Financial Model for Small Scale Lithium Battery Recycling Setup

Financial Model for Small-Scale Lithium Battery Recycling Setup

1. Key Assumptions

• Processing Capacity: 500 kg/day.

• Operating Days: 250 days/year.

• Material Recovery Rate: 50%.

• Recovered Materials: Lithium, cobalt, nickel (blended price: ₹1,500/kg).

• Recycling Fees: ₹30/kg.

• Initial Investment: ₹110 lakh.

• Operational Costs: ₹43 lakh/year.

• Revenue Streams:

• Material sales: ₹9.375 crore/year.

• Recycling fees: ₹37.5 lakh/year.

• Total Annual Revenue: ₹9.75 crore.

2. Cash Flow Projections (Year 1–Year 3)

3. Break-Even Analysis

• Fixed Costs: Initial investment of ₹110 lakh.

• Variable Costs: Operational costs of ₹43 lakh/year.

• Contribution Margin: Revenue per kg = ₹1,950 (₹1,500 from material sales + ₹450 from recycling fees).

• Break-Even Point (in kg): [ \text{Break-Even Point} = \frac{\text{Fixed Costs}}{\text{Contribution Margin per kg}} = \frac{1,10,00,000}{1,950} = 5,641 \text{ kg} ]

• Break-Even Point (in days): [ \text{Break-Even Point} = \frac{5,641 \text{ kg}}{500 \text{ kg/day}} = 11.3 \text{ days} ]

• Break-Even Point (in months): Approximately 1 month (assuming 25 operating days/month).

4. ROI Calculation

• Total Investment: ₹110 lakh.

• Net Profit (Year 1): ₹8.22 crore.

• Net Profit (Year 2): ₹9.32 crore.

• Net Profit (Year 3): ₹9.32 crore.

• Total Profit (3 Years): ₹26.86 crore.

• ROI: [ \text{ROI} = \frac{\text{Total Profit}}{\text{Total Investment}} \times 100 = \frac{26,86,00,000}{1,10,00,000} \times 100 = 2,440% ]

• Annualized ROI: [ \text{Annualized ROI} = \frac{2,440%}{3} = 813% ]

5. Sensitivity Analysis

• Scenario 1: Lower Recovery Rate (40%):

• Revenue from material sales: ₹7.5 crore/year.

• Total annual revenue: ₹7.875 crore.

• Net profit (Year 1): ₹7.445 crore.

• Break-even point: 14 days.

• Scenario 2: Higher Operational Costs (₹50 lakh/year):

• Net profit (Year 1): ₹9.25 crore.

• Break-even point: 12 days.

• Scenario 3: Lower Recycling Fees (₹20/kg):

• Revenue from recycling fees: ₹25 lakh/year.

• Total annual revenue: ₹9.625 crore.

• Net profit (Year 1): ₹9.195 crore.

• Break-even point: 11.5 days.