 6.3: Five Force Model
Competitive Rivalry
MDF industry is not matured in India but it is poised for a growth as a result of increased
demand for engineered woods for the construction of furniture and modular office space.
At present, India has only two full-fledged manufacturing facilities for MDF, which meets
nearly 20% of the domestic demand. The rest is being met by imports. Plans are afoot by
Bajaj Biotec and RDPL to set up manufacturing facilities in the near term to tap the
lucrative market for MDF which is growing at 20-25% p.a. The new capacity additions by
these firms will be absorbed easily by the market that suggests a low intensity of rivalry.
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Entry Barrier
The industry per se is both capital intensive and labour intensive. Also most of the critical
equipments like reformer (digester) are to be imported from Germany or China. The
success in marketing will depend a lot on the supply chain capabilities and extensive
dealer networks in different parts of the country. In this respect, the industry segment can
assumed to be the one with HIGH entry barrier.
The Threat of New Entrants
This is assumed to be Low to Medium due to high entry barrier and other points
mentioned in the above paragraph.
The Threat of Substitutes
This is profoundly HIGH as both wood based and non-wood based substitutes are easily
available in the market that can be used for a variety of purposes. Hence the consumers
choice will depend on factors like price, easy availability, ease of use, end use, etc.
Bargaining Power of Buyers
The bargaining power of buyers will be Medium for branded MDF products. However for
unbranded products, it will be high as the consumer will have ample choices in the market
to choose from.
Bargaining Power of Suppliers
As far as the raw material issue is concerned, the firm plans to use cotton stalks (the
remnant of cotton plant after the harvest of cotton) for the production of MDF. At present,
cotton stalk is burnt in the farm itself and being utilised as manure. The demand for the
same will boost the price for stalks, however it is not assumed to be high or prohibitive.
The idea is to create win-win for the farmers as well as for the manufacturers.
Alternatively, RDPL will engage in developing plantation so that the wood can replace the
cotton stalks. This will also help in curbing the bargaining power of cotton stalk suppliers
and also in mitigating any procurement problems that may arise with regard to cotton
stalks.
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Bagasse is also being thought of as an alternative raw material for the above project,
which is abundantly available in South Gujarat. As mentioned earlier in the report, it is
[presently being sent out to the neighbouring states.
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7
7.1
Marketing Strategy
Present Marketing Set Up
RDPL has well established domestic and international marketing network. The head office
of the RDPL is situated at Ahmedabad in proximity to their manufacturing facilities. RDPL
cover all the states of the India through their marketing offices established in Punjab,
Delhi, Rajasthan, Gujarat, Madhya Pradesh, Maharashtra, Karnataka, Tamil Nadu, Andhra
Pradesh, Chhatishgarh, Jharkhand, Bihar, Uttar Pradesh, and West Bengal, and Assam. The
hierarchy of the of the department mention in figure given below:
Figure 7.1: Present Marketing Set up
VP Marketing
Zonal Sales Manager
Project Manager
Branch Manager
Sales Manager
Area Sales Manager
Sales Executive
The network comprise of about 50 sales executives, 4 Area sales managers, 7 Branch
managers, one project manager and 47 distribution partners in marketing channel.
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Domestic Market set up:

RDPL has appointed direct distributors in many states, which are major markets of wood
base panel in India. These states are Gujarat, Rajasthan, Punjab, Bihar, Jharkhand, West
Bengal, Madhya Pradesh, Assam, Karnataka, Maharashtra, Andhra Pradesh, Uttaranchal,
Uttar Pradesh, Chhattisgarh, Kerala, Delhi and Tamilnadu. On an average every state has 2
to 3 distributors appointed. These distributors are the sole contact point for the client and
they are responsible to develop further dealers network in their region. The exclusive office is
also operated in Mumbai in name of the client, which is directly controlled by the client.
The total Indian market is clearly divided between different zones. The different zones are
monitored by the zonal sales manager, who reports directly to the Vice President of
Marketing. The zone structure is mentioned in the table given below:
Table 7.1: The present marketing zones of RDPL in India
ZONE
STATES
CITIES
Ahmedabad
Rajkot
Gujarat
Surat
Baroda
Mehsana
ZONE 1
Mumbai
(Western India)
Maharashtra
Pune
Nagpur
Nasik
ZONE 2
(Southern India)
MP
Indore
Chhattisgarh
Raipur
Tamilnadu & Kerala
Chennai
Karnataka
Bangalore
Andhra Pradesh
Hyderabad
West Bengal
ZONE 3
Jharkhand
(Eastern India)
Kolkata
Siliguri
Ranchi
Jamshedpur
Assam
Guwahati
Bihar
Patna
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ZONE
STATES
Rajasthan
ZONE 4
(Northern India)
CITIES
Jaipur
Udaipur
Delhi
Delhi
Chandigarh
Chandigarh
Ludhiana
Punjab
Bhatinda
Uttaranchal
Uttar Pradesh
Dehradun
Lucknow
Agra
Source: RDPL
International Market:
The long-term relationship, the client enjoys with many dealers around the globe,
especially in Europe can be leveraged further to export the products from India. In this
respect, the cost-competitiveness and the established brand equity will play a vital role.
RDPL is envisaged to export nearly 60% of the product to favourable market destinations
around the globe. The international marketing network of the RDPL spread in 34 countries
including Canada, USA, Venezuela, Europe, Far East countries, Australia, and
countries with the strong brand name Rushil Dcor premium laminate.
Table 7.2: The present marketing network of RDPL in world
Region of world
Country of market presence

Hong Kong
China
Malaysia
Phillipines
Far East
Singapore
Taiwan
Thailand
Qatar
Middle East
S.Arabia
Kuwait
U.A.E.
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Region of world
Country of market presence

Yemen
Bahrain
Jordan
Egypt
Israel
Mexico
North America
U.S.A.
Venezuela
Peru
South America
Columbia
Australia
Australia
Source: RDPL
7.2
Formulation of Marketing Strategy
MDF as a product has more than 15 years of presence in Indian market; the major chunk
(whopping 80-85%) is being imported. There are only two players who manufacture MDF
domestically, which is a potential substitute/supplement for plywood, particle boards,
veneer, etc. Hence the obvious questions that the firm should address are; what is MDF?
What is the ideal set of applications? And its advantages vis--vis plywood, veneer and
similar substitutes, etc.
The specific choice will hinge upon an optimum combination of the following aspects such
as price discounts, product proliferation, product innovation, improved services, cost
reduction, promotion, etc.
7.2.1
Product Pricing
It can adopt two different ways. The former is based on differentiation, which is, offering
high quality MDF compared to that of the market leaders at a price commanding premium.
However looking at the market dynamics prevailing in this segment, adopting a high-value
strategy based on slightly lower price than the competitor is more likely to succeed. Also
the lower cost of production on account of utilising the cheaply available cotton stalk as
the feedstock will help the firm to position its range of products competitively in the
market.
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7.2.2
Product Innovation
RDPL is the first of its kind in India and the first company to manufacture MDF from cotton
stalks. Trials had been conducted in India and in Germany to produce MDF from cotton
stalks and the quality of fibres were found to be very good. Trial reports and trial samples
are available with the company and as per the report, by adding 20% of wood; the finished
product (MDF) can even match the EN standards.
7.2.3
Product Proliferation
The thrust is to offer large number of options to the buyer in terms of plate thickness,
finish, laminated versions, etc. The typical thickness of MDF ranges from 3 to 35 mm (6, 12
and 18mm being more popular in India). The surface finish could be of plain, grit or
embossed. The embossed panel could be used directly for up market doors and partitions.
RDPL already imports high quality paper laminates to make prelam, etc. It can be
extended to MDF also.
7.2.4
Distribution Network
RDPL has a significant presence in the laminate business in India with offices and sales
centres spread across the country. But these are mainly concentrated in the urban cities.
With the income levels in suburbs and semi-urban places going up, it is worth while to try
smaller towns and townships with a critical mass. However the bulk of revenue will come
from metros and tier1 cities. Export options are also being thought of by RDPL as a riskminimisation strategy (natural hedge against business cycles).
7.2.5
Product Promotion
An important component in the famous 4Ps, the promotion will entail the following things.
Obtain ISI mark and other quality certification.
Obtain certifications from leading architects, furniture makers, etc.
Endorsement by professionals and celebrities.
Special incentives for bulk orders in the form of extended warranty, gift
vouchers, etc.
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Product attributes like resistance to moisture, insects& termites, machinability, life cycle,
etc should be highlighted to entice customers.
7.2.6
Business Intelligence
The companys market research team should be geared to continuously monitor customer
preferences, international trends, company performance, industry status, etc. The
strategy should be evolving based on these market pulses.
7.2.7
Product Mix
Plant and machinery being procured by RDPL is capable to produce the MDF board with the
varied thickness of 6 mm to 18 mm. This provides flexibility to manufacture the product as
per the demand in market. RDPL can also sell MDF and HDF boards directly, without
converting it into prelam and laminated flooring, in a market that depend upon the several
conditions. At present RDPL planning to manufacture the HDF laminated flooring and
Prelam MDF board with the thickness of 12mm, 16mm, and 18mm. All these products have
the highest market demand in panel board market.
RDPL can also enter in modular furniture manufacturing in future, which will help them to
move up the value chain and cater directly to end-product consumers.
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Financial Modelling & Analysis
8.1
Estimation of Capital Cost
The estimation of capital investments have been made based on information collected
from the following sources
Plant and Machineries as per the data provided by the client
Cost of Indigenous component of the project has been worked out on the basis of :
8.1.1
Cross-checking the cost with cost considered in similar projects
Data obtained from Rushil Decore Pvt. Ltd.
Cost information available with IMMs database
Land and Land development
RDPL has purchased 67 acre land worth of Rs. 85 Lakh at Navalgarh in Dhangadra taluka of
Surendranagar district. As per the condition of the land, client has estimated land
development cost is Rs.50 Lakh.
8.1.2
Building and Civil Construction
The Estimated break up of building and civil construction is provided in table given below:
Table 8.1: Building and Civil Work
Sr. No.
1
2
3
4
5
6
7
8
9
11
12
13
14
15
16
17
Particular
Guard Room (3*3)
Scale Station
Canteen Room (8*23)
Shed bicycle (6*30)
Office (3*27*10)
Electrical Station (10*26)
Product Store (15*126)
Production area (30*126)
Refiner Line (3*10*15)
Wood Yard (95*151)
Fuel Station (20*10)
Boiler Room (18*30)
General Storage (18*48)
Pool
Water Tower
Waste Water Treatment
Quantity
9
184
180
810
260
1890
3780
450
14345
200
540
864
300
50
200
88
Unit
M2
M2
M2
M3
M2
M2
M2
M3
M2
M2
M2
M2
M3
M3
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The cost of building and civil works require for the proposed project is Rs. 450 Lakh as per
the architects estimation.
8.1.3
Plant and machinery cost
Imported
RDPL is importing critical machineries for the project. Client has finalised supplier of all
the major machinery required for the project. The detail of the machinery is provided in
table given below:
Table 8.2: List of imported Machinery
(Rs. In lakh)
MDF + Refiner + Sanding line
Texture Press plates
Matt Press plates
Cushion pads
Flooring line
Impregnation line
Short Cycle Line
Total
Supplier Name
Kunming Woodbased Pond
Machine Plant, Kunming
Sesa Press Plates,Italy
Sesa Press Plates, Italy
Marathon Belting U.K.
V-Hold, China Supply
Nantong New Century,
Sanghai
Yalk Ltd.
phase 1
phase 2
Total
947.52
947.52
13.37
11.57
1.56
116.95
0.00
0.00
0.00
0.00
13.37
11.57
1.56
116.95
123.39
0.00
123.39
0.00
266.84
81.41
1028.93
81.41
1295.76
Indigenous
The list of Indigenous equipments along with their supplier and cost estimation is given in
the table below.
Table 8.3: List of Indigenous machinery
(Rs. In lakh)
Steam boiler-6 TPH
Thermic Fluid Heater 2500U * 3
Mobile chippers
Compressor with Dryer-Oil free 195 CFM
Short Cycle Line
Resin Plant
Tooling-dimond
Total
Supplier Name
Cheema Boiler
Isotex
Corportation
Surya energy
Ingersoll-rand
Yalk Ltd.
Bhagsons
Leitz
46.72
Final
Cost
46.72
76.21
0.00
76.21
13.08
140.15
20.00
36.82
286.27
133.37
0.00
0.00
72.59
0.00
252.68
133.37
13.08
140.15
92.59
36.82
538.95
phase 1
phase 2
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Other plant and Machinery

The list of other machinery required for utility and general purpose is mention below along
with their supplier name and cost estimation.
Table 8.4: list of other plant and machinery
(Rs. In lakh)
Generator set [second hand machinery]
Box packing Machinery
Air conditioning
Fork lifts
Trucks
Cooling towers
RO Plant
ETP
EOT crane 5 tones
Erection & commissioning
Laboratory Equipments
Development charges, deposit, line
charges, feeder and transformer charges
& 10% application charges
Supplier Name
Zodiac Genset
Godrej
TATA
Ganara Engineers
Pvt. Ltd
Indian Ion Exchange
phase
1
20.00
30.00
20.00
23.60
10.00
phase
2
82.82
0.00
0.00
11.80
10.00
Final
Cost
102.82
30.00
20.00
35.41
20.00
2.96
2.96
20.00
50.00
13.33
90.00
20.00
50.00
20.00
100.00
10.00
6.67
10.00
10.00
Electrical
200.00
50.00
250.00
Cabling, lighting, panel boards & fittings
Electrical
50.00
50.00
100.00
Chimney
Weighing machines with capacity 20
tones
Motors, Valves, Pipes & insulation,
Exhaust, electrics & Automation
Fabrication work
Total
Drshini
4.94
0.00
4.94
Avery India
25.00
24.36
49.36
Local supply
50.00
100.00
150.00
80.00
540.21
320.00
825.27
400.00
1365.48
8.1.4
Preoperative and Preliminary (POP) cost
Preliminary & Preoperative Costs include all preliminary and pre-operative costs before
commencement of production. The break of the POP cost is given below:
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Table 8.5: Preoperative and Preliminary cost break up

(Rs. In lakh)
Particulars
Legal expenses
Interest During construction
Start up expenses
Upfront/scrutiny fees
Total
8.1.5
Phase 1
5.00
22.75
7.25
5.00
40.00
Phase 2
3.00
49.00
28.00
5.00
85.00
Contingency
The contingency provision at roughly 10% works out to Rs.160 Lakhs in phase 1 and Rs. 234
Lakhs in phase 2.
8.1.6
Margin Money
Estimates of working capital requirements have been worked out on the basis of
expenditure involving cash liabilities and other recurring requirements considering the
norms mentioned below:
Table 8.6: Inventory norms
Particulars
Raw Material
Chemicals
Work in Progress
Finished Goods
Receivable (Debtors)
Sundry Creditors
Phase 1
1.5 M
1 M
0.25 M
0.5 M
0.25 M
0.5 M
Phase 2
6 M
3 M
0.5 M
1.5 M
0.5 M
0.25 M
The available bank finance for working capital has been considered difference between the
net working capital and margin money, while margin money for working capital works out
to Rs. 100 Lakhs in phase 1 and Rs. 180 Lakhs in phase 2.
8.1.7
Total Project Cost
The total project cost for this project has been estimated as given below:
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Table 8.7: Total Cost of Project

(Rs. In lakh)
Sr. No.
1
2
3
4
5
6
7
8
9
10
8.2
Particulars
Phase 1
Phase 2
Total
Land
Land Development
Civil & structural cost
Main plant & Equipment
Imported
Indigenous
Other Equipments/Utilities
Miscellaneous Fixed Assets
Pre Operative & Preliminary Expense
Contingency @ 10 %
Total Capital Cost of Project
Margin money for working capital
85
15
350
0
35
100
85
50
450
267
286
540
15
40
160
1758
100
1029
253
825
15
85
234
2576
180
1296
539
1365
30
125
394
4334
280
Total Cost of Project
1858
2756
4614
Means of Finance
Considering Debt Equity Ratio of 2.30:1, the means of finance for the project has been
proposed as shown in the table below:
Table 8.8: Means of finance

(Rs. In lakh)
Sr. No.
1
2
3
4
5
Particulars
Promoters' Contribution
-Share Capital
-Pref. Share Capital
-Reserves & Surplus
-Internal Cash Accruals
Subsidy
Term Loans
-FCL
-T/L
-Rupee Loan
-NCD
Unpaid Suppliers
Unsecured Loans/Deposits
TOTAL
Phase 1
Phase 2
Total
200
0
0
400
0
300
0
0
500
0
500
0
0
900
0
0
0
1200
0
0
58
1858
0
0
1800
0
0
156
2756
0
0
3000
0
0
214
4614
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8.3
Assumptions
The important basis & assumptions, which are considered for the analysis, are enlisted
below:
8.3.1
Operating Days & Shifts
No. of Working Days
300 Days
Shift of Operation
Three Shifts
8.3.2
Installed Capacity & Utilisation
Installed Capacity
Phase 1
HDF Flooring Line
1,374,255 Sq. Mts.
100 m3/day
Phase 2
Installed capacity of raw board
MDF Board Production
60 % of the installed capacity = 60 m3 / day
HDF Board Production
40 % of the installed capacity = 40 m3 / day
MDF Board will further prelam in impregnation line and short cycle press while HDF board
will be sent to flooring line for manufacturing laminated flooring. The capacity of the
flooring line is the same as in phase 1 and total production will be converted into laminate
flooring.
Capacity Utilisation Levels
Table 8.9: Capacity Utilisation in phase 1

Year
2007-08
2008-09
Capacity Utilization
50%
60%
Table 8.10: Capacity Utilisation in phase 2

Year
Capacity Utilization
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
30%
50%
60%
60%
60%
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The HDF laminated flooring production will be started in October 2007 with imported HDF
board and, Fibre Board manufacturing and prelam plant will commence operation from
October 2008.
8.3.3
Selling Price
RDPL will sell only final products in market i.e. Prelam MDF Board and Laminated HDF
Flooring.
At per existing market conditions, the selling price of the Laminated HDF Flooring is
estimated at Rs. 380 Rs./ m2, which is lower than the imported European laminated
flooring. It is also competitive vis--vis the imports from China.
In prelam MDF board manufacturing, RDPL will focus on the board with the thickness of 12
mm, 16 mm and 18 mm which are preferred specifications in the prelam board market.
The estimated prices for these boards are mention below:
8.3.4
12 mm
322.80 Rs. / m2 (30 Rs. / ft2)
16 mm
365.84 Rs. / m2 (34 Rs. / ft2)
18 mm
408.88 Rs. / m2 (38 Rs. / ft2)
Exchange Rates
1 US $
Rs. 46
1 GBP
Rs. 88
1 Euro
Rs. 60
8.3.5
Operating Norms
Operating Norms outlined below have been arrived at after analysis of guaranteed norms
provided by client and actual norms collected from similar product producers:
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Table 8.11: Operating norms for Fibre Board manufacturing

Particulars
Cotton stalks/Bagasse
Urea Formaldehyde
Ammonium Chloride
Chemical Buffer
Paraffin Wax
Electricity
Water
Thermal Energy-steam
Quantity
2 ton
0.11 ton
0.003 ton
0.003 ton
0.01 ton
400 unit
1 m3
1500000 kcal
Unit cost
2000 Rs.
30000 Rs.
15000 Rs.
55000 Rs.
60000 Rs.
5 Rs.
90 Rs.
0.00057 Rs.
Table 8.12: Operating norms for Prelam MDF Board manufacturing

Particular
Base paper
Melamine
Formaldehyde
resin
Balancing paper
Packing
Plate
refurbishing
costTexture
Plate refurbishing cost-Matt
Tools & Moulds expense
Thermal Energy
Power Cost-150 units/hr
Direct Labour Cost
Total
GSM
80
350
Cost per
m2
28
Kgs
GSM
GSM
0.5
80
50
65
100
30
32.5
8
6
50000
100000
360000
264000
2.4
0.88
8
2.27
5.00
2.00
95.05
Unit
Cycles
Cycles
Rs.
kcal
units
Rs.
Number
Price
2
5
1
20 labour
Table 8.13: Operating Norms for Laminated HDF Flooring Manufacturing

Particulars
High abrasive tissue
Base paper
Balancing paper
Melamine Formaldehyde resin
Packing
Plate refurbishing costTexture
Plate refurbishing cost-Matt
Tools & Moulds expense
thermal energy
Power cost-240 units/hr
Direct Labour cost
Total
UNIT
GSM
GSM
GSM
Kgs
GSM
Cycles
Cycles
Rs.
kcal
units
Rs.
Number
Price
Cost per m2
48
80
80
0.5
50
385
350
100
65
30
18.48
28
8
32.5
6
15000
100000
360000
264000
30
2
5
8
0.88
8
4.49
5.9
5
125.25
1.18
75
95
Mott MacDonald
Selling Expenses
Administrative Expenses :
10% of total sales
RDPL has well established administrative system therefore administrative expenses are
considered 2.5 Rs. Lakh. The increment of 5 % in each following years is considered.
Repairs & Maintenance
8.3.6
1.5% of total Plant and Machinery cost and other assets
Financing Terms Repayment & Interest
Project will be implemented in two phases and according to implementation, RDPL will
require the long-term loan.
Interest on Long Term Loan
Repayment of Long Term Loan
11 % per annum.
Table 8.14: Repayment of Long Term Loan

(Rs. In Lakhs)
Year
Repayment
2007
08
2008
09
2009
10
2010
11
2011
12
2012
13
2013
14
2014
15
2015 16
120
420
600
600
600
480
180
Interest on Working Capital (WC) Loan
9 % p.a.
Interest on Unsecured Loan
11 % p.a.
8.3.7

Depreciation Rates
Land and Site Development

Building and Civil Works
Main Plant and Equipment
Furniture & Fixture
Misc. Fixed Assets
8.3.8
:
:
:
:
:
SLM
WDV
0%
3.34%
10.34%
6.33%
4.75%
0%
10%
15.00%
18.10%
15.00%
Income Tax Rates
The rate of tax has been computed on following basis:

Corporate Tax
33.66%
MAT
11.22%
96
Mott MacDonald
8.4
Cash flows& Profitability Statement

The profitability statement of project is mention below:
Table 8.15: Profitability Statement
Particular
Revenue
Prelam - MDF
Laminated Flooring - HDF
Total Revenue
2007-08
2008-09
2009-10
2010-11
Year of Operation
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
1306
1306
644
2429
3073
2145
2875
5020
2574
3450
6024
2574
3450
6024
2574
3450
6024
2574
3450
6024
2574
3450
6024
2574
3450
6024
2574
3450
6024
Mfg Cost
MDF board mfg cost
HDF board mfg cost
Prelam Cost
Flooring Cost
Total Mfg Cost
0
0
0
876
876.22
237.65
153.40
169.31
1335.72
1896.08
792.16
511.34
564.36
947.52
2815.38
950.59
613.61
677.23
1137.02
3378.45
950.59
613.61
677.23
1137.02
3378.45
950.59
613.61
677.23
1137.02
3378.45
950.59
613.61
677.23
1137.02
3378.45
950.59
613.61
677.23
1137.02
3378.45
950.59
613.61
677.23
1137.02
3378.45
950.59
613.61
677.23
1137.02
3378.45
Fixed Cost
Sales Expenses
Administrative Expenses
Repairs & Maintenance
Total Fixed Cost
130.55
15.00
11.05
156.60
307.26
31.50
27.97
366.74
502.00
33.08
55.95
591.02
602.40
34.73
55.95
693.07
602.40
36.47
55.95
694.81
602.40
38.29
55.95
696.63
602.40
40.20
55.95
698.55
602.40
42.21
55.95
700.56
602.40
44.32
55.95
702.67
602.40
46.54
55.95
704.89
70.75
268.15
358.71
358.71
358.71
358.71
358.71
358.71
358.71
358.71
201.96
541.67
1254.87
1593.73
1592.00
1590.17
1588.26
1586.25
1584.14
1581.92
Depreciation
EBIT
97
Mott MacDonald
Particular
Financial Charges
Working Capital Charges
Interest on Term Loan
Interest on Unsecured Loan
Total Financial Charges
PBT
Tax
PAT
2007-08
2008-09
2009-10
2010-11
Year of Operation
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
27.75
66.00
3.18
96.93
105.42
229.35
14.95
349.72
93.99
304.43
23.53
421.94
112.79
245.85
23.53
382.17
112.79
179.85
23.53
316.17
112.79
113.85
23.53
250.17
112.79
49.50
23.53
185.82
112.79
7.43
23.53
143.74
112.79
0.00
23.53
136.32
112.79
0.00
23.53
136.32
105.03
20.88
84.16
191.95
31.97
159.99
832.92
204.94
627.99
1211.57
361.53
850.04
1275.83
407.95
867.88
1340.01
450.65
889.36
1402.44
489.61
912.83
1442.51
518.37
924.13
1447.82
533.17
914.66
1445.61
543.49
902.12
98
Mott MacDonald
The cash flow statement of project is mention below:

Table 8.16: Cash flow Statement
(Rs. In Lakh)
Sr. No.
2
3
4
5
6
1
2
3
4
5
6
7
8
9
Particulars
Sources of Funds :
Promoter's Contribution
share Capital
Internal Cash Accrual
Deposits
Increase in Long Term Loan
Increase in Working Capital Borrowing
Depreciation
Net Profit Before Tax & Interest
(EBIT)
Sub- Total (A)
Disposition of Funds :
Capital Expenditure
Increase in Current Assets
TL interest
Repayment of Long Term Loan
Interest on Deposits
Repayment of Deposits
Working Capital charges
Income-Tax
Dividend
Sub-Total (B)
A-B
Year of Operation
2011-12 2012-13
2007-08
2008-09
2009-10
2010-11
200
400
57.855
1200
308.29
70.75
300
500
156.068
1800
863.04
268.15
-127.01
358.71
208.86
358.71
0.00
358.71
201.96
2439
541.67
4429
1254.87
1487
1593.73
2161
1758
423.44
66.00
0.00
3.18
0.00
27.75
20.88
2576.068
1155.07
229.35
120.00
14.95
0.00
105.42
31.97
-182.96
304.43
420.00
23.53
0.00
93.99
204.94
2299
140
4233
196
864
623
99
2013-14
2014-15
2015-16
2016-17
0.00
358.71
0.00
358.71
0.00
358.71
0.00
358.71
0.00
358.71
1592.00
1951
1590.17
1949
1588.26
1947
1586.25
1945
1584.14
1943
1581.92
1941
279.11
245.85
600.00
23.53
0.00
112.79
361.53
0.00
179.85
600.00
23.53
0.00
112.79
407.95
0.00
113.85
600.00
23.53
0.00
112.79
450.65
0.00
49.50
480.00
23.53
0.00
112.79
489.61
0.00
7.43
180.00
23.53
0.00
112.79
518.37
0.00
0.00
0.00
23.53
0.00
112.79
533.17
0.00
0.00
0.00
23.53
0.00
112.79
543.49
1623
539
1324
627
1301
648
1155
792
842
1103
669
1273
680
1261
Mott MacDonald
Opening Cash Balance

Closing Cash Balance
0
140
140
336
336
959
959
1497
1497
2124
2124
2772
2772
3563
3563
4666
The calculation of component of the profitability statement and cash flow statement is mention in annexure in the report.
100
4666
5939
5939
7200
Mott MacDonald
8.5
Financial Indicators- NPV, IRR, DSCR, Pay back

Table 8.17: Financial Indicators
Item Description
Value
UOM
NPV
1,822 In Rupees Lakhs
IRR
17 %
DSCR
2.61 Average Value
PBP
5.98 Years
RoI
8.6
12 to 32 % range (for 10 years)

Sensitivity Analysis
Table 8.18: Sensitivity Analysis
Particulars
IRR
DSCR
PBP
NPV
Base case
17 %
2.61
5.98 Years
Rs. 1,822 Lakh
Raw material price increase by 10 %
15%
2.48
6.15 Years
Rs. 1,572 Lakh
Raw material price decrease by 10%
18%
2.73
5.82 Years
Rs. 2,067 Lakh
Selling price increase by 5 %
21%
2.96
5.46 Years
Rs. 2,787 Lakh
Selling price decrease by 5%
12%
2.24
6.67 Years
Rs. 848 Lakh
101
Mott MacDonald
Conclusion and Recommendations
Looking at the business landscape in totality, there exists a good potential for MDF
manufacturing unit to be set up in India. Synergies can be exploited in the case of RDPL who
is already into the production of related products and their marketing. The existence of
marketing channel in India and abroad adds to the overall attractiveness of the project (Read
section on growth drivers for more details).
The financial projections under normal circumstances suggest a positive net present value and
an internal rate of return of 17%, which is significantly above the cost of capital. Under the
proposed debt equity ratio, comfortable debt service coverage can be achieved; posing no
problems to the liquidity (average DSCR is 2.61). In case of pressures on the sales price, the
IRR may fall in a non-linear fashion. For example, 5% decrease in sales price, the IRR will fall
to 12%. However such a scenario is less likely, looking at the market growth rate for MDF
owing to the increased awareness of customers, the boom in construction and under capacity
within India.
Overall, the above project appears to be feasible on economic, technical and market criteria.
Hence it is worth pursuing the above project to tap the increasing market opportunities;
thereby enabling the firm to grow both in terms of size, product range and profitability.
Ensuring an efficient supply chain in terms of raw material procurement, imports and exports
will definitely help the firm to boost the bottom line. Tighter integration on the supply side
for cotton stalks and alternatively for bagasse can deftly handle the uncertainties related to
raw material availability.
102
Mott MacDonald
Appendix A:
Fixed Cost Allocation of Contingency and POP expenses

(Rs. In Lakh)
Cost with
Sr.
No.
Particulars
Phase
Cost with
Contingency
Phase
Cost with
operative
Contingency
allocation
1
2
3
4
5
6
7
8
Land
Land Development
Imported
Indigenous
Misc Fixed Assets
Pre operative Expense
Contingency @ 10 %
Total Capital Cost of Project
Cost with
Cost with
pre-
preoperative
Total
Cost with
Contingency
allocation
preoperative
allocation
85
15
350
94
17
385
96
17
395
0
35
100
0
39
110
0
40
114
85
50
450
85
50
450
88
52
465
267
286
540
15
40
160
1758
294
315
594
17
44
301
323
609
17
1132
278
908
17
94
1174
288
942
17
1296
539
1365
30
125
1296
539
1365
30
125
1338
556
1410
31
1758
1758
1029
253
825
15
85
234
2576
2576
2576
3940
3940
3940
103
Mott MacDonald
Appendix B:
Working Capital Statement
(Rs. In Lakh)
Sr. No.
Particular
1
2
3
4
5
A
Raw material
Consumables
WIP
Finished Goods
Debtors
Total Current Assets
Current Liabilities
Sundry Creditors
Total Current Liabilities
Net Working Capital
Bank Finance
Margin Money
WC Loan interest @ rate 9 %
6
B
C
D
E
2007-08
111.48
149.42
36.51
108.80
54.40
460.60
2008-09
269.04
314.62
158.01
768.16
118.91
1628.73
2009-10
225.44
225.53
117.31
627.50
209.17
1404.94
2010-11
270.53
270.64
140.77
753.00
251.00
1685.93
Year of Operation
2011-12 2012-13
270.53
270.53
270.64
270.64
140.77
140.77
753.00
753.00
251.00
251.00
1685.93 1685.93
2013-14
270.53
270.64
140.77
753.00
251.00
1685.93
2014-15
270.53
270.64
140.77
753.00
251.00
1685.93
2015-16
270.53
270.64
140.77
753.00
251.00
1685.93
2016-17
270.53
270.64
140.77
753.00
251.00
1685.93
37.16
37.16
423.44
308.29
115.15
27.75
50.23
50.23
1578.51
1171.32
407.18
105.42
9.39
9.39
1395.55
1044.31
351.24
93.99
11.27
11.27
1674.66
1253.18
421.48
112.79
11.27
11.27
1674.66
1253.18
421.48
112.79
11.27
11.27
1674.66
1253.18
421.48
112.79
11.27
11.27
1674.66
1253.18
421.48
112.79
11.27
11.27
1674.66
1253.18
421.48
112.79
11.27
11.27
1674.66
1253.18
421.48
112.79
104
11.27
11.27
1674.66
1253.18
421.48
112.79
Mott MacDonald
Appendix C:
Term Loan - Repayment & Interest

Phase 1
1200
Term Loan Amount

Interest rate
Year
2007 - 08
2008 - 09
2009 - 10
2010 - 11
2011 - 12
2012 - 13
2013 - 14
2014 - 15
Phase 2
1800
11.00%
Quarter
Repayment
(Rs in Lakh)
Outstanding Loan
Start of quarter
End of quarter
Quarterly
Interest
0.0
0.0
0.00
II
0.0
0.0
0.00
III
0.0
1200
1200.0
33.00
IV
0.0
1200
1200.0
33.00
0.0
1200
1200.0
33.00
II
0.0
1200
1200.0
33.00
III
60.0
3000
2940.0
82.50
IV
60.0
2940
2880.0
80.85
60.0
2880
2820.0
79.20
II
60.0
2820
2760.0
77.55
III
150.0
2760
2610.0
75.90
IV
150.0
2610
2460.0
71.78
150.0
2460
2310.0
67.65
II
150.0
2310
2160.0
63.53
III
150.0
2160
2010.0
59.40
IV
150.0
2010
1860.0
55.28
150.0
1860
1710.0
51.15
II
150.0
1710
1560.0
47.03
III
150.0
1560
1410.0
42.90
IV
150.0
1410
1260.0
38.78
150.0
1260
1110.0
34.65
II
150.0
1110
960.0
30.53
III
150.0
960
810.0
26.40
IV
150.0
810
660.0
22.28
150.0
660
510.0
18.15
II
150.0
510
360.0
14.03
III
90.0
360
270.0
9.90
IV
90.0
270
180.0
7.43
90.0
180
90.0
4.95
II
90.0
90
0.0
2.48
III
0.0
0.0
0.00
IV
0.0
0.0
0.00
105
Yearly
Interest
Yearly Repayment
66.00
0.00
229.35
120.00
304.43
420.00
245.85
600.00
179.85
600.00
113.85
600.00
49.50
480.00
7.43
180.00
Mott MacDonald
Appendix D:
Unsecured Loan - Interest

phase 1
Unsecured Loan Amount

Interest rate
Year
2007 - 08
2008 - 09
2009 - 10
2010 - 11
2011 - 12
2012 - 13
2013 - 14
2014 - 15
2015 - 16
2016 - 17
Phase 2
58
156
11.00%
Quarter
Repayment
I
II
III
IV
I
II
III
IV
I
II
III
IV
I
II
III
IV
I
II
III
IV
I
II
III
IV
I
II
III
IV
I
II
III
IV
I
II
III
IV
I
II
III
IV
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
(Rs in Lakh)
Outstanding Loan
Start of quarter
0.0
0.0
57.9
57.9
57.9
57.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
Quarterly
Yearly
Yearly
End of quarter
Interest
Interest
Repayment
0.0
0.0
57.9
57.9
57.9
57.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
213.9
0.0
0.0
1.6
1.6
1.6
1.6
5.9
5.9
5.9
5.9
5.9
5.9
5.9
5.9
5.9
5.9
5.9
5.9
5.9
5.9
5.9
5.9
5.9
5.9
5.9
5.9
5.9
5.9
5.9
5.9
5.9
5.9
5.9
5.9
5.9
5.9
5.9
5.9
5.9
5.9
3.2
0.0
14.9
0.0
23.5
0.0
23.5
0.0
23.5
0.0
23.5
0.0
23.5
0.0
23.5
0.0
23.5
0.0
23.5
0.0
106
Mott MacDonald
Appendix E:
SLM Depreciation
(Rs. In Lakh)
Sr. No.
1
2
3
4
5
6
Particulars
Land & land Development
Imported
Indigenous
Miscellaneous Fixed Assets
Total
2007-08
0
6.59
2008-09
0
15.10
2009-10
0
17.07
2010-11
0
17.07
15.56
16.68
31.51
0.40
70.75
91.85
48.28
111.72
1.21
268.15
152.21
63.28
160.40
1.62
394.58
152.21
63.28
160.40
1.62
394.58
107
Year of Operation
2011-12 2012-13
0
0
17.07
17.07
152.21
63.28
160.40
1.62
394.58
152.21
63.28
160.40
1.62
394.58
2013-14
0
17.07
2014-15
0
17.07
2015-16
0
17.07
2016-17
0
17.07
152.21
63.28
160.40
1.62
394.58
152.21
63.28
160.40
1.62
394.58
152.21
63.28
160.40
1.62
394.58
152.21
63.28
160.40
1.62
394.58
Mott MacDonald
Appendix F:
WDV Depreciation
(Rs. In Lakh)
Sr.
No.
1
2
3
4
5
6
Particulars
Land & land Development
Imported
Indigenous
Miscellaneous fixed Assets
Total
2007-08
0
19.74
2008-09
0
23.48
2009-10
0
21.13
2010-11
0
19.02
22.58
24.20
45.71
1.53
113.77
126.47
62.77
148.36
4.06
365.14
220.31
113.00
263.84
7.11
625.38
187.27
96.05
224.26
5.82
532.41
108
Year of Operation
2011-12
2012-13
0
0
17.11
15.40
159.18
81.64
190.62
4.77
453.32
135.30
69.39
162.03
3.90
386.03
2013-14
0
13.86
2014-15
0
12.48
2015-16
0
11.23
2016-17
0
10.11
115.01
58.98
137.72
3.20
328.77
97.75
50.14
117.07
2.62
280.05
83.09
42.62
99.51
2.14
238.59
70.63
36.22
84.58
1.76
203.29
Mott MacDonald
Appendix G:
Tax Statement
(Rs. In Lakh)
Sr.
No.
1
2
3
4
5
6
7
8
9
Particulars
Profit Before Tax
Add : SLM Depreciation
Less : WDV Depreciation
Income / Loss
Unabsorbed Depreciation / Losses
Net Taxable Income
Income Tax
MAT
Final Tax
2007-08
105.03
70.75
113.77
62.02
0.00
62.02
20.88
11.78
20.88
2008-09
191.95
268.15
365.14
94.97
0.00
94.97
31.97
21.54
31.97
2009-10
832.92
358.71
582.79
608.84
0.00
608.84
204.94
93.45
204.94
109
2010-11
1211.57
358.71
496.22
1074.06
0
1074.06
361.53
135.94
361.53
Year of Operation
2011-12 2012-13
1275.83 1340.01
358.71
358.71
422.57
359.90
1211.97 1338.81
0
0
1211.97 1338.81
407.95
450.65
143.15
150.35
407.95
450.65
2013-14
1402.44
358.71
306.57
1454.58
0
1454.58
489.61
157.35
489.61
2014-15
1442.51
358.71
261.19
1540.03
0
1540.03
518.37
161.85
518.37
2015-16
1447.82
358.71
222.56
1583.97
0
1583.97
533.17
162.45
533.17
2016-17
1445.61
358.71
189.67
1614.64
0
1614.64
543.49
162.20
543.49
Mott MacDonald
Appendix H:
Debt Service Coverage Ratio

(Rs. In Lakh)
Sr. No.
Particulars
1
2
3
4
5
6
7
8
Revenue
Profit Before Tax
Profit After Tax
LT Interest
Interest on Deposits
Depreciation
LT Loan Repayment
Deposit Repayment
Return on Investment (%)
Debt-Service Coverage Ratio
- Debt Service
- Coverage
DSCR
Average DSCR
2007-08
1305.54
105.03
84.16
66.00
3.18
70.75
0.00
0
12%
2008-09
3072.64
191.95
159.99
229.35
14.95
268.15
120.00
0
15%
2009-10
5019.975
832.92
627.99
304.43
23.53
358.71
420.00
0
28%
2010-11
6023.97
1211.57
850.04
245.85
23.53
358.71
600.00
0
32%
69.18
224.09
3.24
364.30
672.44
1.85
747.96
1314.65
1.76
869.38
1478.13
1.70
110
Year of Operation
2011-12 2012-13
6023.97 6023.97
1275.83 1340.01
867.88
889.36
179.85
113.85
23.53
23.53
358.71
358.71
600.00
600.00
0
0
31%
30%
803.38
737.38
1429.97 1385.45
1.78
1.88
2.61
2013-14
6023.97
1402.44
912.83
49.50
23.53
358.71
480.00
0
29%
2014-15
6023.97
1442.51
924.13
7.43
23.53
358.71
180.00
0
28%
2015-16
6023.97
1447.82
914.66
0.00
23.53
358.71
0.00
0
28%
2016-17
6023.97
1445.61
902.12
0.00
23.53
358.71
0.00
0
28%
553.03
1344.57
2.43
210.96
1313.80
6.23
23.53
1296.90
55.11
23.53
1284.36
54.58
Mott MacDonald
Appendix I: Pay Back Period & Internal Rate of Return

(Rs. In Lakh)
Particulars
Cash Outflow
Cash Inflow
Net Cash flow
Cumulative Cash flow
Payback Period
Internal Rate of Return
Discount Factor@8%
DCF
NPV
2007-08
1857.86
224.09
-1633.76
-1633.76
5.98
17%
2008-09
4613.92
672.44
-3941.49
-5575.25
Years
0.93
-1513
1,822
0.86
-3379
Lakh
2009-10
Year of Operation
2010-11 2011-12 2012-13
2013-14
2014-15
2015-16
2016-17
1314.65
1314.65
-4260.60
1478.13
1478.13
-2782.47
1429.97
1429.97
-1352.50
1385.45
1385.45
32.95
1344.57
1344.57
1377.53
1313.80
1313.80
2691.32
1296.90
1296.90
3988.22
1284.36
1284.36
5272.58
0.79
1044
0.74
1086
0.68
973
0.63
873
0.58
785
0.54
710
0.50
649
0.46
595
111
Mott MacDonald
Appendix J:
Availability of Bagasse
Sr.
No.
Name Of Sugar Factory
Sugarcane
crushed per day
Sugarcane
crushed per year
Bagasse available
per year for sale
Shree Khedut Sahakari Kahnd

Udyog Mandli Ltd. Pandvai
3500 ton
4-5 lakh ton
25,000 ton
3200 ton
5 lakh ton
25,000 ton
2500 ton
4 lakh ton
50,000
2500 ton
2 to 2.5 lakh ton
5000 ton
9 to 10 Lakh ton
15-17,000 ton
5000 to 6000 ton
10 lakh ton
20 to 25000 ton
10,000 ton
18 lakh ton
65,000 to 70,000
ton
7000 ton
10 lakh ton
50,000-60,000 ton
2500 ton
3.5 lakh ton
10,000 ton
3500 ton
5.5 to 6 lakh ton
10,000 ton
6000 ton
10 lakh ton
45,000 ton
3500 ton
5.5 lakh ton
12,000 ton
5000 ton
6 lakh ton
30,000-40,000 ton
2500-3000 ton
5 to 5.5 lakh ton
15- 17,000 ton
2500-3000 ton
3.5 lakh ton
15000 ton
66,200 ton
104.5 lakh ton
4,21,000 ton
10
11
12
13
14
15
Shree Ganesh Khand Udyog

Sahakari Mandli Ltd
Ganesh Gram, Vataria
Vadodara Dist. Co-Operative
Sugarcane Group Union Ltd.
Gandhar,Karjan
Sardar Co-Operative Sugar
Factory, Ladhod
Shree Sayan Vibhag Sahakari
Khand Udyog Mandli Ltd,
Sayan, Olpad
Shree Chalthan Vibhag Khand
Udyog Shahakri Mandli Ltd,
Chalthan.
Shree Khedut Sahakari Khand
Udyog Mandli Ltd.
Bardoli.
Madhi Sugar
Factory,Bhajipura, Madhi
Shree Ukai Pradesh Sahakari
Khand Udyog Mandli Ltd,
Khusal Pura, Vyara
Shree Mahuva Pradesh
Sahakari Khand Udyog Mandli
Ltd. Bamania, Mahuva
Ltd, Gandevi, Bilimora
Shree Narmada Khand Udyog
Sahakari Mandli Ltd,
Dharikheda, Rajpipla
Shree Valsad Sahakari Khand
Udyog Mandli Ltd, ParneraPardi,Valsad
Shree Kamrej Vibhag
Ltd,Navi Prardi, Kamrej
Shree Maroli Vibhag Khand
Udyog Sahakari Mandli, Ltd,
Maroli,Navsari
Total
113
Mott MacDonald
114

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Techno-Economic Feasibility report of

Medium Density Fibre Board

Rushil Dcor Pvt Ltd.

P:\Ahmedabad\AMC\USERS\PROJECTS\230431-Rushil -MDF -Feasibility\report\Final Report - Amended 26th Nov 2007.doc/

Techno-Economic Feasibility report of

Medium Density Fibre Board

Rushil Dcor Pvt Ltd.

P:\Ahmedabad\AMC\USERS\PROJECTS\230431-Rushil -MDF -Feasibility\report\Final Report - Amended 26th Nov 2007.doc/

Techno-Economic Feasibility report of

Medium Density Fibre Board

Rushil Dcor Pvt Ltd.

P:\Ahmedabad\AMC\USERS\PROJECTS\230431-Rushil -MDF -Feasibility\report\Final Report - Amended 26th Nov 2007.doc/

Techno-Economic Feasibility report of

Medium Density Fibre Board

Rushil Dcor Pvt Ltd.

Background of the Firm

About the Promoters & Management

The Scope of Work

Approach and Methodology

Medium Density Fibreboard

Prelam MDF Board

Global Scenario for MDF

Laminate Flooring Market

Indian Scenario on Furniture

Other Relevant Issues

Raw Material Assessment

Raw material Types

Bagasse as Alternate Raw Material

Manufacturing Process of Prelam Boards:

P:\Ahmedabad\AMC\USERS\PROJECTS\230431-Rushil -MDF -Feasibility\report\Final Report - Amended 26th Nov 2007.doc/

Techno-Economic Feasibility report of

Medium Density Fibre Board

Rushil Dcor Pvt Ltd.

Manufacturing process of Laminated Flooring

Strategic Analysis of the Firm

Five-Force Model Analysis

Present Marketing Set Up

Formulation of Marketing Strategy

Financial Modelling & Analysis

Estimation of Capital Cost

Cash flows& Profitability Statement

Financial Indicators- NPV, IRR, DSCR, Pay back

Conclusion and Recommendations

Fixed Cost Allocation of Contingency and POP expenses

Working Capital Statement

Term Loan - Repayment & Interest

Unsecured Loan - Interest

Appendix G: Tax Statement

Appendix H: Debt Service Coverage Ratio

Pay Back Period & Internal Rate of Return

P:\Ahmedabad\AMC\USERS\PROJECTS\230431-Rushil -MDF -Feasibility\report\Final Report - Amended 26th Nov 2007.doc/

Techno-Economic Feasibility report of

Medium Density Fibre Board

Rushil Dcor Pvt Ltd.

1.1: Approach and Methodology

P:\Ahmedabad\AMC\USERS\PROJECTS\230431-Rushil -MDF -Feasibility\report\Final Report - Amended 26th Nov 2007.doc/

Techno-Economic Feasibility report of

Medium Density Fibre Board

Rushil Dcor Pvt Ltd.

2.1: Classification of Board based on Density

P:\Ahmedabad\AMC\USERS\PROJECTS\230431-Rushil -MDF -Feasibility\report\Final Report - Amended 26th Nov 2007.doc/

Techno-Economic Feasibility report of

Medium Density Fibre Board

Rushil Dcor Pvt Ltd.