Low risk
by the investment contract

In the process of risk assessment, in particular, sensitivity analysis was performed. To analyze the sensitivity of the project was set to a range of studies from minus to plus thirty to thirty percent. Measuring step was set at ten percent. The analysis was used to estimate key performance indicators:

  • Investment costs;
  • Volume of sales;
  • Selling price;
  • Direct costs;
  • Total costs;
  • Salary.

As a result, the following was revealed:

The sensitivity analysis in rubles showed that the project in question is characterized by high resistance to a change in the basic parameters and the risk of inefficiency of the project can be considered low. So, for example to ensure a positive value NPV, the level of product prices, sales volume and the level of direct costs can be reduced within 30%.

Sensitivity analysis of the project in US dollars, showed that in case of reduction of the sale price or volume of production by 30%, the project goes beyond the payback period.

This phenomenon is due to the general trend of the currency (dollar / ruble) and a high level of depreciation of the ruble, which was established in the project at a rate of 7.5%. This value has been established because of the need to address the crisis in the global economic system. However, given the other macroeconomic indicators, such as the price of oil relative to the exchange rate fluctuations, as well as a short-term crisis period, the probability of the basic parameters of the established framework is quite low.

It should also be noted that our study shows that the market for dairy products is scarce. The trend in prices shows a positive trend. Thus, we can conclude that the development of negative scenario is unlikely.

 Sensitivity analysis in rubles

Params -30% -20% -10% 0% 10% 20% 30%
  Discounted payback period %
1 Start-up expenses 54 56 59 61 64 66 68
2 Sales volume 79 72 66 61 58 55 52
3 Sales price 79 72 66 61 58 55 52
4 Direct costs 60 60 61 61 62 63 63
5 General expenses 61 61 61 61 62 62 62
6 Salary 59 60 61 61 62 63 64
  Profitability index
1 Start-up expenses 2,13 1,97 1,82 1,70 1,59 1,49 1,40
2 Sales volume 1,10 1,30 1,50 1,70 1,90 2,10 2,30
3 Sales price 1,10 1,30 1,50 1,70 1,90 2,10 2,30
4 Direct costs 1,77 1,75 1,72 1,70 1,67 1,65 1,63
5 General expenses 1,71 1,71 1,70 1,70 1,69 1,69 1,68
6 Salary 1,80 1,76 1,73 1,70 1,66 1,63 1,60
  Internal rate of return %
1 Start-up expenses 37 34 31 28 25 23 21
2 Sales volume 13 19 23 28 32 36 40
3 Sales price 13 19 23 28 32 36 40
4 Direct costs 30 29 28 28 27 27 26
5 General expenses 28 28 28 28 28 28 27
6 Salary 30 29 29 28 27 26 26

Sensitivity analysis in dollars

Params -30% -20% -10% 0% 10% 20% 30%
  Discounted payback period %
1 Start-up expenses 57 61 63 66 69 72 75
2 Sales volume 84 79 72 66 62 59 55
3 Sales price 84 79 72 66 62 59 55
4 Direct costs 64 65 66 66 67 68 68
5 General expenses 66 66 66 66 66 67 67
6 Salary 64 65 66 66 67 68 69
  Profitability index
1 Start-up expenses 1,79 1,65 1,53 1,42 1,33 1,25 1,17
2 Sales volume 0,93 1,09 1,26 1,42 1,59 1,76 1,93
3 Sales price 0,93 1,09 1,26 1,42 1,59 1,76 1,93
4 Direct costs 1,49 1,47 1,44 1,42 1,40 1,38 1,36
5 General expenses 1,44 1,43 1,43 1,42 1,42 1,42 1,41
6 Salary 1,51 1,48 1,45 1,42 1,40 1,37 1,34
  Internal rate of return %
1 Start-up expenses 28 24 21 19 17 14 13
2 Sales volume 6 10 15 19 23 26 30
3 Sales price 6 10 15 19 23 26 30
4 Direct costs 20 20 19 19 18 18 17
5 General expenses 19 19 19 19 19 19 19
6 Salary 21 20 20 19 18 18 17