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Economic Feasibility of the Conceived Project

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Professor Sanjay Mahajani introduces this course as a critical culmination of the chemical engineering curriculum, where students apply theoretical knowledge from core subjects like heat and mass transfer, reaction engineering, and process control to real-world design problems. He emphasizes that while previous courses may have covered fundamental concepts, this project serves as both a final assessment and a last opportunity for those who missed earlier details to solidify their understanding. From an industry perspective, the course mirrors actual professional practices where massive investments, often running into thousands of crores, are made based on rigorous feasibility reports rather than simple theoretical exercises. The speaker highlights that successful chemical projects involve three key entities: the manufacturer seeking production capacity, a technology licensor providing the necessary processes, and an EPC (Engineering, Procurement, and Construction) company executing the build, all interacting within a timeline typically spanning one to three years before reaching steady-state operation. The project workflow begins with ideation or concept generation, followed by essential preliminary evaluations of market demand, available technology, and environmental impact. Although students are provided with specific chemicals for their projects, they must still critically assess whether these products have viable markets in India versus global export opportunities or if surplus raw materials like benzene can be effectively utilized at various sites such as Sri Lanka or Bangladesh. A crucial lesson Mahajani imparts is that simulations and detailed calculations are merely tools to support decision-making rather than the end goal; students often mistakenly believe a project succeeds solely because their simulation numbers look good, whereas true feasibility requires balancing economic viability with environmental constraints and realistic process selection among multiple possible reaction routes. As the design progresses from preliminary estimates to detailed engineering, the focus shifts to accurate cost estimation involving equipment dimensions, instrumentation, utilities, overheads, and production costs. Mahajani clarifies that in industry, these calculations are typically performed by EPC companies or specialized teams within large manufacturers rather than a single individual, though students should understand both perspectives depending on project scale. He warns against making arbitrary assumptions without theoretical backing, such as guessing reaction kinetics or vapor-liquid equilibrium data for unknown compounds; instead, engineers must use established methods like UNIFAC or UNIQUAC to derive necessary parameters sensibly. Ultimately, the course aims to transform students into complete chemical engineers by pushing them beyond minimum requirements to explore open-ended projects with maximum depth and breadth, ensuring they are prepared for the complexities of real-world industrial applications where assumptions must be grounded in scientific understanding rather than convenience.
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We have Professor Sanjay Mahajani. Uh he's going to uh talk about very important things and some of the things uh I have not covered. He's going to talk about it. Um I'm going to invite uh Professor Sanjay Mahajani. Uh So I think the overall structure of this course, what exactly you're supposed to do and everything is very well explained by Professor Kannan. I'll just take 10-15 minutes. Uh by now you realize it's not that very easy course, right? Straightforward. Why why are you laughing? See what one project, six students, huh? So much. So and and we have so many faculty members supporting you. We're getting external experts and all. So you should do good job. So what what what was done there, right? It's the minimum that you're expecting, okay? And we're expecting you to do something more than that, then only you'll get S grade. Okay. All right. So uh So as Professor Kannan said, like uh it's a culmination course, right? That means whatever you have learned so far, you're going to actually apply. Apply not in a physical sense, but at least on a paper, okay? So whatever you have learned, okay, in your core courses like heat mass transfer, reaction engineering, process control, everything. You will be actually applying it for a particular problem, okay? A design project, right? So it's a good chance if you miss anything earlier, um probably the last chance to learn again, okay? And as Professor Kannan said, uh you may start liking chemical engineering after this, okay? Probably it's too late, but uh Still not bad, okay? So uh what I'm going to tell you, of course, the importance of this course is something that uh uh like already said that it's related to what you learn. But I'm going to tell you uh from the point of uh you of somebody working in industry, okay? Now, how this particular project will be useful there, okay? And whether we do something similar in industry, right? So, when you say about chemical projects, now we're talking about the production of a particular chemical for certain capacity, right? And uh so, there are many chemical plants, okay? And uh there are many chemicals being produced, right? And most of the times, the investments done are very, very huge, right? Not not in order of lakhs, not even few crores, right? Most of times of the order of say what? 25 crores onwards all the way up to all the way up to 10,000. 10,000 is too large for a mega project like refinery and all, but for a chemical project can be as high as 3,000, 4,000 crores, okay? So, it's a huge amount that somebody is investing. And what's the basis for that? The basis is this, right? Basis is this report, okay? So, you understand the importance of this, right? So, generally the chemical projects, they are implemented. Now, who will like to produce chemical? So, there are three entities, I keep telling this, okay? A manufacturer, right? So, a manufacturer, any example? I know what you're going to say. Somebody said it already. Producer? I want to produce a chemical. Any producer you know? Reliance, yeah. Right? A chemical producer? Say Reliance, right? A petrochemical company, right? So, would Reliance have a technology with it? It won't have, right? So, there is a technology licenser, right? So, there is this licenser. So, it's probably a repetition for some of you, but this is a class fourth year and third year combination. And it's it's repetition is all right, okay? Anyway, there are many things you're going to get repeated in the design project, okay? So, this is again a revision of what we have done. So, license the technology that you're going to use and implement it. Is that all? These two entities can implement a chemical project? You need EPC company, right? You need EPC company. So, these are the three main players. They will interact with each other and do a chemical project. So, when I say chemical project, like it is when you have some idea and you actually build a plant and start commissioning it. So, this is a period. It can be 1 year, it can be 2 years, it can be 3 years also. But beyond 3 years, not desirable, right? So, in this particular period, you do many activities, okay? It's like plane taking off, no? And then, once you go at a particular height, you achieve steady state, start manufacturing, start minting money, right? But till then, whatever you do is very, very crucial, right? And the design project or preparing the design report is is a is a very important part of it, right? So, so, it all starts with So, what are the activities in project management? Some of them we revised yesterday in the management course also. Start with ideation, right? Start with a concept that I I as a manufacturer I as a manufacturer I may think I want to produce styrene, okay? Right? I don't have styrene plant my in in my manufacturing complex. Okay? There's no styrene producer in India, right? What making styrene? The the of making money out of it. This is one idea. This is where the project starts. Okay? Right? And I means I means who? The producer. Right? Of course, there's a team, right? There's a business development team in Reliance, okay? Which may think about it, right? So, once that idea is generated, right? So, that's the first step. That's the first step. The conception. Hm? Right? And once that idea is generated, what do you need to look for? Huh? What next? Market. Very good. What next? Huh? Done? Good. There are three things that you need to do first, okay? That whether there is a market for the chemical that I'm producing or I'm I'm thinking of producing, right? And third third very important thing is the technology. And this is See, the project that you're going to do, you're going to follow these steps. Okay? Right? For you, the ideation has already been done. Right? You're already given your chemical. Okay? You're lucky. Huh? You don't need to ideate, right? But it's it's better you see whether the chemical given by us worth producing or not. Okay? Is there a market or not? Right? Is there technology good technology or not? Now, what's the meaning of good technology? Cost effective and as Professor Kandan said, and probably Yogendra will repeat or other emphasize it, that whether it's environment friendly or not, right? All these things you're going to see, right? And of course, the market. And Professor Rahul will tell you how to search for market. Like chemicals, whether we are importing it or not, okay? Or there's a surplus production happening in India. Certain chemicals are producing on a very large scale, okay? And we're exporting it, right? So, so these are three important steps. And again, part just before first stage evaluation we'll be doing all these things, right? And what comes later, no? Is a preliminary feasibility report that you prepare, okay? So, start doing some economic calculations, okay? Because you have some technology available, right? Start writing down numbers and so on. And there is something that you've done as a part of economics course, right? Calculate the production cost, revenue, right? Profit and so on. I've been working with numbers, you may get some attractive figure at the end of the day that your payback period is of the order of a few minutes, right? Possible, okay? But then you have to go back and check whether we had the calculations are correct or not. And that's why need to do detailed calculations, right? And now what follows is very important. And now you have to look at the technologies, you take a deep dive into it, right? Understand the technologies very well. Now, producing phenol, you can make it from benzene, you can make it from toluene, you can make it from chlorobenzene. There's so many possible routes, right? You have to identify particular route, right? And see whether what which one of them is good or not. And what is the consultant said? The selection, okay, the process selection, the route selection is important part. You may do some preliminary calculations for all the routes and finally say that fine, this is the best one. Okay, there's no hurry. No need to really rush and take a decision and start doing simulations. Don't do that. Be realistic. Okay? See, I've seen most of the times, no, student gives so much importance important They give so much importance to simulations that if the simulations are working well, you're getting some numbers, you think that your project is over. That That's not the case. Okay? At the end of it, what is important is that you're going to tell us the economic feasibility and now, of course, the environment feasibility, also, of the project that you're going to do. Right? So So, only simulations Simulation's only a tool. Take it. Okay? Of course, you should do it. You should master that tool. But, at the same time, make sure that that's not the end of it. Okay? Right? So, you may do some preliminary calculations. The design codes you learned already how to do linear balances, come up with the quick estimates, and so on. Right? If required, you can do it for multiple routes and select one of them. You'll appreciate that. Okay? Right? Site selection It comes much later. But, yeah, by now you know what raw materials you're using. Okay? Whether you have surplus raw material Benzene is surplus in India. Can we make something out of benzene? So, another If my raw material is benzene, can I put a plant in India? Oh, you have a choice. You can put a plant in Sri Lanka, Bangladesh. Very well. Right? So, site selection is also very crucial. You know, your economics depends on that. Right? Your market depends on that. And this is where now detailed economics comes in picture. And while doing this, your project will come handy. When I say detailed Detailed economics means what? Now, of course, economics is very easy, like Okay, just few formulae that you have to deal with. Okay? But, it's very important how we deal with them. Right? So, on one side, your project cost. On the other side, your production cost. Right? Project cost would include equipment, it would include instrumentation, it would include electrical part of it, and there are additional cost also, overheads and other things, right? So, that is project cost. Now, how will you calculate this? Now, as Professor Kannan said, there might be some data available in literature, somebody has done it in US, okay, in what, 2000, right? And the cost was so much, right? Then apply some factors and try and get this. This is one way to do it, and that's I would say a preliminary calculation. But, then if you want to get the exact estimate, you have to do a design, right? You have to actually work out the dimensions of the reactor, distillation column, pumps, compressors, everything. And then get the cost for each and every item and see whether your cost that you only earlier predicted is somehow close to what you're determining, okay, by actually doing the calculation. That's what detailed cost estimation is. And in a design project, you're supposed to do that. We'll appreciate it more as much depth you go in and as much breadth also you cover, okay, because this is this is an open-ended project. Of course, we have given you a well- structured program. You can even go faster, okay? There's no harm in it, right? You can do something more than what we have told you, right? So, as Professor Kannan said, like if you're asking you to design do a detailed design of one piece of equipment, why not all, okay? It's possible, okay? Right? So, this is what is done. And after this, your report is ready, okay? And this is where like this So, by the way, I didn't tell you the roles of this, okay? So, now, the this is this is a licensing company which will give the license to the manufacturer. By the way, manufacturer and EPC together would decide, okay, whether this license is good for for me or not, okay? So, I have to do some calculations like what you're going to do in the design project, right? And and then, if I find this promising, I'll have several meetings with licenser. If I find this promising, then I decide to go ahead, okay, and actually buy the license. Right? So, that's the procedure. So, all these calculations that you're going to do in a design project, who does those calculations? Licenser does those calculations? No, then? Who does those calculations? Huh? The The producer would do those calculations. Huh? Let's go to the owner. Who Who does those calculations? Producer? Me? I Not a single person. Come on, man. Get it right. Huh? Who going to get the calculations? Guess the right answer. Huh? You didn't get the question? Huh? Is it detailed economic feasibility report? Who does this? EPC company, you know, so straightforward. Huh? So, not necessarily the EPC company would do it, okay? At same time, if you're a manufacturer, if you are other manufacturers to actually deal with the EPC company, then on one side, manufacturer will also have a team working on it simultaneously, right? Okay? And both of them would do this exercise if the project is very large. Right? For smaller projects, and if there are limitations at the producer's side, entire contract is given to EPC to do those calculations. Try and understand design project, okay? How it is implemented, who does this in industry, right? As I said, like while doing a design project, feel like you feel like you're in the industry, okay? Because most of the courses and there's understanding of theoretical concept, but now you're applying them as if you're working in industry. Okay? Right? And after this, now you've taken a decision whether to go or no, right? Then you have to do all these things at the ground level, okay? Now, this is part of the project which is not really part of our design project. This is something when you're actually going from concept to commissioning, right? So, whatever there in the red, okay? Is is something that is supposed to do as a part of design project. So, this is the context I wanted to give it to you, okay? Now, coming back to doing this project, the most of the things I already told you, but again, I expect that not just do the things that are told you and think that you're done a great job, okay? Every project is open-ended project. There's so much depth into it. There's so much breadth, okay? So, you have to cover that and there's a lot of expectations. As I said before, you're providing all the support to you. And of course, economics and there are many There's a possibility that you may need to make many assumptions, right? And but then again, assumptions also you have to do them sensibly in the sense that you apply some understanding, theoretical concepts, right? You can't just say I don't have kinetics available. I assume volume to be 1 m³ and go ahead, okay? Can't do that, right? Okay? So, somehow you have to come up with something similar, some side some other reaction that's happening, similar catalyst or so on. It's about kinetics. Vapor liquid equilibrium is also same, a compound which is not listed in library. There ways to do that, like you can use UNIFAC, UNIQUAC, and so on, right? So, So, how to do assumptions is also very important you learn in this particular course. So, overall, I'll repeat what Professor Ganan said, "It's a very exciting course and do maximum, okay? So, that you become a complete chemical engineer. Because unless you do a design project, you're not a chemical engineer, okay? Right? Whether you want it or you don't want it. All right. So, all the fielding is set for you, okay? And you have to just do uh you have to bowl at a right spot. That's it. Thanks.