1. Project feasibility report on Agrawal auto parts Pvt. Ltd. (Piston rings) By: KULDEEP AGRAWAL Roll No:- MT14IND010 Industrial Engineering (2014-15) Mechanical Engg. Department VNIT Nagpur
2. Content Introduction Demand study Location study Raw material study Technical study Implementation schedule Financial aspects Financial analysis
3. Introduction Piston ring is one of the most important part of the Diesel/Petrol engines. It is an open-ended ring that fits into a groove on the outer diameter of a piston in a reciprocating engine such as an internal combustion engine or steam engine. The principal function of the piston rings is to form a seal between the combustion chamber and the crankcase of the engine. The goal is to prevent combustion gases from passing into the crankcase and oil from passing into the combustion chamber.
4. Demand study Piston ring is the one of the most replaceable part of the diesel/petrol engines. It has great demand in the replaceable market as well as in new engines market. For the last few years there is noticeable increase in the automobile industry, which is the vast market for it. Piston rings are not only used in the automobile industry but also used in : Railway Engines Compressors Steam Hammers Cars Retaining Rings So, by maintaining quality and using proper marketing techniques there is always a great market of this product
5. The piston rings would be supplied to: Porwal Auto Components Ltd,Pithampur,Madhya Pradesh-91-7292- 405101 Liugong India Pvt. Ltd, PLOT NO. 163, SECTOR 3, INDUSTRIAL AREA, Pithampur - 454774, Madhya Pradesh, India Mahle engine parts Ltd ,Plot No 112, Sector 1, Pithampur, Dhar - 454775, Industrial Area
6. Location study Availability of land 400 sq.mt. land is available in industrial sector 3 of Pithampur , Dhar MP. Approach to site Good road network ,connectivity with NH 79 and NH 59. Transportation Rented vehicle for Transportation and supply is available. Water Personal bore water of land owner and daily need is fulfilled by municipal corporation water supply Power Electricity available for 24 hrs at good tariff . Other facilities The amenities like post office, hospitals, schools, petrol pumps, Bus services, Banks are available near working site.
7. Raw material study The materials used to make Piston Rings are one of the most critical factors in its performance. Listed below are some of today's common material used in manufacturing of piston rings and metallic seals: Cast iron , Cast iron alloyed for piston rings , Nodular cast iron alloyed for piston rings. Piston rings are generally made up of cast iron . The blanks of cast rings of required size and desired properties are procured from the local foundries or casting suppliers. the blank of castings are taken from following suppliers- Indus Technologies, industrial sector 1,Pithampur,Madhya Pradesh. Raneka industries Ltd. Dhar, Madhya Pradesh. Porwal Auto Components Ltd, Pithampur , Madhya Pradesh.
8. Technical study The blanks of cast rings of required size and desired properties are procured from the local foundries. After that blanks are cleaned and get ground .Then the blanks are undergone through various processes like facing, rough diameter , rough bore, finish diameter & finish bore. The rings are generally machined to the required shape by means of turning, a process in which the ring blank, already axially ground, is copy turned on the inside and outside diameters. After a segment equivalent to the free gap is cut from the ring it assumes the free shape that will give it the required radial pressure distribution when fitted into the cylinder.
9. CASTING BLANK CLEANED AND GROUNDED FACING ROUGH AND FINISH BORING AXIALLY TURNING GAP CUTTING PACKAGING
10. Quality Controls & Standards The procured blanks castings should be checked very carefully as per given requirement(size , grade etc).This is the very first step in quality control . The product should be monitored after completion of each stage so that chance of rejection at the end is eliminated. Piston rings should be manufactured as per IS : 5791 -1971 & IS: 8422 for IC engines.
11. Production Capacity Production Capacity (Per annum) = Production rate per hour * Efficiency *Hours per shift * No. of shift per day * No. of working days per month * No. of months per annum. Production rate per hour = 25 Efficiency = 75% Hours per shift = 8 hours No. of shift per day = 1 shift No. of working days per month = 25 days No. of month per year = 12 months
13. Basis and Presumptions 1. The production capacity of the unit has been worked out on the basis of single shift of 8 hours a day for 300 working days a year ( i.e.25 days a month ). 2. The unit is expected to work at 75% efficiency of installed capacity. 3. Wages for labour, etc. have been considered as per the prevailing market rates in accordance with the Minimum Wages Act.
14. 4. The unit is assumed to run in a rented/leased building. 5. The cost of machinery and equipment's have been taken as per the rates quoted by manufacturers/suppliers. 6. The cost of raw material and other inputs are based on current prices prevailing in local market. 7. Interest rate for fixed and working capital investment have been calculated on an average rate of 14%.
15. Implementation schedule Sr No. Activity Estimated period 1. Preparation of the project report 1 month a. Calling quotations 2 weeks b. Preparation of Report 1 week 2. Provisional registration as SSI Unit 3 months 3. Clearance from Pollution Control Board 3 months 4. Financial Arrangements 1 month 5. Purchase and Procurement of Machinery and Equipment 1 month 6. Installation of Machines and Equipment 1 month 7. Electrification etc. 1 month 8. Recruitment of staff 1 month 9. Commencement of production 9 months onwards
16. Financial aspects 1.Machinery & Equipments Sr. No. Description Qty Price (Rs.) 1 Lathe machine,1800 mm bed with 3 H.P motor 2 3,40,000 2 Lathe machine,900 mm bed with 2 H.P motor 1 2,60,000 3 Face grinder with special attachment, 4 H.P motor 1 60,000 4 Bench drill machine.12mm capacity 1 15,000 5 Bench grinder,250mm wheel dia,1H.P motor 1 15,000 6 Gauges ,tools & other equipments LS. 40,000 TOTAL 7,30,000
21. Total recurring expenditure (per month) 1+2+3+4 =3,56,400 /- Total working capital (for 3 months) 3,56,400 x 3 = 10,69,200/-
22. TOTAL CAPITAL INVESTMENT 1. Fixed capital = Rs. 8,43,000/- 2. working capital = Rs. 10,69,200/- Total = Rs. 19,12,200/-
23. Cost of production per annum 1. Total recurring cost per year = Rs. 42,76,800 2.Depreciation on machinery & equipment @ 10% = Rs. 73,000 3.Depreciation on office furniture @ 20% = Rs.8,000 4.Interest on total investment @ 14% = Rs. 2,67,708 Total cost of production = Rs. 46,25,508
24. Bank Name- SBI Bank, INDORE Principal amount Rs. 14,00,000 /- Rate of interest 14 % p.a. SOURCE OF FINANCE
25. FINANCIAL ANALYSIS Turnover (per year) : Qty. Rate /set Value(Rs.) 45000 sets of piston Ring @ Rs.150 /- 67,50,000/- Gross Profit (Per annum) = Total turn over - (Per annum) Total cost of production (Per annum) Gross Profit (Per annum) = 67,50,000 46,25,508 = 21,24,492/-
26. TAXATION 1. Corporate Tax in India : = 30% Total Income = 30% of Gross Profit = 0.30 * 21,84,492 = 6,37,348/- INR 2. DDT( Director Dividend Tax) = 15% (Gross Profit/Annum Corporate Tax) = 15% (21,84,492 6,37,348) = 15% (15,47,144)/- = 2,32,072/- Total Tax payable = 6,37,348 + 2,32,072 = 8,69,420/-
28. Net profit ratio = Net profit per annum x 100 Turnover per annum = 12,55,072X 100 67,50,000 = 18.6% Rate of return = (Net profit per annum x 100 )/Total investment = (12,55,072x 100 )/ 19,12,200 = 65.6%
29. Break Even Point (B.E.P): Fixed Cost SR NO. Description Amount (Rs) 1 Depreciation on machines and equipment tools, fixtures and office equipment's 73,000 2 Building rent 7,20,000 3 interest on total investment 2,67,708 4 Insurance 1,20,000 5 40% of Salary & Wages 5,47,200 6 40% of other contingent expenses (excluding rent & insurance) 3,12,000 Total Fixed Cost : 20,39,908
30. Production cost per annum: Rs. 46,25,508 Turnover : Rs. 67,50,000 Quantity produce per annum: 45000 Fixed cost: Rs. 20,39,908 Fixed cost+ production cost per unit*x=sales cost per unit* x BEP : Volume(x) : 43210 sets Pay back period : 11 months Sales : Rs. 64,81,500 (sales cost per unit*x)