CAPEX (Capital Expenditure)

CAPEX (Capital Expenditure) is the one-time investment a business makes to acquire long-lived productive assets — land, civil works, plant and machinery, utilities, and pre-operative expenses — needed to begin operations. CAPEX sits on the balance sheet as a fixed asset and is depreciated against revenue over the asset's useful life (typically 10–25 years for Indian biogas and recycling equipment), in contrast to OPEX which is consumed within the same financial year.

For Indian project budgets, CAPEX is conventionally broken into five buckets: land and site development (10–15%), civil works and buildings (15–25%), plant and machinery (40–55%), utilities and balance-of-plant (10–15%), and pre-operative expenses including consultancy, financing fees, and pre-commissioning trial costs (8–12%). A 10 TPD CBG plant typically lands between ₹12–18 crore total; a 5 TPD tyre pyrolysis unit between ₹3–5 crore; a 1 TPD e-waste dismantling plus PCB recovery line between ₹2–4 crore. These are guide ranges only — actual figures vary by 30–40% with site conditions, automation level, and pollution-control specifications.

CAPEX defines the financing structure. Indian banks typically fund 65–75% as term loan, with the balance as promoter equity. Subsidies under MNRE (for CBG), MoEFCC (for waste management), and state-level schemes can offset 20–40% of CAPEX — but they are reimbursed after commissioning, so the project must self-fund the full amount upfront and recover later. CAPEX understatement is the single most common cause of Indian project distress: a 20% overrun typically converts a 16% IRR project into a 9% IRR project once additional debt is drawn and depreciation rises.

• One-time investment in long-lived assets — depreciated, not expensed in year one.
• Five buckets: land, civil, plant and machinery, utilities, pre-operative.
• Indian financing norm: 65–75% term loan, 25–35% promoter equity.
• 20% cost overrun typically halves the project's post-tax IRR.