Cost Structure
Power and salt are
the major cost drivers in the manufacturing of soda ash.
Power accounts for
around 30% of the total cost of manufacturing. High cost of power
in India is a major deterrent in the competitiveness of domestic
soda manufacturers in spite of having world scale soda ash
capacities for manufacture of synthetic soda ash.
The power cost in
India varies anywhere between Rs3.5-4.4/ kwh for state supply and
comes to around Rs1.75/ kwh for co-generation plant. Though the
variable cost of power in a captive plant is low, the setting up of
co-generation plant requires heavy capital investment at the
initial stage.
Availability of salt
at reasonable price is another critical aspect for the
competitiveness of the soda ash producers. Normally the price of
salt hovers around Rs350/ton, but the cyclones, which hit Gujarat
coast, result in prices of salt rising steeply.
An indicative cost
structure for a typical domestic soda ash company is given
below.
|
Cost
element
|
Rs/kg
|
|
Unit cost
|
9.5
|
|
Raw
material
|
1.7
|
|
Power &
fuel
|
1.7
|
|
Other manufacturing
cost
|
1.6
|
|
Employee
cost
|
0.6
|
|
Admin & selling
cost
|
1.4
|
|
Cost of
sales
|
6.9
|
|
Profit
margin
|
2.6
|
