Harley Davidson Company Essay

Harley Davidson Inc is a company that has been in existence for over 100 years. The company is made up of several other subsidiary companies such as the Harley Davidson Motor Company, Harley Davidson Financial Services and Buell Motorcycle Company. These companies work together in the motorcycle industry with the motor cycle companies dealing with the production and marketing of the motorcycles while the financial services deals with providing financial services to the customers and dealers of the company. Harley Davidson Company has undergone various challenges in its internal and external environment such as the World War I and II, the Great Depression and other internal challenges such as the labor strikes and change in ownership. An analysis of the company portrays several strengths, weaknesses, opportunities and threats that the company faces. The company can use the findings of this analysis to develop a grand strategy that can help the company survive the future. The various stakeholders of the company are mostly the customers, the suppliers, dealers, employees, the shareholders and the management of the company. These are the people that are affected by the activities of the company and that also have expectations from the company. The company’s financial performance has been improving during the current financial year due to the restructuring changes that are ongoing. It has reported profits in its operations and also an increase in sales. The strategic issues that the company is facing have also challenged its performance. The shifts in the customers’ tastes and preferences for example have affected the sales of the company’s motorcycles. A grand strategy that focuses on growth through an increase in marketing and an improvement of the company’s product and manufacturing processes can help the company survive the current environment. 1.0 Introduction Companies strive to excel in all manner of situations and overcome the challenges that they face in order to succeed and become competitive. Harley Davidson Inc is once such company. It has been surviving for about 107 years since it was founded in 1903 (Harley-Davidson, n.d). The company has its headquarters in Milwaukee, Wisconsin and was founded by three brothers Arthur, Walter and William Davidson together with a partner, William Harley. The company consists of several subsidiary companies which operate in three continents. The companies include Harley-Davidson Motor Company (HDMC) which deals with the production of motor vehicles together with Buell Motorcycle Company (Buell) (Harley-Davidson, 2010). Harley-Davidson Inc also includes Harley Davidson Financial Services (HDFS) which provides financial services to the dealers and customers of HDMC’s products. It also provides insurance policies and programs to the companies and its customers. HDMC sells motorcycles, together with the accessories and spare parts which it also produces. Harley-Davidson is also involved in other activities such as racing and in the production of bicycles and motor vehicles. The company which has been in existence for years now has survived several political and economical challenges such as the World War 1, the Great Depression, the World War 2 and other company trials such as labor strikes and change in ownership. Despite the many challenges it has undergone over its existence the company has been able to survive. The company’s sales have gone off severally, its quality has also been affected but it has been able to regain both the sales and the quality of its products. It has remained tough in the manufacturing of motorcycles and this has made its brands the most sought after all over the world (Davidson, Thompson, & Barger, 2006). The company has also faced competition from other companies based in the U.S and in other countries such as Japan but it has been able to retain and maintain its market share. Further more; the founders of the company were named American heroes through their innovation with the company receiving several awards for its involvement in the two World Wars and other racing events (United States Department of Labor, n.d). This paper discusses Harley Davidson Company providing a SWOT analysis of the company, a description of its internal and external environment, a financial assessment of the organization as well as summarizing the major strategic issues that have faced the company. It also discusses the next grand strategy that the company can undertake in the future to improve its performance. 2.0 Harley Davidson 2.1 History William Harley, Arthur Davidson and Walter Davidson pooled their resources in 1903 to produce their first practical motorcycle (Harley-Davidson, n.d). The three men were assisted by William A. Davidson on a part time basis and by 1905 they had produced eight machines and they hired their first employee then. William Davidson quit his job in 1907 at the Milwaukee Road railroad and joined the Motor Company (Harley-Davidson, n.d). The Harley Davidson Company was later incorporated in September 1907 with the stock of the firm being split into 4 among the four founders.   At that time the staff of the company had more than doubled from 18 employees in 1906. The size of the company had also doubled by then and dealer recruitment had begun targeting the New England Region. In 1908, the company was able to sell its first motorcycle for police duty in Detroit Police Department and a year later they started motorcycles spare parts. In 1912, the company started building its six storey headquarters at Juneau Avenue in Milwaukee (Harley-Davidson, n.d). The building would also become its main factory with a separate parts and accessories department. During the same year the company made its first sales outside the U.S when it started exporting motorcycles to Japan. Its dealership network also grew to become over 200 dealers. A few years later, the company formed a racing department with Engineer William S. Harley who was assisted by William Ottaway. It also started publishing its first magazine, The Enthusiast which became the first motorcycle magazine all over the world (Harley-Davidson, n.d). In 1917, when the World War I started, the company was asked by the military to produce motorcycles to be used during the war. The company produced over 20,000 motorcycles to be used specifically by the military for the war (Speed Ace, n.d). The involvement of the company in producing motorcycles for the military enabled it to survive the war. By 1920 the company had become the largest motorcycle manufacturer in the world due to the number of motorcycles it produced and the size of its facilities. It was operating in over 67 countries and had over 2000 dealers all over the world (Harley-Davidson, n.d). In the year 1941 when the World War II started, the company suspended the production of civilian motorcycles and started producing more military motorcycles (Harley-Davidson, n.d). The company also developed specific models for the army and in 1943; the company received the first of its 4 Army –Navy Awards for its excellent performance while producing motorcycles for the army. The company had produced over 60,000 models for military use (Harley-Davidson, n.d). When the war ended, the company wasting no time it resumed the production of civilian motorcycles. In the year 1952, the company was charged with restrictive practices after they applied to the US Tariff Commission for a 40% tax to be imposed on the imported motorcycles (Speed Ace, n.d). In 1953, as the company was celebrating its 50th anniversary, an attractive logo was developed that would depict the engine that had brought the company that far (Harley-Davidson , n.d). During the same year, Hendee Manufacturing Company, the Indian Motorcycle Company in the U.S, went out of business leaving Harley Davidson as the sole U.S motorcycle manufacturer over the next 46 years. The year 1969 was not a great year for the company as the American Machine and Foundry (AMF) acquired the Motor Company and made some changes that affected the company for years to come (Masker, 2007). AMF worked to streamline the production activities of the company and reduced the workforce in a bid to reduce the costs of the company. These changes were beneficial to the company in the short term but they became very damaging to the future of the business and in its long term. The reduction in the workforce led to a labor strike that affected the performance of the company. Furthermore the changes that had been done led to a reduction in the quality of the motorcycles that were produced over the years. The sales of the company were affected and the company almost went bankrupt. It was during this time that the Japanese manufacturers caught up with the company with their better quality, technology and increased stock. The regime by AMF lasted until 1981 when the company was bought back by 13 senior executives who were led by Vaughn Beals and Willie G. Davidson. The group bought the company for about $80 million and they were they able to set up the company to its load of recovery (Masker, 2007). Soon after in 1986 the company was listed in the American Stock Exchange and started to trade publicly in the year 1969. A year later the company was listed in the New York Stock Exchange and it petitioned the International Trade Commission to terminate a five year tariff on heavy weight motor cycles. This was seen as a major step for the company as it boldly stated it was in a position to compete fairly in the market. In 1993 the company celebrated its 90th anniversary with over 100,000 people parading their motorcycles in Milwaukee, Wisconsin (Harley-Davidson, n.d). The company also purchased a minority interest in Buell Motorcycle Company which was manufacturing American sport motorcycles. In 1998 the company opened a new assembly facility that was to be the first of its kind outside the United States. The facility was opened in Manaus Brazil when the company was celebrating its 95th Anniversary and at the same time it bought the remaining interests in Buell Motorcycle Company of 49% (Harley-Davidson, n.d). The company has continued to expand its production facilities in Milwaukee, Tomahawk, Wisconsin, and New York and in Pennsylvania (Davidson, Thompson, & Barger, 2006). The company has also been developing more products and improving its products with the latest technology. The company has also developed a Harley Davidson Museum which showcases the motorcycles that the company has developed over the years and other historical items that the company has maintained in its archives. The museum building cost the company over $75 million and is situated in Milwaukee (Rovito, 2006). 2.2 SWOT Analysis The SWOT analysis is a framework that is used to audit an organization and its external environment. The results of the analysis help in the planning of any strategic decisions towards the future of the company. The analysis involves identifying the internal and external factors that favor the organization and that also form an unfavorable environment (Stahl & Grigsby, 1997). The strengths of the company include those attributes that help the company to achieve its objectives while the weaknesses are the internal attributes that derail the achievement of the company’s objective and that also harm the company. The opportunities that are in the external environment include conditions that help the company to achieve the objectives. The threats on the other hand, include the conditions that are in the external environment and that challenge the company and affect it in a way that it may not be in a position to achieve its objectives. (a)  Ã‚   Strengths The Harley Davidson Company has several strengths that make it very competitive and profitable. The company has been in existence for over 100 years, and during this time it has established brand loyalty with its customers for its products. This is the major strength of the company as the products of the company are viewed as a culture and not just products. Most of the customers of the company are male and are in the middle-aged age bracket. They normally use the motorcycles for recreational purposes rather than for transport. The main qualities that the customers look for in the company’s product are the brand quality and the style. The company is able to provide these qualities and hence maintain its customers. The computer switching costs are high and once a customer buys a product from the company, they get trapped in buying more of the company’s products. The complementary products that come with the motorcycles also encourage the consumer loyalty. Once a customer purchases a Harley motorcycle, they proceed to buy accessories such as jackets and bandanas from the company. The company has also expanded its operations in different regions within the United States and also in other countries outside the United States. Some of the production plants are located in areas such as York, Kansas City, Tomahawk, and Milwaukee among others (Harley-Davidson, Inc., 2009). The different manufacturing plants have helped in reducing the costs especially in transport. The company has also diversified its activities and acquired several companies in different industries. The company acquired Buell Motorcycle Company which was also in the production of Motorcycles in East Troy, Wisconsin (Wheelen & Hunger, 2002 ). It also acquired the company Eagle Mark in 1995 which was providing financial services to manufacturers of leisure products as well as their dealers and customers. The company acquired Eagle Mark so that it would provide retail financing to its customers, insurance and contracts for servicing. Eagle Mark Company has also been offering planning services on behalf of the North American Dealers in motorcycle floor planning. The two companies have been working together complementing each others activities. The diversification of the company in the motorcycles, related products and the financial services has helped the company to diverse its risks in the industry and in business. Over the years the company has maintained strong relationships with its suppliers. The strong relationship with the suppliers has given the company access to resources that it needs in its production processes as well as the design and development of its products. It has then been able to increase the quality of its goods and improve the features of the brands in a bid to remain competitive. The production process is also reduced in terms of time as the suppliers are able to deliver the suppliers on time reducing the lead time. This leads to a reduction in costs and saves time for the company. The company operates its business in three continents and in various countries all over the world. However it has not been able to increase its foreign sales which are mostly carried out outside the U.S. (b)  Ã‚   Weaknesses The major weaknesses that the company has experienced within its internal operations include the weak marketing strategies that it has applied especially in its foreign markets. The company has experienced low foreign sales over the years as compared to its competitors. In 2009, the international sales only made up 33% of the total unit sales of the company (Pravda.Ru, 2009). The number of dealers in international markets are also very few and this has contributed partly to the low market sales of the company’s products as most of the customers in the market can not access the company’s products through this dealers. The labor conflicts that the company has experienced in some of its plants over the years have been affecting the performance of the company. Dissatisfied workers of the company have held strikes that have contributed to losses for the company as it has had to shut down the production plants during these times. The company has also had to lay off workers during the strikes in a bid to cut down its operation costs as a result of the strikes in other production plants. The labor conflicts have also reduced the investor confidence in the company as the prices of the company’s shares have been affected. (c)  Ã‚  Ã‚   Opportunities The external environment of the company has several opportunities that can benefit the company and improve its performance and market share. The shifts in the trends in the customers’ preferences and tastes in the market are producing an opportunity that the company can exploit to its advantage. The customers’ preferences and tastes have changed especially among the young and hip crowd of customers who the company was once targeting as its sole customers. These customers have shifted their preferences to sporty motorcycles for their recreational purposes. Harley-Davidson Company does not engage in the production of sporty motorcycles; however the increased demand for these kinds of motorcycles is providing an opportunity for the company to develop them and target this new market. The company can grab this opportunity and develop these sporty motorcycles and hence gain from the high demand. The need to restructure the company’s business structure after the company’s subsidiaries have experienced a decrease in performance is providing an opportunity for the company to concentrate in its brands and grow. The new structure of the company will ensure that all the resources of the product are put into good use to help develop the company and expand its operations into other markets. The company will also be able to focus on the development of the products and also develop new products that can help increases the market share in different parts of the world. (d)  Ã‚   Threats The company has faced several threats in the market that have undermined its performance. One of the major threats that the company has faced include the competition in the market. The company has faced a lot of competition from other international companies and manufacturers especially in the heavy weight motorcycles market. Some of the major competitors include Yamaha, Suzuki, and Honda among others. The increased competition has led to decreased sales of the company’s products especially in the foreign markets. The competition between these companies is based on the price, quality, and features of the products, the preferences of customers and the reliability of the products among other factors. The switching costs for the manufacturers in the industry are also quite low. With the increased growth in demand and the potential of the market, new competitors are entering the market and increasing the competition. The existence of substitute goods such as cars for transport and other recreational activities has also threatened the existence of the company and the sales. Consumers have a wide variety of products to substitute the motorcycles with and the increase of competitors is also leading to an increase in more brands in the market. This poses a big threat to the future of the company in the market of its products. The changes in customers’ demographics are also threatening the business in terms of sales. The percentage of males who have been purchasing the company’s products especially the motorcycles is declining. The percentages of women who are purchasing the products are however increasing. During the years 2003 and 2004 the percentage of sales that were purchased by men made up 89% with the rest being female. While in the years 2005 and 2007, the percentages had reduced to 88% among the male customers and 12% among the female customers (Harley-Davidson, n.d). The ages of the customers who have been purchasing the products of the company have also been increasing. By 2008 the median age of the customers had risen to 47 from 45 in the year 2004.

Project Report on Cost Analysis of Rice Mill in India Essay

1.1 Introduction Rice is the staple food for 65% of the population in India. It is the largest consumed calorie source among the food grains. With a per capita availability of 73.8 kg it meets 31% of the total calorie requirement of the population. India is the second largest producer of rice in the world next to China. The all India area, production, and yield of rice in the year 2001-02 was 44.62 million hectares, 93.08 million tons and 2086 kg/ ha respectively. In India paddy occupies the first place both in area and production. The crop occupies about 37 % of the total cropped area and 44% (2001-02 position) of total production of food grains in India. West Bengal is the leading producer of paddy in the country. It accounts for 16.39% of the total production, and the other leading states are Uttar Pradesh (13.38%), Andhra Pradesh (12.24%), Punjab (9.47%), Orissa (7.68%) and Tamil Nadu (7.38%); the remaining states account for 33.45% of the production. India is also one of the leading exporters of rice in the world market. India’s export of rice stood at 23.89 lakh MT in 1997-98. The corresponding value of foreign exchange earned was to the tune of Rs. 3371.00 crore in 1997-98. Indian Basmati Rice has been a favorite among international rice buyers. Following liberalization of international trade after World Trade Agreement, Indian rice will become highly competitive and has been identified as one of the major commodities for export. Look more:  capital budgeting examples essay This provides us with ample opportunity for development of rice based value-added products for earning more foreign exchange. Apart from rice milling, processing of rice bran for oil extraction is also an important agro processing activity for value addition, income and employment generation. Many of the rice processing units are of the traditional huller type and are inefficient. Modern rice mills are having high capacity and are capital intensive, although efficient. Small modern rice mills have been developed and are available in the market but the lack of information is a bottleneck in its adoption by the prospective entrepreneur. The present model will go a long way in bridging the information gap. 1.2 Description of Rice Milling Operations Paddy in its raw form cannot be consumed by human beings. It needs to be suitably processed for obtaining rice. Rice milling is the process which helps in removal of hulls and barns from paddy grains to produce polished rice. Rice forms the basic primary processed product obtained from paddy and this is further processed for obtaining various secondary and tertiary products. The basic rice milling processes consist of: 1. Pre Cleaning: Removing all impurities and unfilled grains from paddy 2. De-stoning: Separating small stones from paddy 3. Parboiling (Optional): Helps in improving the nutritional quality by gelatinization of starch inside the rice grain. It improves the milling recovery percent during de-shelling and polishing / whitening operation 4. Husking: Removing husk from paddy 5. Husk Aspiration: Separating the husk from brown rice/ unhusked paddy 6. Paddy Separation: Separating the unhusked paddy from brown rice 7. Whitening: Removing all or part of the bran layer and germ from brown rice 8. Polishing: Improving the appearance of milled rice by removing the remaining bran particles and by polishing the exterior of the milled kernel 9. Length Grading: Separating small and large brokens from head rice 10. Blending: Mixing head rice with predetermined amount of brokens, as required by the customer 11. Weighing and bagging: Preparing the milled rice for transport to the customer The flow diagram of the various unit operations are as follows: Figure 1: Block Diagram of Rice Processing 1.3 Status of Rice Milling Units in India Rice milling is the oldest and the largest agro processing industry of the country. At present it has a turnover of more than 25,500/- crore per annum. It processes about 85 million tons of paddy per year and provides staple food grain and other valuable products required by over 60% of the population. Paddy grain is milled either in raw condition or after par-boiling, mostly by single hullers of which over 82,000 are registered in the country. Apart from it there are also a large number of unregistered single hulling units in the country. A good number (60 %) of these are also linked with par-boiling units and sun -drying yards. Most of the tiny hullers of about 250-300 kg/hr capacities are employed for custom milling of paddy. Apart from it double hulling units number over 2,600 units, underrun disc shellers cum cone polishers numbering 5,000 units and rubber roll shellers cum friction polishers numbering over 10,000 units are also present in the country. Further over the years there has been a steady growth of improved rice mills in the country. Most of these have capacities ranging from 2 tons /hr to 10 tons/ hr. 1.4 Need for Improved Rice Mills The recovery of whole grains in a traditional rice mill using steel hullers for dehusking is around 52-54%. There is excessive loss in the form of coarse and fine brokens. Further loss of large portion of endosperm layers during the dehusking operation further accentuates the problem. Against it, the recovery percent of whole grains in modern rice mills using rubber roll shellers for dehusking operation is around 62-64%. The whole grain recovery percent further increases to 66-68% in case of milling of parboiled paddy. Thus it can be seen that there is an overall improvement of recovery of whole grains by about 10-14% if one uses rubber roll shellers for rice milling operations. The conversion ratio (i.e. recovery % of various final product and byproduct for every 100 kg feed of raw paddy) for these improved rice mills are can be as follows: 1. Percent of milled rice : 62-68%2. Percent of rice bran : 4-5% 3. Percent of rice husk : 25% 4. Percent of germ wastages : 2%-8% It has been observed that dehusking using rubber roll shellers reduces the risk of breaking the grain because husk is pulled off almost at once and pressure is applied by means of resilient surfaces across the width of the grain, where kernels, generally are much more uniform than they are by length. Moreover, the process does not remove the internal epidermis of the husk. Thus the deshelled grains with their silver skin envelope are protected against scratches and keep longer and better while the silver skin and the germ increases the quantity of bran which is produced while whitening. The improved rice mills have a better husk and rice bran aspiration system. The same prevents mixing of fine brokens with rice bran. Therefore the quality of rice bran obtained is better. It has also been observed that the location of rice mills are confined to a few selected production centers. Their development as a village level agro processing unit is yet to take a proper shape. In the absence of village level rice milling unit, the farmers have to travel great distances for milling the rice. This leads to increased transportation and handling losses. Thus there is a need to develop improved rice mills as a village level agro processing unit for bringing about technical up-gradation and development of the sector. Value addition and generation of gainful and sustainable employment opportunities are the other possible benefits arising out of this agro processing industry. The Central Govt. is also providing a big boost towards the development of this industry. It has since repealed w.e.f. May 27, 1998 the Rice Milling Industry (Regulation) Act, 1958 and Rice Milling Industry (Regulation and licensing) Rules, 1959. Further, rice milling sector which was earlier reserved for the small scale sector, have now been de-reserved. As such, no license/ permission is now required for setting up a rice mill. 1.5 Rice Husk Gasifier A rice husk gasifier aims at using wastes from rice mills to fuel a spark-ignition engine that will drive a generator to produce electricity. Instead of dumping rice husks along roadsides, it can now be converted into valuable fuel that can help in substituting the energy required at the mill itself. The gasifier basically employs a moving-bed downdraft gasifier reactor developed by CRHET in combination with a gas-conditioning device that removes impurities from the gas thereby making it highly suitable fuel for heat engines. The gasifier produces a clean gas with a very low amount of black carbon (i.e., only 50 um/m3of gas), and so the gas coming out of the muffler of an engine is also clean. CO2 emission is Operation of the likewise relatively low of about 0.6 kg per ton of rice husks. Figure 2: Block Diagram of Rice Husk Gasifier 1.6 Problem Description The Rice milling is the process that helps in removal of hulls and bran’s from paddy grains to produce polished rice. Rice is rich in genetic diversity with thousands of varieties grown throughout the world. Rice has been one of man’s most important foods. Today, this unique grain helps sustain two-thirds of the world’s population. It is life for thousands of millions of people. It is deeply embedded in the cultural heritage of their societies. About four-fifths of the world’s rice are produced by small-scale farmers and are consumed locally. The major portion of the paddy is being processed through hullers. The hullers are usually low capacity mills. In these hullers, both shelling and polishing operations are carried out simultaneously. Hence, there is no control on the polishing of rice, bran and a higher breakage of rice occurs. Today the number of middle class people is rising who want good quality of food. Thus a number of small, technically advance rice mills are being set up to meet the quality needs of the people and substitute for huller mill, to get polished rice, rice bran and paddy husk. In this project, profit analysis of a small scale technically advance rice mill is carries out using the business case of Jay Laxmi Rice Mill, Bazpur in Udham Singh Nagar district in the state of Uttarakhand. It has a nominal capacity of 4000kg/hr. It has been built for the production of raw rice. The relation between the cost of capital and the net present value of the project was developed. The internal rate of return was determined by finding the appropriate discounting rates for which the net present value is zero. Sensitivity analysis of various factors like paddy price, raw rice price, bran price versus internal rate of return and the net present value of the project were done to estimate profit. Also, the owner want to know the effect on internal rate of return and net present value if the husk produced is used for generating electricity for the plant. What is the minimum percentage of electricity consumption that should be substituted by rice husk gasifier such that the process is profitable? There are a lot of bottlenecks and unforeseen problems in estimating it. The owner needs to know the fixed and variable costs for operating this. The market forces decide the price/unit of raw rice in the market. Thus, the owner has to follow the supply demand dynamics and price its product. To maintain a pre-defined profit margin the owner should know its revenue and costs and aim to increase its revenue and decrease its costs. These problems are discussed and solved in this report. 1.6 Objectives On the light of the above discussion the following objectives will be addressed in this investigation: * Obtaining an exhaustive asset list along with its initial cost, life and salvage value to compute the Net Present Value, Payback Period and Internal Rate of Return of the project. * To create a programme in C and obtain a relationship between Internal Rate of Return (IRR) and yearly cash flow generated. * To obtain relationship between Net Present Value and Cost of Capital * To obtain relationship between Net income, Internal Rate of Return and Net Present Value * To perform sensitivity analysis for the owner on the basis of: * Buying price of Paddy versus Internal Rate of Return and Net Present Value * Selling price of Raw Rice versus Internal Rate of Return and Net Present Value * Selling price of Bran versus Internal Rate of Return and Net Present Value * Salvage value versus Internal Rate of Return and Net Present Value * To find the minimum percentage of total electricity consumption that should be generated from Rice Husk Gassifier so that the process is economic and obtain a relationship between percentage electricity substituted from the husk gassifier, Internal Rate of Return and Net Present Value. Chapter 2: Review of Literature ————————————————- This is a specific case study partening to Jay Laxmi Rice Mill at Bazpur in Udham Singh Nagar district in the state of Uttarakhand. This case study is an analysis of the establishment and functioning of small scale modern rice mill in India. It is neither a story of spectacular success, nor of a spectacular failure as case studies usually are. Rather, it is written with a purpose of illustrating the complexity of factors that enter into the establishment and functioning of an enterprise in a low income economy. These factors often distort both the factor and the product prices and make it difficult to measure the efficiency of an enterprise with the usual yardsticks of cost-benefit analysis. In conducting the analysis the classical analytical tools have been used. These tools take into account the Time Value of Money and are the core topics in books on Engineering Economics. The equations used in the analysis of the project have been taken from the book on ‘Essentials of Engineering Economics’ by James L. Riggs and Thomas M. West. The current market price of the assets used in the rice mill has been obtained from Satake, Japanese manufacturer and supplier of rice mill machinery. The Kolkata representative of Satake recommends the market price and setting up cost. The list of assets used in Rice Husk Gasifier, their current market price and salvage value were obtained from the various sites. The papers on ‘Electricity generation from rice husk in indian rice mills’ and ‘Rice husk gasifier for melting and reheating process’ helped me in detailed understanding of the rice husk gassifier. Keeping all these study in mind, I have perform the sensitivity analysis of various factors like paddy price, raw rice price, bran price versus the internal rate of return and the net present value of the project. Also found out the relationship between factors like Cost of Capital, Net Present Value and Internal Rate of Return. Chapter 3: Problem Solving ————————————————- 3.1 Important Terminology Time Value of Money: * It is the idea that money available at present time is worth more than the same amount in the future due to its potential earnings capacity. * Thus any amount of money is worth more the sooner it is received. For example, assuming a 5% interest rate, $100 invested today will be worth $105 in one year ($100 multiplied by 1.05). Cash Flow Diagram: * A cash flow diagram is a tool used to represent the transactions which will take place over the course of a given project. * Transactions can include initial investments, maintenance costs, projected earnings or savings resulting from the project, as well as resale salvage value of equipment at the end of their lives. * Cash inflow is positive e.g. – revenue, resale salvage value * Cash outflow is negative e.g. – cost of equipments and set-up, disbursements etc. Figure 3: Cash Flow Diagram Resale Salvage Value: The estimated value that an asset will realize upon its sale at the end of its useful life. The salvage value is used in conjunction with the purchase price and accounting method to determine the amount by which an asset depreciates each period. For example, with a straight-line basis, an asset that cost $5,000 and has a salvage value of $1,000 and a useful life of five years would be depreciated at $800 ([$5,000 – $1,000]/5 years) each year. Within the tax system, when a person donates a car he or she receives a tax deduction. The value of this deduction depends on the salvage value of the car. This salvage value is determined to be the current fair market value that could be obtained had the car been sold on that day rather than donated. Disbursements: Money paid out in the discharge of a debt or expense. Disbursements can include money paid out to run a business, spending cash, dividend payments, and/or the amounts that a lawyer might have to pay out on a person’s behalf in connection with a transaction. When money is disbursed, it is a cash outflow. Cash flow is a measure of the cash inflow, revenue, and cash outflows, or disbursements. Ideally, there will be more money flowing in than flowing out. If cash flow is negative (in other words disbursements are higher than revenues), it can be an early warning of potential insolvency. Internal Rate of Return (IRR): The discount rate often used in capital budgeting that makes the net present value of all cash flows from a particular project equal to zero. Generally speaking, the higher a project`s internal rate of return, the more desirable it is to undertake the project. As such, IRR can be used to rank several prospective projects a firm is considering. Assuming all other factors are equal among the various projects, the project with the highest IRR would probably be considered the best and undertaken first. IRR as the rate of growth a project is expected to generate. While the actual rate of return that a given project ends up generating will often differ from its estimated IRR rate, a project with a substantial higher IRR value than other available options would still provide a much better chance of strong worth. IRR can also be compared against prevailing rates of return in the securities markets. If a firm cannot find any project with IRRs greater than the returns that can be generated in the financial market, it may simply choose to invest its retained earnings into the market. IRR (before tax) of a business venture / commercial project can be computed when all the cash flows (P, R, D, F) and lives (n) of assets are given. It is calculated by equating the Net Present Value (NPV) to zero. The corresponding value of ‘i’ is the IRR. Payback period: Payback Period in capital budgeting refers to the period of time required for the return on an investment to â€Å"repay† the sum of the original investment. For example, a $1000 investment which returned $500 per year would have a two year payback period. The time value of money is not taken into account. Payback period intuitively measures how long something takes to â€Å"pay for itself.† All else being equal, shorter payback periods are preferable to longer payback periods. Payback period is widely used because of its ease of use despite the recognized limitations described below. Useful Life: Period during which an asset or property is expected to be usable for the purpose it was required. It may or may not correspond with the item`s actual physical life or economic life. The length of time that a depreciable asset is expected to be usable is its useful life. Cost of Capital: The required return necessary to make a capital budgeting project, such as building a new factory, worthwhile. Cost of capital includes the cost of debt and the cost of equity. It determines how a company can raise money (through a stock issue, borrowing, or a mix of the two). This is the rate of return that a firm would receive if it invested in a different vehicle with similar risk. The cost of capital is a term used in the field of financial investment to refer to the cost of a company’s funds (both debt and equity), or, from an investor’s point of view â€Å"the shareholder’s required return on a portfolio of all the company’s existing securities†. It is used to evaluate new projects of a company as it is the minimum return that investors expect for providing capital to the company, thus setting a benchmark that a new project has to meet. For an investment to be worthwhile, the expected return on capital must be greater than the cost of capital. The cost of capital is the rate of return that capital could be expected to earn in an alternative investment of equivalent risk. If a project is of similar risk to a company’s average business activities it is reasonable to use the company’s average cost of capital as a basis for the evaluation. A company’s securities typically include both debt and equity, one must therefore calculate both the cost of debt and the cost of equity to determine a company’s cost of capital. However, a rate of return larger than the cost of capital is usually required. Market Price: Market price is the economic price for which a good or service is offered in the market place. Market pricing is primarily determined by the interaction of supply and demand. Price is interrelated with both of these measures of value. The relationship between price and supply is generally negative, meaning that the higher the price climbs, the lower amount of supply is demanded. Market price is just the price at which goods and services are sold. Price, the amount of goods for which a product is sold, may be seen as a financial expression of the value of the product. Setting the right price is an important part of effective marketing, being the only part of the marketing mix that generates revenue, as product, promotion, and place are all about marketing costs. Price is also the marketing variable that can be changed most quickly. Collin Ta’eed’s ‘Making Money’ describes pricing strategy as a difficult task that depends on nine major factors. They are as follows: 1. Total Costs: If the market price doesn`t include enough just to break-even, one is heading for trouble. The best thing to do is sum up all costs and divide by the number of hours that can be billed a year. This doesn`t include sick days, holidays, and hours working on the business, hours with no work and so on. All hidden costs must be factored. E.g.: insurance, invoices that never get paid for one reason or another, and taxes. 2. Profit: The aim of every business is to make money. Profit is the target money one wants to make above breaking even. Profit is affected by the revenue generated which in turn depends on market price. 3. Market Demand: The concept of demand – supply states that if what one does is in high demand, then make your services more expensive. Conversely if there`s hardly any work around, then decide the market price based on competitors pricing strategy. Signs that demand are high include too much work coming in, other freelancers being overloaded and people telling you they`ve been struggling to find someone to do the job. Signs that demand are low include finding yourself competing to win jobs, a shortage of work and fellow freelancers re-entering the workforce. 4. Industry Standards: It is a technical standards used in business. It is based on the industry market price, value for money, services offered etc. in order to fit in the market, one must adhere to industry standards. 5. Skill Level: Different people, depending on the result they produce, possess a different skill level. When applies to companies, it implies that the market price must be commensurate with the company`s skill. 6. Experience: Although often bundled with skill, experience is a different factor altogether. Experience affects how much a company must charge. E.g.: You may have two very talented photographers, but one with more experience might have better client skills, be able to foresee problems (and thus save the client time and money), and intuitively know what`s going to work for a certain audience and so on. 7. Business Strategy Adopted: Business strategy or angle will make a huge difference to the pricing strategy. E.g.: Think about the differences between Revlon and Chanel, the two could make the same perfume but you would never expect to pay the same for both. Pitching oneself in front of the target customers helps define a company as cheap and cheerful, high end or somewhere in between. This largely affects the market price as people are ready to pay a premium for high end goods. 8. Service Offered: Services are an intangible equivalent of economic goods. Service provision is often an economic activity where the buyer does not generally, except by exclusive contract, obtain exclusive ownership of the thing purchased. The benefits of such a service, if priced, are held to be self-evident in the buyers` willingness to pay for it. Public services are those societies as a whole pays through taxes and other means. The services that a company provides for its clients make a big difference to its price tag. For example you might be a freelancer, who will do whatever it takes to get a job just right, or perhaps you are on call 24-7, or perhaps you provide the minimum amount of communication to cut costs. Whatever the case, adjusting the pricing to the type and level of service provided is a must. 9. Market Segment: Prices will often vary for different clients. This happens for a few reasons. Some clients require more effort, some are riskier, some are repeat clients, some have jobs you are dying to do, some you wouldn`t want to go near with a stick. Thus these factors must be taken into account while pricing a commodity. Fixed Costs: A cost that does not change with an increase or decrease in the amount of goods or service produced. Fixed costs are expenses that have to be paid by a company, independent of business activity. It is one of the two components of the total cost of a good or service, along with variable cost. Fixed costs are defined as expenses that do not change as a function of the activity of a business, within the relevant period. E.g. rent, property tax, insurance, or interest expense. An example of a fixed cost would be a company`s rent on a building. If a company has to pay $10,000 each month to cover the cost of the rent but does not manufacture anything during the month, the rent payment is still due in full. In economics, a business can achieve economies of scale when it produces enough goods to spread fixed costs. For example, the $100,000 lease spread out over 100,000 widgets means that each widget carries with it $1 in fixed costs. If the company produces 200,000 widgets, the fixed cost per unit drops to 50 cents. Variable Costs: A corporate expense that varies with production output. Variable costs are those costs that vary depending on a company`s production volume; they rise as production increases and fall as production decreases. Variable costs differ from fixed costs such as rent, advertising, insurance and office supplies, which tend to remain the same regardless of production output. Variable costs can include direct material costs or direct labor costs necessary to complete a certain project. For example, a company may have variable costs associated with the packaging of one of its products. Conversely, when fewer of these products are sold the costs for packaging will consequently decrease. Marketing Costs: It is the amount of money spent on advertisement, distribution and selling of finished goods in the market. It has components of fixed and variable costs. It is difficult to obtain an estimate of the marketing cost. Hence, it is taken as a percentage of total costs and added to it. Total Costs: Total costs (TC) describes the total economic cost of production and is made up of variable costs, which vary according to the quantity of a good produced and include inputs such as labour and raw materials, plus fixed costs, which are independent of the quantity of goods produced and include (capital) that cannot be varied in the short term, such as buildings and machinery. Total cost in economics includes the total opportunity cost of each factor of production as part of its fixed or variable costs. If one assumes that the unit variable cost is constant, as in cost-volume-profit analysis developed and used in cost accounting by the accountants, then total cost is linear in volume, and given by: total cost = fixed costs + unit variable cost * quantity. Figure 4: Total Cost = Fixed Cost + Variable Cost Revenue: In business, revenue is income that a company receives from its normal business activities, usually from the sale of goods and services to customers. Revenue may refer to business income in general, or it may refer to the amount, in a monetary unit, received during a period of time. Profit: It is the difference between a firm`s total revenue and all costs. It is the positive gain from an investment or business operation after subtracting for all expenses. It is the opposite of loss. Profit = Total Revenue – Total Costs Profit is the money a business makes after accounting for all the expenses. Regardless of whether the business is a couple of kids running a lemonade stand or a publicly traded multinational company, consistently earning profit is every company`s goal. The path toward profitability can be long. For example, online bookseller Amazon.com was founded in 1994 and did not produce its first annual profit until 2003. Many startups and new business fail when the owners run out of capital to sustain the business. Profit Before Tax: A profitability measure that looks at a company`s profile before the company has to pay corporate income tax. This measure deducts all expenses from revenue including interest expenses and operating expenses, but it leaves out the payment of tax. This measure combines all the company`s profits before tax, including operating, non-operating, continuing operations and non-continuing operations. PBT exists because tax expense is constantly changing and taking it out helps to give an investor a good idea of changes in a company`s profits or earnings from year to year. 3.2 Data Procurement Data required for analysis * List of Assets * Cost Spent on assets at t=0 * Useful life of each asset * Resale salvage price of each asset * Average repair and maintenance cost per year * Administrative cost per year * Fixed expenses incurred per year like rent, wages etc. * Variable costs involved in rice production * Quantity of rice, bran, husk produced * Unit price of raw material (paddy) and products (rice, bran, husk) The current asset price, useful life and salvage value was provided by Satake. Refer: Appendix A, Table 1.1. Data Description Each asset has a list of the following variables (whichever is applicable) * Quantity * Model type * Capacity * Electrical Rating * Market Price Data required for analysis of Rice Husk Gassifier * List of assets * Cost Spent on assets at t=0 * Useful life of each asset * Resale salvage price of each asset It is obtained from various sites online. Refer: Appendix B, Table 2.1. 3.3 Specifications and Assumptions Some specific data: * Capital Expenditure incurred = Rs. 9,05,04,240 * Capacity of Rice Mill = 4 tons per hour * Maximum Run = 270 days * 16 hours * Annual Requirement of Paddy at installed capacity = Capacity*Maximum Run = 17280 Metric Tonnes per year * The yield of rice is Particulars| Yield Percentage| Annual Yield (in MT)| Raw Rice| 65| 11232| Husk| 21| 3628.80| Broken Rice| 4| 691.20| Rice Bran| 8| 1382.40| Rejected Rice| 1| 172.80| Impurities| 1| 172.80| * Price of Paddy in the market = Rs. 1250 per quintal * Market Price of Raw Rice = Rs. 2000 per quintal * Market Price of Broken Rice = Rs. 1400 per quintal * Market Price of Bran = Rs. 1500 per quintal * Market Price of Husk = Rs. 320 per quintal Assumptions: * The plant is assumed to run for 270 days (approximate value for the rice mill) for calculations pertaining to profitability of rice mill. * The salvage cost is unknown and is taken as 10% of total assets cost. * Quantity of raw rice produced = Quantity of raw rice sold. No inventory is utilized. * No wastage of products and byproducts. 3.4 Solution Approach Payback Period Payback Period Internal Rate of Return Internal Rate of Return Net Present Value Net Present Value Solutions Solutions Net Present Value: * It is the algebraic sum of all cash flows pertaining to the project discounted to present time (t=0) at a chosen rate (i.e. Cost of Capital) NPV= -P+R-DÃâ€"1+in-1i*1+in+SÃâ€"11+in Where, P = Cost of Asset spent at time t=0 R = Revenue Income D = Disbursements S = Resale Stock Salvage Value i = Cost of Capital n = Number of Periods (Useful life of asset) Internal Rate of Return: The internal rate of return on an investment or project is the â€Å"annualized effective compounded return rate† or â€Å"rate of return† that makes the net present value (NPV) of all cash flows (both positive and negative) from a particular investment equal to zero. Payback Period: It is calculated by calculating Cumulative Cash Flow = (Net Cash Flow Year 1 + Net Cash Flow Year 2 + Net Cash Flow Year 3 †¦ etc.) Accumulate by year until Cumulative Cash Flow is a positive number: that year is the payback year. k= ln⠁ ¡(R-DR-D-P*i)ln⠁ ¡(1+i) Where, K = Payback Period P = Cost of Asset spent at time t=0 R = Revenue Income D = Disbursements i = Cost of Capital For calculation of Profit obtained Profit Function = Revenue generated – Cost Incurred Revenue generated = ∑(Qi*pi) Where, Qi = Quantity of commodity i sold per year pi = Unit Price of commodity i in the market Cost Incurred = Fixed Costs (FC) + Variable Costs (VC) Refer: Appendix A, Table 1.3 and Table 1.4. Chapter 4: Results and Discussions ————————————————- Result 1: For initial estimated values of input parameters * Initial Project Cost incurred at t=0 (P) = Rs. 90504240 (Refer: Appendix A, Table 1.2) * Gross Revenue Income (R) = Rs. 266664960/year (Refer: Appendix A, Table 1.4) * Operating Expenditure/ Disbursement (D) = Rs. 223860420/year (Refer: Appendix A, Table 1.3) * Salvage Value /Resale Value (S) = Rs. 6707544, * Useful life of assets (n) = 20 years, * Cost of Capital (i) = 15% Figure 5: Cash Flow Diagram at estimated values of input parameters Refer: Appendix A, Table 1.5. Using engineering economics equations (Refer Chapter 3, section 3.4 – Solution Approach), we have found * NPV= -90504240+266664960-2435595801+0.1520-10.15*1+0.1520+6707544[11+0.1520] = Rs. 54529825.06 * IRR = 25.27% at NPV = 0 * Payback period, k= ln(266664960-243559580266664960-243559580-90504240*0.15)ln(1+0.15) = 6.34 years Figure 6: C programme for calculating IRR Refer: Appendix C. This is the C programme return to calculate the IRR of any cash flow correct upto two decimal places. This programme can be used for any type of cash flows. Result 2: The following two graphs depict the relation of Cost of Capital with NPV and Payback Period. Figure 7: Effect of Cost of Capital on NPV Refer: Appendix A, Table 1.6. This graph helps obtain an estimate of the NPV based on the Cost of Capital. In order to get higher NPV, the Cost of Capital should be less. With a variation of 10% in the Cost of Capital, from 11% to 20% the NPV decreases substantially from 94 million INR to 22 million INR. Figure 8: Effect of Cost of Capital on Payback Period Refer: Appendix A, Table 1.6 This graph helps obtain the estimate of the Payback period based on the Cost of Capital. In order to get lesser Payback Period, the Cost of Capital should be less. With a variation of 11% in the Cost of Capital, from 10% to 20% the Payback Period increases substantially from 3.56 years to 10.95 years. Discussion: The value of Cost of Capital is varied over a feasible range of 10% to 20% and the corresponding values of NPV and Payback period. If the Cost of Capital decreases, the NPV of the firm increases while the Payback Period of the firm will reduce as expected from the formulae of NPV and Payback Period – Refer Chapter 3, section 3.4 – Solution Approach. Result 3: The following two graphs depict the relation of cost of unit amount of paddy (raw material cost) with NPV and IRR. 1 Unit = 1 Quintal Figure 9: Effect of unit Paddy Price on NPV Refer: Appendix A, Table 1.7. This graph helps obtain an estimate of the NPV based on the cost of unit amount of paddy. The graph shows more or less a linear variation as expected. In order to get higher NPV, the cost of raw material should be less. A large variation could be seen in the NPV i.e. from 324 million INR to -216 million INR, when the price of paddy varies from 1000 INR per quintal to 1500 INR per quintal, keeping all other market price and other factors constant. In India, the Government of India fixes the minimum paddy price to save the interests of the farmers. So, if the price of the paddy goes above 1300 INR per quintal, the firm will not be beneficial at all instead will start incurring a loss. Figure 10: Effect of unit Paddy Price on IRR Refer: Appendix A, Table 1.7 In the graph the effect on IRR for different unit price of Paddy is shown. As the price of paddy increases from 1000 INR per quintal to 1350 INR per quintal, the IRR decreases substantially from 73.26% to 2.99% in eight uniform steps. Discussion: For a fixed market price of Raw Rice, NPV and IRR decreases substantially with increase in unit price of Paddy. This is an obvious conclusion from the NPV equation – Refer Chapter 3, section 3.4 – Solution Approach. As the unit price of paddy rises, the operating cost also starts increasing thus our annuity per year will decrease. With decrease in NPV and IRR, the payback period also increases. Result 4: In the following two graphs the unit price of Raw Rice (product) is varied to see the effect on the NPV and IRR. 1 Unit = 1 Quintal Figure 11: Effect of unit Raw Rice Price on IRR Refer: Appendix A, Table 1.8 This graph helps obtain the NPV of the firm based on the unit market price of Raw Rice. As the unit market price of Raw Rice increases, the Gross Revenue Income increases substantially which leads to increase in NPV. This graph shows linear variation with unit price of Raw Rice as expected. A large variation could be seen in the NPV i.e. from -191.5 million INR to -441.2 million INR, when the price of raw rice varies from 1650 INR per quintal to 2550 INR per quintal, keeping all other market price and other factors constant. With 1% increase in the unit market price of Raw Rice, the NPV of the firm increases substantially by 25.784%. If the unit market price of Raw Rice is above 1920 INR per quintal, the firm will be beneficial and below that price it will be running in loss. Figure 12: Effect of unit Raw Rice Price on IRR Refer: Appendix A, Table 1.8 In the graph, the variation of IRR for different unit market price of Raw Rice is studied. The unit market price of Raw Rice is varied in a feasible range of 1850 INR to 2550 INR, to estimate the effect on IRR. The IRR of the firm increases substantially from 3.71% to 93.79% in twelve uniform steps. This happens because as the unit market price of Raw Rice increases, the gross revenue income also increases which increases the IRR of the firm and reduce the payback period. Discussion: The unit market price of Raw Rice is required to estimate the profit that can be earned. As the unit price of Raw Rice increases, the gross revenue income increases and thus the NPV and IRR of the firm increases substantially. If the revenue increases, the payback period of the firm will reduce. If the unit market price falls beyond a certain point i.e. 1920 INR per quintal, the firm will start incurring loss. These graphs help in setting competitive market price of Raw Rice. Result 5: The following two graphs show the effect of unit market price of Bran (byproduct) on the NPV and IRR of the firm. 1 Unit = 1 Quintal Figure 13: Effect of unit Bran Price on NPV Refer: Appendix A, Table 1.9 This graph helps obtain the NPV of the firm based on the unit market price of Bran. The NPV of the firm increases from 11.27 million INR to 141 million INR in fifteen equal steps assuming 50 INR hike in unit market price of Bran at every step. This graph shows linear variation with unit price of Raw Rice as expected. With 1% increase in the unit market price of Bran, the NPV of the firm increases substantially by 2.38%. Figure 14: Effect of unit Bran Price on IRR Refer: Appendix A, Table 1.9 Since with the increase in the unit market price of Bran the NPV of the firm increases, therefore IRR of the firm also increases. With 1% increase in the unit price of Bran the IRR increases about 0.24%. This graph shows more or less a linear variation. The IRR of the firm increases from 17.20% to 40.76% as the price of Bran increases from 1000 INR per quintal to 2500 INR per quintal. Discussion: The unit market price of Bran, a byproduct, also has substantial effect on gross revenue income as it forms 8% part of the total outcome which is about 1382.40 Metric tons. Today market price of Bran is about 1500 INR per quintal through which 20.736 million INR revenue is generated per year. Since, an increase in unit market price of Bran increases the gross revenue income, the NPV and IRR of the firm also increases. With increase in revenue, the payback period of the firm decreases. Result 6: Figure 15: Effect of Salvage on NPV Refer: Appendix A, Table 1.10 Figure 16: Percentage change in NPV with percentage change in Salvage Value Refer: Appendix A, Table 1.10 Basic Assumption: Salvage value is hard to define as it is the future value of 20 years down the line from now. Hence it is assumed to be certain percentage of the total assets cost. It is assumed to be 10% of the total assets cost incurred and is discounted to today’s value at a rate of 15% to find the Net Present Value of the firm. The salvage value can vary over a range of 5% to 20% of the total assets cost. The NPV changes from -0.5% to 0.75% i.e. from 54.32 million INR to 54.94 million INR by changing the salvage value by -5% to 10% i.e. from 5% to 20% of the total assets cost. Discussion: The NPV of the firm doesn’t increases substantially with increase in the salvage value of the assets. The graph shows a straight line variation as expected. With 1% increase in salvage value the NPV increase by 0.075%. This increase in the NPV is negligible, therefore, even if the assumed resale value of the assets change in the future, it will not affect the calculations done in this case study for the profitability analysis of Jay Laxmi Rice mill. Result 7: The following two graphs will help in assessing the economy of generating electricity from husk (by product) using Rice Husk Gassifier. Figure 17: Effect of percentage of Total electricity requirement that is substituted by Rice Husk Gasifier on NPV Refer: Appendix B, Table 2.3 The graph shows that the NPV of the firm increases linearly as the amount of electricity produced by the husk Gasifier increases as expected. The NPV of the firm increases from 51 million INR to 89 million INR as the amount of electricity that is substituted by the Rice Husk Gasifier increases from 65% to 100% of total electricity requirement. The minimum amount of total electricity that should be produced from husk so that the firm has the same NPV as before implanting the husk gasifier is 68.8% Figure 18: Effect of percentage of Total electricity requirement that is substituted by Rice Husk Gasifier on IRR Refer: Appendix B, Table 2.3 This graph shows the variation of the IRR of the firm with respect to the percentage of the total electricity requirement that is substituted by Rice Husk Gasifier. The graph shows an expected linear increase in IRR as the amount of electricity produced by the husk Gasifier increases. The IRR of the firm increases from 24.52% to 31.32% as the amount of electricity that is substituted by the Rice Husk Gasifier increases from 65% to 100% of total electricity requirement. Discussion: To be economic at least 68.8% electricity requirement needs to be generated from Husk Gasifier i.e. the minimum amount of total electricity requirement that should be substituted by the Rice Husk Gasifier so that the firm profit as before setting up of the Rice Husk Gasifier. If the amount of electricity produced is more than this amount than the plant will earn more profit than before but if it is less, then the rice husk gasifier should not be set up, because the plant will be earning less than before. The plant may be beneficial but will be in loss as comparison to the current scenario. The following figure 19 shows the cash flow diagram when 68.8% of electricity requirement is generated from Husk Gasifier. Figure 19: Cash Flow diagram with Rice Husk Gasifier Refer: Appendix 8, Table 2.2 Chapter 5: Summary and Conclusions ————————————————- 5.1 Summary The main aim of this study was was to analyze the Jay Laxmi Rice Mill, Bazpur in Udham Singh Nagar district in the state of Uttarakhand, from its business point of view. It has a nominal capacity of 4000kg/hr. It has been built for the production of raw rice. Some estimates were required to analyze its profitability. The economic analysis of the project was carried out using engineering economics equations. The sensitivity of NPV, IRR and Payback period with respect to various factors like Cost of Capital, paddy price, raw rice price, bran price and salvage were studied. Also the economy assessing of generating electricity from husk (by product) using Rice Husk Gassifier was done. The minimum electricity requirement that needs to be generated from Rice Husk Gasifier for economic purposes was calculated. The following conclusions are drawn from the study: * For initial estimated values of input parameters (P = Rs. 90504240, R = Rs. 266664960/year, D= Rs. 223860420/year, S = Rs. 6707544, n = 20 years, i = 15%) * NPV = Rs. 54529825.06 * IRR = 25.27% * Payback period = 6.34 years * With a variation of 10% in the Cost of Capital, from 11% to 20% the NPV decreases substantially from 94 million INR to 22 million INR and Payback Period increases from 4.03 increases to 10.95 years. * A large variation could be seen in the NPV i.e. from 324 million INR to -53.5 million INR, when the price of paddy varies from 1000 INR per quintal to 1350 INR per quintal while IRR increases from 73.26% to 2.99%. * NPV increases from -50.9 million INR to -441.2 million INR and IRR increases from 3.71% to 93.79%, when the price of raw rice varies from 1850 INR per quintal to 2550 INR per quintal. * As the price of Bran increases from 1000 INR per quintal to 2500 INR per quintal, the NPV and IRR of the firm increases from 11.27 million INR to 141 million INR and 17.20% to 40.76% respectively. * With 1% increase in salvage value the NPV increase by 0.075%. This increase in the NPV is negligible, therefore, even if the assumed resale value of the assets change in the future, it will not affect the calculations done in this case study for the profitability analysis of Jay Laxmi Rice mill. * To be economic at least 68.8% electricity requirement needs to be generated from Husk Gasifier i.e. the minimum amount of total electricity requirement that should be substituted by the Rice Husk Gasifier so that the firm profit as before setting up of the Rice Husk Gasifier. References ————————————————- * James L. Riggs 2004, Engineering Economics, 4th edition, Tata Mc Graw Hill Education Private Limited, pp 67-147. * Chandra P. 2011, Fundamentals of Financial Management, 11th edition, Tata Mc Graw Hill Education Private Limited, pp 150-167. * T. Kapur, T. C. Kandpal and H. P. Garg, Electricity Generation from Rice Husk in Indian Rice Mills: Potential and Financial Viability, Indian Institute of Technology, New Delhi (1995). * Alexis Belonio, Victoriano Ocon, and Antonio Co, Garbage-In Fuel-Out: Small-Scale Rice Husk Gasifier Plant for Community Street Lighting, Suki Trading Corporation, Philippines (2011). * Email from Gaurav Vashisht (gaurav@satakeindia.com) working at Satake, kolkata.

Anxiety Self Esteem And Alienation Psychology Essay

Anxiety Self Esteem And Alienation Psychology Essay Adolescence is a phase of physical, emotional, social variations, adjustment and development. Anxiety can impact self-esteem, interpersonal relationships and may lead to alienation. The study investigated the interrelationships among these variables on undergraduate girls and boys (40 each) between the ages of 18 and 23 years. Sinha’s Comprehensive Anxiety Scale (1971), Coopersmith Self-Esteem Inventory (1967) and Sharma’s Alienation scale (1988) were used to test the variables. Significant differences were found among female college students reporting higher anxiety, self-esteem and alienation than male college students. Self esteem and anxiety were highly correlated among males and valid relation was found between alienation and anxiety. However, gender differences were found towards core coon all the constructs. Further, the study contributes to examine the social problems that are prevalent among the adolescents so that maximum can be benefited to the societal inst itutions and the families by providing the understanding. Key Words: Adolescents, Anxiety, Alienation, Self-Esteem *Research Scholar, s.ali.shah14@gmail.com , 09891927834 **Assistant Professor, korsidk@gmail.com , Department of Psychology, Jamia Millia Islamia, New Delhi- 110025 Introduction: Increased media attentions, prevalence of university counseling centers and enhanced awareness of the mental health needs of college going students, (Benton, Robertson, Tseng, Newton, Rudd, 2004) marked the need to study severity of the problems which might affect the individual as he/she is at odd at self. The present study investigates the relationship between anxiety, self-esteem and alienation among male and female college students. Anxiety: Anxiety is an essential and natural emotional experience. The concept of anxiety is as old as human existence. Anxiety is associated with substantial negative effects on children’s social, emotional and academic success (Essau, Conradt Brown, Higgins, Hawkins et al., 2000; Suh Smith, 2000; Smyth, 2009).

The impact of certain forms of technology on reading skills or reading Essay

The impact of certain forms of technology on reading skills or reading habits - Essay Example However, technological based reading has led to an increase in the reading of news, views, sexual content, general information, selected fields but has decreased the reading of literature. Electronic sources are now available for the students like iPods and kindle (of Amazon) that has greatly influenced the reading skills and habits of the students and in fact 34 percent of the students have access to their own iPhone. Today, majority of the schools increasingly have the access to digital media. With such kind of availability of technology, students can readily access the reading materials in a digital format. The paper discusses the impact of the reading skills and habits with the introduction of technology. Reading is one of the oldest habits with the passion of the greatest personalities of all the time. The emergence of technology has led to some extraordinary change in the reading culture and habits of the students. Imagining today’s educational system without technology can be difficult for the students and the teachers. A learning environment without interactive white boards, laptops, TVs and electronic devices would be difficult to identify as a conducive learning environment (Datta & Macdonald-Ross, 2002). Technology has made its existence in the reading behavior of the students. Although printed media still commands significant sales, reading is no longer confined to print reading as the scope of reading has evolved drastically in the recent days due to evolution of the internet to include web pages, e-papers, e-journals, websites, chat rooms, blogs, discussion boards, e-mails and other communication documents. This has made reading and access to information easier and f aster as a student can access information from the internet at their convenience (Gambrell, 2005). Reading habits can be determined by the number of minutes per day that are spent when

Examples of two problems in the healthcare field that have Essay

Examples of two problems in the healthcare field that have mathematical solutions - Essay Example For example, Young’s Rule is commonly used to determine child’s dose. The formula for Young’s Rule is as follows: Rationale for the use of Young’s Rule to determine dosage for children is that there is a lot of variation in the size, weight, and tolerance level of the children. There needs to be a formula that can standardize the determination of dosage for children regardless of these factors. Young’s Rule is particularly used when the dosage has not been recommended for the children by the manufacturer. Using Young’s Rule, dosage for a child can be determined just by using his/her age as the information. For example, if 500mg of a tablet is prescribed for an adult per day, then to find the dose for a child 10 years of age, the process would be as follows: Doctors and nurses operating in the health care industry have to deal with a lot of complicated cases quite often. New procedures and operations are being realized for the treatment and cure of diseases that have so far been considered incurable. Rapid advancement in the field of science and technology has provided answers for many unsolved questions. However, it is not easy to convince a patient that needs a surgery to undergo it. This is where statistics plays its role. Doctors gain confidence of the patients by referring to past patients that have undergone the surgeries successfully. Let’s suppose an older adult needs to have a polyp in the vocal cord surgically removed. He is double-minded on whether or not to undergo the surgery because he may not survive anesthesia as he also happens to be a patient of diabetes, asthma, and few other health complications. Mathematical solution for an old patient that wants to know what are the chances of survival after being given surgery under general anesthesia is providing him with the statistics mentioning the survival rate for patients of the same age in the past. The rationale for providing the patient with the statistics is that it

Civil engineeringredevelopment of ratho stationedighburgh Essay

Civil engineeringredevelopment of ratho stationedighburgh - Essay Example Further, the redevelopment project of Ratho station would also be very helpful as it would be capable to support wider choice of tram services and also helps the occupants in the neighbourhood residential area (Edinburgh, n.d.). The entire landscape of the region is expected to be developed by upholding the rich heritage and natural assets in the region (Edinburgh, n.d). Further, necessary precautions are also given to ensure the occupational safety and health of passengers and the employees in the station. Maximum utilization of renewable energy and also using natural means to give maximum comfort conditions would be the core elements in the architectural plan. Providing the right orientation to enhance the heat gain, passive cooling means to reduce the load on HVAC systems are the few essential interventions planned in this exercise. Providing adequate open spaces that would create more comfort for the passengers are the other key concerns addressed in the planning process. The redevelopment project shall also communicate the philosophy of protection of ancient monuments and buildings besides conservation measures adopted at the heritage locations. BREEAM standards would be followed closely in an effort t o promote the sustainable re-development process of the station. In addition the Ratho station shall act as the focal point of generating local employment. Guidelines of BREEAM. BREEAM guidelines gives the proper direction for the sustainable development initiatives that could be adopted in the design of energy efficient and environmentally safe infrastructure components. The major emphasis given is in the design of cycle ways and pedestrian tracks. Strengthening public transport systems with less dependence on private transport are the important options for providing better living conditions. They also take proper attention for effective implementation of the proposed the travel plans like special cycle ride ways. The important design considerations that need to be incorporated in the design of station facilities are as follows As the energy conservation is one the top most priorities in the redevelopment process, all the lighting systems used would be of the high efficiency lighting systems or low energy consuming units. Further, all the signals and related units too would be converted or replaced in these lines. Conversion of the railway station at Ratho into as an energy producing station , such that station is capable of generating its own power is one of the design objectives. The piezoelectric systems that use the mechanical energy from the movement of gate to generate voltage could be implemented. The successful implementation of such type of systems are claimed by East Japan railway Company. Based on the volume of the passengers expected at the Ratho station it is estimated that atleast 1000kW per second could be generated from Ratho station (Schwartz, 2008). The use of energy efficient LED lamps could be used to indicate the tram arrivals at the station which could lead to considerable reduction in the electric bill (Irani,2006). Further, using systems that minimizes the water consumption by implementing water reuse systems to conserve the water used for

ESSEX COUNTY COURTHOUSE Essay Example | Topics and Well Written Essays - 1000 words

ESSEX COUNTY COURTHOUSE - Essay Example It is considered as the largest and busiest trial court in New Jersey serving a population of 798,301 citizens of Essex County living in the vicinity in an area of 127.44 square miles (Bentley 45-7). The Essex Courthouse underwent a total rehabilitation worth $49 million and this step saw its recognition for the award of Donald T. Dust Recognition in 2005. This was the highest honor from the Newark Preservation and Landmarks Committee. The Donald T. Dust Recognition Award was named after the founder of the committee, the late Donald T. Dust. The award is given for â€Å"outstanding efforts towards the preservation of the historic landmarks in the City of Newark.† The Historic courthouse was praised for having excelled in its restoration on an ambitious project carried out by any government level. Apart from the aforementioned award, the court house also received three other awards; the North Jersey Chapter of the Victorian Society’s local preservation award, New Jersey Historical Sites Council preservation award and the national preservation award which was received from the Victorian Society in America. A work of art by itself, the courthouse boasts of a variety of treasures of art, beautiful sculptures and paintings works done by some of most renowned American artists of the twentieth century. They beautifully capture the meaning and insight of American Law and this promotes the worthiness of the place making it a place to visit for any tourist (Dow, George, and Mary 101). The Essex County Courthouse is made up of colonial history architectural structures. It has helped the entire county to be designated as the Essex National Heritage Area by the National Park Service. Areas surrounding the County Courthouse have been preserved due to their significance nationally, acting as tourist attraction sites and by extension earning the county with lots of revenues

The role of social media in the 2011 Japanese disaster Dissertation

The role of social media in the 2011 Japanese disaster - Dissertation Example This is simply because the media are always after of informing the public of the great risk involved nd the needed recovery (Miles and Morse, 2007). The world witnessed such event due to the availability of live coverage and actual footage of the disaster’s destructive force. In situation like this, the media are the most important sources of information. They eventually have pervasive power to disseminate information to keep everyone highly informed about things that matters to the entire humanity. For many decades, media have remarkably improved and evolved due to its vibrant dominance in imparting information throughout the world. Their scope of spreading the right information has reached not just within a certain place but today it has remarkably moved over in the entire world. The media have remarkably become among of the most important tools for public relations activity and news coverage (Courtright and Slaughter, 2007). In the midst of advanced information technology, the ultimate goal of the media is to aggressively scatter information from one place to another in a fast pace. In fact, people are bombarded with information daily because of the capacity of the media to transform certain information to be relevant to them. People are always looking forward to the right information and they always expect to have it from the media. In particular, this paper tries to discuss the role of social media in the 2011 Japanese disasters such as earthquake and tsunami. The role of television One of the oldest technologies invented by human is television. Today, in wherever part of the world, it is one of the most important sources of information and entertainment of the people. Television has become the major part of the daily lives of... One of the Japanese in an interview told the media about his horrible experience during the earthquake and its series of aftershock. ‘I have witnessed how strong the magnitude of the earthquake was. The whole building was already moving like a cradle does.’ Due to this coverage of the media, people from other parts of the world were given enough idea how horrible was the said experience. They were given the right and even detailed information how strong was the magnitude of that earthquake plus they were provided with the actual idea of the tsunami through a live aerial video footage. In the midst of 2011 Japan disasters, it is evident that television has become one of the most important sources of information. For instance, it is through television news reports that individuals have been informed about their family relatives abroad especially those in Japan. Specifically, television has become one important instrument that could be used for precautionary measures and monitoring of hazards behaviours of the people (Morris, 2005). The television broadcasted significant news reports from Japan and these specifically try to update concerned individuals about the ongoing progress of disaster among the Japanese. For instance, the television has become the channel of information how Japan had correspondingly attempted to solve the issue in facing the aftermath of the disaster. It is therefore clear that television has the potential to trigger emotion by simply trying to give visual details of specific information. People may not be focusing on the opinion of the news report but they are actually after of what they see. Through the live telecast of tsunami in Japan, people from around the world had enough information about the potential destructive forces of nature.

Toyota Brake Problem Analysis Research Paper Example | Topics and Well Written Essays - 2250 words

Toyota Brake Problem Analysis - Research Paper Example They are the leading automobile manufacturer in the world for the last few decades. Even in America, Toyota cars are selling more than what the local automobile manufacturers were able to sell. Quality and reliability are the major features of Toyota vehicles. Competitors are struggling to compete with Toyota because of the superior quality, excellent supply chain, and very good after sales support, offered to the consumers by Toyota. It is difficult to compete with Toyota individually and therefore competitors are forming regional blocs to compete with Toyota. For example, â€Å"DaimlerChrysler and BMW accepted GM's invitation to cooperate in joint development of hybrid technology, in part to gang up on Toyota†2. In short, the competitors were struggling to compete with Toyota till recent times. However, Toyota suffered some major setbacks in recent times and forced to recall some of its cars because of technical problems like brake problems accelerator pedal problems etc. Th is paper briefly analyses the impacts of such problems caused to Toyota at present and in future. Some owners of the 2010 Prius have reported their brakes do not always engage immediately when they press the brake pedal, or that the brakes have an inconsistent feel. The National Highway Traffic Safety Administration said it would assess the scope of the problem and the safety risk to about 37,000 cars that could be affected3 Brake problems and accelerator pedal problems were the major technical problems which caused Toyota to recall millions of vehicles from America, Europe and Asia for repairing and replacing. The Prius, a hybrid-powered (gas and electric) sedan introduced in American market as the most environmental friendly car by Toyota, suffered major brake problems which forced Toyota to recall around 37000 cars from American market alone. This vehicle was manufactured strictly in accordance with the demands of President Obama. Obama earlier declared cash for clunker program f or replacing old cars from American roads and to encourage Americans to use more environmental friendly and fuel efficient cars. Many of the Americans utilized the cash incentives offered by Obama to replace their old cars and they purchased Prius because of the claims put forward by Toyota. However, the brake problems of Prius affected the images of Toyota as a trusted brand in America. Toyota Motor Corp extended its safety recall of millions of its most popular cars to Europe and China in a further blow to the reputation of the world's largest auto maker. The scale of the fix for potentially dangerous accelerator pedals emboldened rivals and could land the Japanese carmaker with hundreds of millions of dollars in extra costs per month. Toyota, a byword for quality and reliability, said it had not yet determined how many vehicles in Europe would be recalled, or when, but media and analysts believe 2 million may be affected on top of some 6 million in North America. In China, the wo rld's biggest auto market in 2009, the carmaker said on Thursday it had submitted an application to recall over 75,000 RAV4 vehicles4 It is estimated that around 8 million Toyota were so far recalled from the global market because of accelerator and brake problems. Toyota engineers are working day and night to rectify the problems and to regain the lost confidence of the public. Nobody has any doubt about the abilities of Toyota in bouncing back from this crisis; however, it is

Management Solutions Using the PISCO Methodology Case Study

Management Solutions Using the PISCO Methodology - Case Study Example Many people have already transferred from place to place and a lot of those people, the so-called immigrants, have already decided to stay and work on the foreign lands they have gone to. Hence, the main effect of this social move on achieving success on other places, the employment of the multicultural population has been the resort to supporting the lives of the said immigrants. Hence, the workforce of every company making up the business industries is at times having the same worries on how to face the challenge of dealing with and managing people who are widely different from each other.Understanding this particular factor suggests that Lael Matthews is indeed facing a particular management dilemma that practically subjects her to a decision that needs to be made abruptly and systematically understanding the fact that this particular decision would directly affect the organization as a whole. Having this responsibility established right upon her shoulder, it could be observed how important her decision is going to be in connection with the growth of the organization that she is standing for. To know how complex the matter is, the definition of the entire situation shall be presented below.There are three managers vying for the promotion that is to be given to only one particular candidate. Among the candidates included three major personnel which included Liz, Roy and Quang Yeh. All particular individuals have had their own chances of serving the organization for quite some time and had been able to find ways to improve the progress of the business for some certain ways in their own remarkable ways.

Gay marriage in America Essay Example for Free

Gay marriage in America Essay America was built on the foundation of equality for all men; however, not until recently have gay and lesbian individuals inherited such civil rights. One of the largest and most pressing issues effecting the gay population is the issue of gay marriage. Marriage is defined as â€Å"the relationship that exists between a husband and wife or a similar relationship between people of the same sex† (Websters). Within the past ten years fifteen states have legalized gay marriage. â€Å"As of Nov. 13, 2013, gay marriage has been legalized in 15 US states (CA, CT, DE, HI, IA, MA, MD, ME, MN, NH, NJ, NY, RI, VT, and WA) and the District of Columbia. 34 states have gay marriage bans through either laws or constitutional amendments or both.† (Procon) Fifteen states legalizing gay marriage in ten years is a strong the accomplishment however, it is still, and continues to be, a very polarizing issue within the country. The passage and acceptance of gay marriage effects many different diversity categories including but not limited to age, religion, and ethnicity and race, and economic status. Age There is a direct correlation between age and the opinion of same sex marriage in America. According to The Pew Research Center, younger Americans are much more accepting and favor same sex unions over older Americans (PewResearchgroup). â€Å"Individuals, born after 1980, favor allowing gays and lesbians to marry legally by a 53%-to-39% margin, while there is less support for same-sex marriage among Baby Boomers those born 1946 to 1964 than among younger age groups. Currently, 38% favor allowing gays and lesbians to marry legally while 52% are opposed† (Pew Research) These recent poling numbers would suggest a continuing trend from generation to generation; each new generation is more in favor of same sex marriage than the previous. With more Americans favoring same sex marriage than ever before, one would believe this trend of acceptance of gay marriage will continue over the next generations to come. Religion There is a strong relationship between how religious you see yourself and your views and attitudes toward gay marriage. This idea is not very surprising although very important as it contributes to an understanding of the religious factors that influence opinions about issues directly impacting the gay population. â€Å"Religious attendance is associated with negative attitudes towards gay and lesbians and less support to gay and lesbian civil rights.† (Todd and Ong, 1) There is a positive link between high religious attendance and negative attitudes towards gay marriage; religious attendance is a constant predictor of attitudes towards gay marriage. Within subgroups of religion such as Christian Orthodoxy and conservative Protestant, â€Å"with such an identification, therefore reducing the odds of supporting gay marriage.† (Todd and Ong, 1) Findings suggest the more one identifies and strictly follows their religious views has a direct link to their views on gay marri age. Ethnicity and Race Views and opinions, whether they be negative or positive regarding gay marriage changes and varies within ethnicities and race. African-Americans are generally more opposed to gay marriage versus their white counterparts. â€Å"African-American religiosity is primarily responsible for their conservative views about homosexuality and same-sex marriage.† (Sherkat, Mattias de Vries, and Creek, 81) The factors of race and religion closely relate to each other in this aspect and help to influence each other. As stated above religion has great influence on ones views of same-sex marriage and â€Å"African-Americans have the highest rates of religious participation of any subgroup of the U.S. population† (Sherkat, Mattias de Vries, and Creek 81) â€Å"Between 1998 and 2004, white opposition to same-sex marriage declined to under 54 percent, and it dipped to under 46 percent by 2008. Opposition to same-sex marriage also declined substantially for those of â€Å"other† races, decreasing to under 40 percent in the 2004 survey, and fluctuating between 45percent in 2006 and 43 percent in 2008. Yet, African-American opposition did not decline substantially between 1988 and 2006.† (Sherkat, Mattias de Vries, and Creek 81) Within different races the opinions of gay marriage seem to be changing with the times except for the African-American race. Again, whether it is due to outside factors of religion, culture, or tradition, the African-American race seems to be lagging in the forward movement of gay marriage. Summary As Americans we are guaranteed certain inalienable civil rights and liberties, however as we have seen and know that is not always true. Based on an individual’s sexual preference the ability to marry is not always assured. Factors such as age, religion, ethnicity and race, and economic status greatly influence ones opinion on same sex marriage. Those who are older and more religious oppose gay marriage more than their counterparts who are younger and less religious. Is this to say every older religious individual does not believe in same sex marriage? The answer is no; however, these factors such as age and religiousness tend to follow these trends. There is also variation in opinions within races and ethnicities. White Americans seem to be the most accepting of gay marriage over African-Americans and other races. Discussion The decision on choosing gay marriage legalization and views in America today comes from the realization that there are more gay couples seeking marriage in today’s society than ever before. Gay marriage is no different than heterosexual marriage between a man and a woman with the one obvious exception of gay marriage being between two individuals of the same-sex. Often times, gay marriages are not granted the same civil rights and civil liberties as their heterosexual counterparts. Age, religion, ethnicity and race, and economic status greatly factor into ones positive or negative  views on gay marriage. Throughout this course I have learned that some individuals or even groups of people, such as the gay population, have a very difficult time obtaining the same advantages as their peers. In the past, homosexuality was something to be feared, however, today the public opinion of gay marriage is changing for the better. Stereotypes and prejudices still exist today however they are slowly being phased out by an understanding and more positive attitude towards gay marriage. As of today fifteen states have legalized gay marriage with many other states predicated to soon follow suit. This research has helped me better understand the struggle and plight that the gay community often faces for basic civil rights. Liberties and benefits that I take for granted that come along with marriage are not often extended to the gay community based solely on sexual orientation. I have gained a new appreciation of marriage because I know it is not something that is equal for everyone as well as not obtainable for every individual at this present time. Marriage is not something to be taken for granted because there are those that still cannot share in its wealth. American was built on the foundation of freedom for all regardless of differing diversities; I believe this should hold true for all regardless of sexual orientation. Work Cited â€Å"Gay MarriageProCon.org.† ProConorg Headlines. ProConorg, 11 Nov.2013. Web. 17 Nov. 2013. Kohut, Andrew. â€Å"Less Opposition to Gay Marriage, Adoption and Military Service.† Pew Research Center for the People and the Press RSS. People Press, 22 Mar. 2006. Web. 06 Nov. 2013 â€Å"Marriage.† Marriage. N.p., n.d. Web. 17 Nov. 2013. Sherkat, Darren, Kylan Mattais De Vrias, and Stacia Creek. Race, Religion, and Opposition to Same-. Social Science Quarterly (2010): 80-100. EBSCO. Web. 17 Nov. 2013. . Todd, Nathan R., and Katherine S. Ong. Political and Theological Orientation as Moderators for the Association between Religious Attendance and Attitudes toward Gay Marriage for White Christians. Psychology of Religion and Spirtuality 4.1 (2011): 56-70. EBSCO. Web. 2013. .

Sequencing Technology for Epilepsy Diagnosis

Sequencing Technology for Epilepsy Diagnosis Epilepsy: It is estimated that at many as 10% of the general populace will experience a seizure in their lifetime. (Persad et al., 2003) Epilepsy is a chronic neurological disease defined by its characteristic symptom, recurrent and spontaneous seizures. (Berg et al., 2011) (Asher Y et al., 2012) Epilepsy is a common condition with an occurrence of up to 3% in the population (Deng H et al., 2013). According to Pal D.k et al., (2010) over half of epilepsies have a genetic cause. A large body of research has gone into identifying the genetic causes and corresponding molecular mechanisms of epileptic disorders. Epilepsies have a wide variety of causes including dysfunctional ion channels (channelopathies), abnormal brain development and errors of metabolism etc. (Garofalo S et al., 2012) Research in the genetic mutations behind epilepsies is vital in further understanding the pathology of the many different conditions and developing superior treatments for the afflicted patients. Early Onset Epileptic Encephalopathy: Epileptic Encephalopathies are a large number of rare (prevalence of 1et al., 2010). The symptoms of an EE generally include severe and recurring seizures along with cognitive and developmental delay and/or deterioration. This cognitive and behavioural decline may be influenced by the seizure activity as well as the underlying mechanisms of disease (Kaiman B.A. et al., 2012). The term Epileptic Encephalopathy encompasses a wide variety of syndromes with a diverse range of genetic causes and considerable overlap with other syndromic disorders such as Autism and Mental Retardation. (Berg et al., 2011). The overlap in these syndromes and continuing progression in our understanding of EE’s has resulted in A.T. et al (2010) emphasising that the term epileptic encephalopathy should be viewed as a â€Å"concept and a description† of the wide spectrum of epileptic conditions with an encephalopathic course that are being observed in the clinic. A key diagnostic feature is that Epileptic Encephalopathies tend to occur in infancy to early childhood. While adults can suffer from epilepsy with encephalopathic features this does not tend to be as severe as the Early Onest Epileptic Encephalopathies (EOEE). Children suffering from EOEE’s rarely make it to adulthood due to their poor prognosis. Berg A.T. et al (2010). While more research is coming to light on the potential lasting damaging effects of seizures (Berg et al., 2011) what is certain is that the early onset and repetition of the severe seizures present in EOEE’s is devastating to the early development of patients and their continued growth. As the patients progress from a neonate towards childhood their symptoms will also progress. For example seizures in neonates may not be observable to a clinician as the axonal pathways are not fully myelinated yet and prevent the â€Å"surge† from reaching the motor cortex. Once the brain is fully myelinated the seizures would become observable clinically even though the onset was much earlier in the neonatal stage. This progression of the clinical presentation of epileptic seizures is mirrored in the likelihood of infants suffering from Early Infantile Epileptic Encephalopathy (Otohara syndrome) to develop into Infantile Spasms (IS) at 3-6 months in life. Patients’ suffering from IS tend to develop into Lennox-Gastaut syndrome in childhood. (Asher Y et al., 2012) Diagnosis and treatment: As seen in table 1 and table 2 there are a number of epileptic encephalopathies with a clear enough presentation to make an accurate diagnosis based on the clinical symptoms alone. However due to the rarity of these conditions and the occurrence of EOEE’s with unclear presentations (I need a %?) confirmation of a candidate mutation (gene?) is considered the gold standard when it comes to EOEE diagnosis. (Lemke J.R. et al., 2012) In Lemke J.R. (2012) it was shown that when comparing the diagnostic results of a target gene panel against a clinician’s suggested diagnosis that the gene panel results matched the suggest diagnosis in the EOEE’s with clear presentations. This accounted for 50% of the cohort. However for the remainder of the cohort with unclear EE symptoms there very few suggested diagnoses and not all of these were accurate. It has been suggested by Kay C, (2012) that the significant failure to confirm a genetic diagnosis for unclear EE’s is due to the role of de novo variants as candidates. While we may have the above lists of confirmed disease and causative gene mutations in tables 1 and 2 there are still many other EOEE’s without validated genetic causes that could be the result of de novo mutations in the patients. Considering the ever increasing list of epilepsy linked (but not validated) genes, 265 of which identified in (Lemke J.R. et al., 2012)) it is clear that the current gold standard of diagnosing EOEE’s isn’t high enough. A case study shown by Zupanc M.L., (2009) recorded the diagnostic process of a patient â€Å"Kay† that originally presented with slight head drops at 7 months old. Correlating the head drops to an epileptiform EEG (in this case a â€Å"generalised high-amplitude burst of polyspike, spike and slow wave discharges†) allowed certain conditions to be ruled out however it was highlighted that while a confident diagnosis was reached there were alternatives that cou ldn’t be ruled out. Difficulty in EOEE diagnosis can stem from the multitude of potential genetic causes available for some presentations which can lead to a clinician wandering blindly picking candidates for Sanger sequencing to identify a candidate mutation. (Lemke J.R. et al., 2012) Next generation sequencing technology: If the issue in diagnosing EOEE’s is the lack of validated genetic causes for the different presentations then the most comprehensive way to investigate the matter is to examine the EOEE genomes in comparison to controls and identify the candidate genes. Next generation sequencing technology has provided the means to do this and recent years have seen a surge of NGS based studies in EOEEs and their genetic causes. (Lemke et al., 2012) (Veeramah K.R. et al., 2012) (Veeramah K.R. et al,. 2013) The original human genome project was officially announced as completed in April 2003 (Wheeler D.A., et al. 2013). This project made use of the hierarchal shotgun sequencing method (Chial H et al., 2008). This entailed the use of bacterial artificial chromosome clones (BAC) which each housed a 100Kb fragment of DNA. Over 20,000 over these BAC clones were mapped to the human genome and the order in which these BAC clones would be aligned was the tiling path that would be followed to sequence each human chromosome. The BAC clones are further sub divided into 2 Kb fragments (appropriately sized for sequencing) and these are sub-cloned into plasmid vectors and the fragments that will undergo sequencing. The sequencing was undergone by capillary electrophoresis methods. As long as there is sufficient overlap between these sequences they can be aligned to recreate the BAC clone structure. Then using the BAC clone mapped tiling path the sequences of the BAC clones can be aligned to create a contiguous stretch of sequence that represents the human chromosome. (Mardis E.R., 2008) The advances made in this area to create the next generation sequencing technologies involve a movement away from capillary electrophoresis methods and changes in the methods of how the DNA fragments are assembled to produces the genome sequence. Whole Genome Sequencing removes the use of BAC clones and instead the genome is fragmented into different distinct size classes and placed into plasmid and fosmid subclones. By generating paired end reads and using the number of bases between these reads based on the size classes the genomes can be sequenced quicker than using BAC clones. Next generation sequencing platforms allow for massively parallel DNA sequencing and come in a variety of different set ups. As the need for BAC clones has been removed the sample preparation process is much quicker and cheaper than the method used in the original human genome project. Also while the actual run time of the next generation sequencers is longer than that of the capillary based platform the fi nal yield of reads is much higher (from 96 reads on the capillary platform to up to tens of millions on a massively parallel system). This explosion in genomic sequencing technology less than two years after the completion of the first human genome project has provided an astonishing change in the pace of genomic research. (Mardis E.R., 2008) NGS read diagrams? Next generation sequencing and epilepsy: The study of genetic diseases including the EOEE has benefitted greatly from the genome sequencing revolution. Whole genome sequencing techniques have been used to identify a de novo variant in the SCN8A gene which encodes voltage gated sodium channel pore-forming alpha-subunits. Following discovery of the variant the effects of the variant on channel function was observed and shown to implicate the gene’s involvement in EOEE and Sudden Unexpected Death in Epilepsy (SUDEP). (Veeramah K.R., et al., 2012). Targeted gene panels (next generation sequencing of a list of target genes coding regions only) has proven effective in diagnosing clear presenting EOEE and even providing a potential causative variant when no clinical diagnosis is possible. Most impressive of all was the use of whole exome sequencing (WES) to identify de novo candidate variants of relevance in 7 out of 10 children and potentially identifying 3 new genes that could be linked to EOEE (Veeramah K.R. et al., 2013 ) WES is the process of sequencing only the human exome rather than the whole genome. The exome consists of all the coding regions (exons) of the genome. Even though the exome only accounts for 1% of the whole genome it is estimated to contain 85% of disease causing mutations (Choi M et al., 2009). As of April 2013 U.S. National Human Genome Research Institute claims to sequence a whole genome at the price of $5826. The Howard Hughes Medical Institute claims to sequence the whole exome at the all-inclusive cost of $500. The Broad Institute of Massachusetts Institute of Technology estimates that whole exomes can be sequenced at four times the rate of the genome in their facility (Perkel J.M 2013). This rapid and ongoing reduction in cost is mirrored at the rate WES projects are being undertaken. With a date filter for the end of 2010 on Pubmed I performed the search â€Å"exome sequencing† and found a total of 44 articles. By the end of 2012 this 805 and by the end of 2013 the nu mber had more than doubled to 1,751. Whole exome sequencing projects have the advantage of not only being cheaper and faster than whole genome projects but also are a more comprehensive option than targeted gene panels for identifying EOEE candidate variants. While not as complete in whole genome sequencing in scope 85% covers a significant amount of data to be analysed and only leaves a 15% chance of not finding a candidate variant. It should also be noted that the exome is much easier to process and analyse while the whole genome includes non-coding areas which we are currently not really able to analyse in such a way to validate the relevant link between disease and non-coding variants (Perkel J.M 2013). Hypothesis: The question we are trying to answer with these projects is â€Å"Can whole exome sequencing detect candidate disease causing variations in early onset epileptic encephalopathy patients†? As this project involves isolated probands and one family trio it also raises the question of whether the inclusion of parent WES data allows for more rapid and accurate variant analysis. As such the end research goals are to identify likely and relevant disease candidate variations in the proband WES data and confirm their presence with Sanger sequencing The benefits of WES studies in EOEE candidate variants are numerous and important. Identifying a confirmed candidate mutation can allow an affect family to receive genetic counselling. If a clear mechanism of disease can be ascertained from the disease candidate then potentially alternative anti-epileptic therapy can be implemented based on the specific condition to improve patient prognosis even slightly. Along with this as EOEE have such a wide variety in causes and mechanisms some can respond poorly to some standard anti-epileptic drugs and lead to rapid deterioration of the patient. Identifying a genetic cause can prevent this from happening. (FIND REFERENCE) On a larger scale understanding the complex mechanisms of these devastating disorders is the only way to improve and develop treatments for these conditions and improve patient prognosis. Understanding how these rare forms of epilepsy manifest may in turn provide clues into the mechanisms of the more common forms of epilepsy . (FIND REFERENCE) As more research is beginning to highlight the role of earlier onset of seizures on the developing brain and the encephalopathic effects WES could become an effective screening tool in the future that would allow early intervention to control or prevent these devastating seizures and greatly improve patient standard of life and change EOEE to a more manageable condition. (Berg et al., 2011) References: (Persad V, Epilepsy and developmental disability) Berg AT ET al, epilepsy cognition and behaviour Asher Y Molecular bases and clinical spectrum of EIEE Scheffer I., Genetic testing in epilepsy what you should be doing Deng H Molecular biology of genetic based epilepsies D.K. Pal, A.W. Pong, W.K. Chung, Genetic evaluation and counseling for  epilepsy. Nature reviews, Neurology 6 (8) (2010) 445e453. Garofal S from genetics to genomics of epilepsy Hennekam, care for patients with ultra rare disorders Kaiman B.A. et al., A genetic diagnostic approach to infantile epileptic encephalopathies Berg AT et al Epilepsy, cognition and behaviour. Lemke J.R. Targeted next generation sequencing in epileptic disorders. Kay C whole genomes in the clinic (Veeramah K.R. et al de novo pathogenic SCN8A mutation identified (Veeramah K.R. et al, Exome sequencing reveals new causal mutations in children epilepsia (Chial H et al., 2008) DNA Sequencing Technologies Key to the Human Genome Project .(Mardis E.R., 2008) Next generation DNA sequencing methods. (Veeramah K.R., et al., 2012) de novo pathogenic SCN8A (Veeramah K.R., et al., 2013) WES 9/10 de novos (Choi M et al., 2009) Genetic diagnosis by whole exome capture and massively parallel DNA sequencing. (Perkel J.M 2013) ScienceMag exome sequencings towards