...Diamond Chemicals: Merseyside and Rotterdam Project Investment decision analysis Group Name- fInatics Group Members- 1. Nishant Kumar (MP13037) 2. Rahul Naredi (MP13039) 3. Samardarshi Sarkar (MP13046) 4. Shadab Akhtar (MP13050) Summary About the case Diamond Chemicals is a leading producer of polypropylene, the polymer used in a variety of products (ranging from medical products to packaging film, carpet fibers, and automotive components) and is known for its strength and elasticity. Diamond Chemicals is producing polypropylene at Merseyside, England and in Rotterdam, the Netherlands. Both factories are identical in size, age, and plant design. Merseyside is a factory built in 1967. Merseyside production process is the production process that are old, the best semi-continuous, and therefore has a total workforce of more than the other plant competitors. Diamond Chemicals is under pressure from investors to improve the financial performance due to economic slowdown worldwide and also the accumulation of common stock of the company. Revenue per share has fallen to 30 Euros at the end of 2000 from around 60 Euros at the end of 1999. Original Assumptions | | | Suggested Assumptions | | Annual Output | 250000 | | Annual Output | 250000 | Output Gain/Original Output | 7% | | Output Gain/Original Output | 7% | Price/ton (Pounds Sterling) | 541 | | Price/ton (Pounds Sterling) | 541 | Inflation rate (Prices and costs) | 0% | | Inflation...
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...Diamond Chemicals PLC Executive Summary Diamond Chemicals is considering two mutually exclusive projects, the Merseyside project and the Rotterdam project, for the production of polypropylene When considering the Merseyside project, senior-management wants a positive impact on earnings per share. The addition to earnings per share was £28,800 with an average addition of £2,000 per year2. Calculated with erosion, the addition to earnings per share was £18,800 with an average addition of £1,100 per year2. The payback period for the project was 3.10 years, when considering the erosion of Rotterdam, this would increase to 3.46 years2. The net present value of Merseyside is £15.61 million and when considering erosion, the net present value is £11.37 million2. The internal rate of return is 33%, with the erosion, it is 28.2%2. Based on these four criteria, Merseyside is a valid project to consider. When considering the Rotterdam project, the effect on earnings per share was £6,000 with an average addition of £2,100 per year4. With the erosion of Merseyside, the earnings per share would be -£2,700 with an average addition of £1,200 per year4. The payback period of the Rotterdam project would be 13.68 years and with erosion, it would be 14.24 years4. The net present value is -£3.24 million and when considering erosion, it was -£6.61 million4. The internal rate of return is 8.04% and with erosion 5.91%4. The Rotterdam project does not meet the criteria due to a negative...
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...------------------------------------------------- Diamond Chemicals: The Merseyside and Rotterdam Projects Valuation and Recommendation | Table of Contents Executive Summary2 Problem Statement & Issues3 Analysis of Merseyside & Rotterdam3 The Merseyside Proposal & Analysis3 Static NPV4 Option to Switch to Japanese or German Technology4 The Rotterdam Proposal & Analysis5 Static NPV5 Option to Switch to German Technology5 Qualitative Considerations6 Recommendation7 Appendix I – Black-Scholes Model for Japanese Option8 Appendix II – Merseyside Margrabe Model for German Option8 Appendix III – Merseyside Assumptions9 Appendix IV – Merseyside Discounted Cash Flow Analysis9 Appendix V – Merseyside Depreciation Schedule10 Appendix VI – Merseyside Sensitivity Analysis11 Appendix VII – Rotterdam Margrabe Model for German Option12 Appendix VIII – Rotterdam Assumptions12 Appendix IX – Rotterdam Discounted Cash Flow Analysis13 Appendix X – Eustace’s Margin Growth Rate Error13 Appendix XI – Rotterdam Depreciation Schedule14 Appendix XII – Free Cash Flow Comparison Graph14 Executive Summary: Due to Diamond Chemical’s recent poor financial performance, it is seeking to upgrade the Merseyside plant or Rotterdam plant in order to improve performance and create value for its shareholders. The upgrade of the Merseyside plant will require a capital expenditure of £9.0 million and will increase polypropylene output by 7.0%, and increase gross margin from 11.5% to...
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...Analysis Diamond Chemicals Introduction This project belongs in the engineering-efficiency category; therefore, it has to fit at least 3 of 4 performance hurdles, which are 1. Impact on EPS; 2.Payback; 3.Discounted cash flow and 4. Internal rate of return. In this article, some of those involved explained and described their opinions; however, professional knowledge may have been lacking. Therefore, we will expound and clarify below. Management Analysis Capital Expenditure On the surface, making sure a project measures up to a range of consistent, prescribed criteria in order to be accepted would appear to be a sound business practice. But in our opinion, we think DC only focused on the financial management. We think they should utilize the strategy map strategy. A strategy map provides a uniform and consistent way to describe that strategy, so that objectives and measures can be established and managed. The strategy map provides the missing link between strategy formulation and strategy execution. (Norton and Kaplan, 2004 *1) Furthermore, DC won't only focus on the financial report; they also manage by human resource and other strategic elements. Also, any of the above financial calculations or assumption could bring the wrong settlement or the expectations will be seriously biased. Economic / Financial Analysis Transportation Costs The transportation division asked that the cost of tank cars required for additional throughput should be involved in the initial...
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...1. What changes, if any, should Lucy Morris ask Frank Greystock to make in his discounted cash flow (DCF) analysis? Why? What should Morris be prepared to say to the Transport Division, Director of Sales, her assistant plant manager and the analyst from the Treasury Staff? • In DCF analysis if Merseyside Project done by Greystock, inflation rate is assumed to be 0%, which is not the case in practice. Treasury staff showed concerns that long-term inflation should be 3%. • Since preliminary engineering costs are sunk costs, it should not be deducted as expenses. • Proposed expenditure is 9m which is not changed as to 11m. 2m expense of transport department is not included. Replies to: • Transport Division: Expense of 2m should not be added in this analysis because it should be incurred by the concerned division in line with the policy, that the expenditure of respective division’s expenditure are independent of each other as this division is not a part of the group. • Sales Department: This product is prices as commodity. There are concerns of oversupply but Greystock stated that company doesn’t have to bear the additional charges. This will steal the competitor’s share rather than the cannibalization, as it is prices as commodity. • Assistant plant manager: EPC renovation was rejected on the economic grounds but it ignores the strategic advantage after recession ends. The proposed renovation should be in the capital program of Morris for the strategic advantages. •...
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...Case 3: Diamond Chemicals Diamond Chemicals operates two large polypropylene production plants, the Merseyside Works in England, and the other in Rotterdam, Holland. Diamond Chemicals’ plant manager Lucy Morris is currently examining a (British Pounds) 9 Million project to improve the plant, which has been under scrutiny for poor financial performance. Morris has assumed the responsibility of Merseyside Works, and has decided improvements need to be made. Although there is room for substantial operational improvement, the plant would need to be shut down for about 45 days in order to upgrade. Frank Greystock, Moriss’ controller, has developed a DCF summary of the proposed project. Although the plant’s throughput would surely increase after the upgrade, various company stakeholders have examined the proposed plan to ensure it would increase Diamond Chemical’s Profit. Morris is on the “right track” to improve Diamond Chemical’s existing manufacturing plant. Although Diamond Chemicals is one of the largest, and leading firms, more needs to be done in order to maintain and exceed this competitive position. I believe Morris is examining the correct shortfalls, but more scrutiny on Greystock’s analysis should be provided before a decision is made. More “what if” assumptions need to be made. In addition to examining this project’s DCF models, Diamond Chemical needs to provide other alternatives to the project. For example, various smaller, and larger, cost-reduction projects...
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...Based on the discussion with other divisions and teams, we believe that there are several adjustments to be made. First, with regard to the Transport Division’s memorandum, we determined that the charge for the use of excess rolling stock is non-material and the higher utilization rate is actually good for overall efficiency. It is, however, proper to allocate the accelerated schedule to purchase new rolling stock attributable to this project to the capital budget. We do so in the amount of $2 million discounted to 2001 using 10%. This change makes the total cost 10.65 million. The allocation of sales force and how to reach the sales target should be the responsibility of the sales and marketing department. Their concern regarding cannibalization of sales between the company’s two plants cannot be reliably modeled with the data available. However we should make adjustment on the loss of output due to construction, including both the 45 days shut down and a period for sales to grow back to their pre-construction base. Moreover, the loss should be based on pre-project output level, not new output. Thus, we increased the loss of output to 62,500 (250000 / 360 days * 45 days *2) tons, double the original figure. The EPC project should not be considered because it is unrelated to the poly renovation plan. In particular, there are no synergies between the two proposed projects that have been identified. The discount rate should not be changed to 7%, instead, we add the 3% to inflation...
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...[pic] ✓ INTRODUCTION ✓ ALLOTROPHIC FORMS OF CARBONS ✓ APPLICATIONS Carbon from Latin: carbo "coal" is the chemical element with symbol C and atomic number 6. As a member of group 14 on the periodic table, it is nonmetallic and tetravalent—making four electrons available to form covalent chemical bonds. There are three naturally occurring isotopes, decaying with a half-life of about 5,730 years. Carbon is one of the few elements known since antiquity. There are several allotropes of carbon of which the best known are graphite, diamond, and amorphous carbon. The physical properties of carbon vary widely with the allotropic form. For example, diamond is highly transparent, while graphite is opaque and black. Diamond is among the hardest materials known, while graphite is soft enough to form a streak on paper (hence its name, from the Greek word "to write"). Diamond has a very low electrical conductivity, while graphite is a very good conductor. Under normal conditions, diamond has the highest thermal conductivity of all known materials. All carbon allotropes are solids under normal conditions with graphite being the most thermodynamically stable form. They are chemically resistant and require high temperature to react even with oxygen. The most common oxidation state of carbon in inorganic compounds is +4, while +2 is found in carbon monoxide and other transition metal carbonyl complexes...
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...JUNIOR 1 S Y 2000 - 2 0 0 1 V o l . 20 N o . 1 C O N T E N FOR LOVE OF DIAMONDS These brilliant gems are not only for fashion but find many uses in other industries as well. CHEMISTRY: BUILDING BLOCKS OF MODERN CIVILIZATION Understand the significance of chemistry throughout man’s history. NUCLEAR CHEMISTRY: TOWARDS A SAFE ENERGY SOURCE Is nuclear technology a boon or bane of science? Read on. T S ib er s, De ar BB su bs cr ng ga zin e is ma ki Ba to Ba la ni ma e ma ga zin e. to yo ur fa vo rit lled so me ch an ge s a new section ca c g the changes is Amon s wi th sc ie nt ifi .” It de al “P se ud os ci en ce pt io ns th at an d mi sc on ce ve no tio ns , my th s, e. Al so , we ha pu la r at on e tim we re po ” se ct io n to “C yb er wo rld ex pa nd ed ou r ac tiv ity se ct io n. e a we b- lin ke d in cl ud wi ll th es e ch an ge s We ho pe th at re nc e stu di es mo ur sc ie he lp ma ke yo jo y! re fu n! En re le va nt an d mo Th e Ed ito r MEDICINE’S POTENT MIXTURES AND SOLUTIONS Chemistry plays a major role in our existence through important medical applications. R E G U L A R F E AT U R E S 3 Science & Technology News 5 Filipino Scientists and Inventors BOARD OF ADVISERS Violeta Arciaga, Jaime F. Bucoy Jose C. Calderon, Victoria V. Cervantes, Juanita M. Cruz, Belen P. Dayauon Medical Facts and Fallacies 9 Livelihood Technology / I’d Like to Know 10 Cyber World CONSULTANT ...
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...founded by Mark Christopher Vadon and Ben Elowitz on March 18, 1999 | Company Type & SizeThe company sells the products on its websites. Because of its unique business model the company sells its products at much lower prices than the competitors. The company had 183 full time employees, 5 part-time employees, and 1 independent contractor. | 2. BRIEF SUMMARY OF CASE SITUATION Business or Industry DescriptionBlue Nile had grown to become the world’s largest online retailer of certified diamonds and fine jewelry. | Blue Nile’s Current SituationBlue Nile reported $302 million in 2009. In 2010 Blue Nile management was concerned about the lingering effects of poor economic condition in the United States on the diamond jewelry industry and how it should pursue expansion in international business. | 3. INDUSTRY AND COMPETITIVE ANALYSIS Industry Macro-Environmental Characteristics-According with U.S Department of commerce U.S jewelry sales totaled $58.8 billion by 2009.- Diamond jewelry sales were particularly hard hit by the recession, with industry sales declining from $32.5 billion in 2005 to an estimated $29.5 billion in 2009.- The Jewelry Board of Trade estimated that there were some 22,415 specialty jewelry firms in the U.S in 2009, down from 26,750 specialty jewelry retailers in 1999. | Strategic Group MAPBlue Nile Zale Tiffany Others C U S T O M E R S | Industry Driving Forces-Internet: With Blue Nile and online jewelers, it gives them the...
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...3.3 PRICE The use of synthetic, or lab grown diamonds, has challenged the natural diamond industry, even though production of synthetic gems is low compared to naturally-mined stones – only 1 to 2 out of every 100 carats sold is a synthetic (see table at top). Unlike other precious gems – rubies, emeralds and sapphires – where synthetics can sell at up to a 90 percent discount to naturals, high-quality synthetic diamonds can only trade at around a 2 to 20 percent discount (see table 2) Overtime, with the advancement and improvement of technology, the production of gem quality synthetic diamonds will continue to improve. Synthetic diamonds are manufactured based on demand, keeping that in mind, the relative prices will come down because...
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...Synthetic Diamonds: Better a diamond with flaws than a pebble without. Diamonds are essentially made out of carbon atoms. They are solids that can go through the process of high temperature and high pressure. (Pilgrim, 2011) It is known to man that diamonds are the hardest material on the earth. (Sean, 2008) With a melting point of 3550 ℃and a boiling point of 4827 C. As you can see above that diamonds have an extremely high melting point (m.p) and a high boiling point (b.p.) The pressure to produce diamonds are also in extreme conditions, diamonds are produced with a temperature range of 900 and 1300 degrees Celsius. Then put under pressure of 725,000 pounds per square inch. (World of Carbon, n.d.) Diamonds have these properties because they are macromolecules; (Encyclopedia of Britannica n.d.) macromolecules are atoms that join together and from on big molecule. In which they also have a strong bonds. Each Carbon atom has a valence electron of four, diamonds are made out of units of carbon atoms joined together using the strongest linkage in chemistry’s perspective, covalent bonding. The carbon is bonded with tetrahedral shape, it has a structural unit consisting of eight atoms, which is arranged in a cube. The tetrahedral shape is very strong and stable, which leads to why diamonds have such a high melting point. (Anne Marie, n.d.) They are also unable to conduct electricity this is because there is no free electrons since the valence electron is tightly bonded together...
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...analysis……………………………………………………………… page 10 Jewelry supply chain…………………………………………………………. page 16 Industry value chain, Jewelry Retail………………………………………….. page 19 Company analysis……………………………………………………………… page 24 SWOT…………………………………………………………………………… page 46 Financial ratios…………………………………………………………………… page 50 Strategies………………………………………………………………………… page 53 Preferred strategy……………………………………………………………….. page 60 EVA……………………………………………………………………………… page 62 Blue Nile balance sheet…………………………………………………………… page 63 References…………………………………………………………………………. Page 64 Executive Summary Blue Nile is a publicly traded company. The company was established in 1999 and is headquartered in Seattle, WA and is one of leading online retailers of diamonds and fine jewelry. In addition to serving the U.S. market, Blue Nile offers products to selected countries through its Canadian and UK websites. 70% of their sales are from engagement rings and wedding bands and they are known for being a high-end jewelry retailer. The company offers its products on its websites without actually holding the products. Because of its unique business model, it is able to sell its products at much lower prices than the competitors. After a thorough analysis of the trends impacting the market, and Blue Nile in particular, we have come up with a strategy that will maintain and improve the company’s position in the industry. By increasing its focus on marketing, Blue Nile should be able to gain more of...
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...well as researchers. However, views expressed do not necessarily reflect those of the Bank. While reasonable care has been taken to ensure authenticity of information and data, EXIM Bank accepts no responsibility for authenticity, accuracy or completeness of such items. © Export-Import Bank of India Published by Quest Publications February 2010 CONTENTS Page No. List of Tables List of Exhibits List of Boxes Executive Summary 1. 2. 3. 4. 5. 6. 7. 1. 2. 3. 4. 5. Introduction Raw Material Base: Global scenario International Trade in Precious Metals, Gems and Jewellery Profile of Select Countries Status of Precious Metals, Gems and Jewellery Industry in India Market Analysis Challenges and Strategies World Gold Demand Production of Diamond in the World and in India World Exports and Imports (2007) of Select Precious Metals, Gems and Jewellery India’s Major Export Destinations and Import Source Countries of Precious Metals, Gems and Jewellery (2008-09) Members of Kimberley Process 5 7 9 11 30 32 41 47 61 84 93 108 109 110 113 116 Annexure Project Team: Mr. S. Prahalathan, General Manager, Research & Planning Group Ms. Renuka Vijay, Manager, Research & Planning Group 3 List of Tables Table 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. 26. Title Consumer Demand for Gold in the World Major Producers of Gold in the World Major Producers of Silver in the World Major Producers of Gemstones in the World Major Producers...
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...1 The analysis of Graphene material Alinur Mirassov, Azat Yerkinova, Gaukhar Balbayeva Madi Aldabergenov, Takhmina Torgayeva Abstract: Recently, graphene has attracted the interest of significant number of scientists and physicians due to its exceptional properties (e.g., large surface area, thermal and chemical stability, high conductivity). This new member of the carbon family has potential to revolutionize the current applications (some of them are described in the essay) as well as creating new set of applications. In this paper, we review the background of the novel material, its comprehensive atomic structure and properties that has fascinated the scientific community since its discovery. We also cover the synthesis of the material, including different effective methods that was investigated from the year of discovery until the present day. Finally, we discuss possible challenges and future perspectives in this rapidly enhancing scientific area. Key words: Graphene; Graphene-based material; 2-dimensional (2D); monolayer; Carbon nanotubes; Dirac level; fullerene; nanostructure; graphene synthesis; graphene applications. Reference to this paper should be made as follows: Aldabergenov, M., Balbayeva, G., Mirassov, A., Yerkinova, A. & Torgayeva, T. (2013) ‘The analysis of Graphene Material’, Astana: Nazarbayev University. 1 Introduction With the time movement and generation flow, the science and engineering achievements expands and widens by...
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