Piston ring kuldeep agrawal

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

Content

• Introduction• Demand study• Location study• Raw material study• Technical study• Implementation schedule• Financial aspects• Financial analysis

Introduction Piston ring is one of the most important part of the

Diesel/Petrol engines. It is an open-endedring that fits into a groove on the outer diameter of a piston in a reciprocating engine such as aninternal combustion engine or steam engine. The principal function of the piston rings is to forma seal between the combustion chamber and the crankcase of the engine. The goal is to preventcombustion gases from passing into the crankcase and oil from passing into the combustion chamber.

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 EnginesCompressorsSteam HammersCarsRetaining Rings

So, by maintaining quality and using proper marketing techniques there is always a great market of this product

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

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.

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.

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.

CASTING BLANK

CLEANED AND GROUNDED FACING ROUGH AND FINISH BORING

AXIALLY TURNING

GAP CUTTING

PACKAGING

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.

Production CapacityProduction 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

Now,Production Capacity (Per annum) = 25*. 75 * 8 * 1 * 25 * 12= 45000Production Capacity (Per annum) = 45000 Sets.

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.

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%.

Implementation scheduleSr 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 month’s onwards

Financial aspects1.Machinery & Equipments

Sr. No.

Description Qty Price (Rs.)

1 Lathe machine,1800 mm bed with 3 H.Pmotor

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.Pmotor

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

• Installation & electrification charge @ 10% of cost of machine = 73,000 Rs.

• Furniture & office equipment= 40,000 Rs Total= 1,13,000 Rs.

WORKING CAPITAL ( per month)

1. Personnel Sr. no. Designation No. Salary

(per month) Total

1 Production Manager 1 25000/- 25000/-

2 Supervisor 1 15000/- 15000/-

3 Skilled worker 2 12000/- 24000/-

4 Unskilled worker 2 8000/- 16000/-

5 Store-keeper 1 10000/- 10000/-

6 Clerk-cum-Typist 1 10000/- 10000/-

7 Peon 1 7000/- 7000/-

8 Watchman 1 7000/- 7000/-

TOTAL 1,14,000/-

2.Raw material (per month)

3.Utilities (per month)Electricity & Water = Rs 40,000

Sr.no.

Description Qty. Rs.

1 Piston ring castings @ Rs.48/kg 1300 Kg 62,400

2 Packing Material (Moulded hard paper cartoon ) @ Rs. 10

500 5000

Total 67,400

4. Other expenses (per month)Sr. no. Description Rs.

1 Stationary 4000

2 Transport charges 25000

3 Telephone 4000

4 Maintenance 20000

5 Insurance 10000

6 Miscellaneous 12000

7 Rent 60000

TOTAL : 1,35,000

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/-

TOTAL CAPITAL INVESTMENT 1. Fixed capital = Rs. 8,43,000/- 2. working capital = Rs. 10,69,200/- Total = Rs. 19,12,200/-

Cost of production per annum

1. Total recurring cost per year = Rs. 42,76,8002.Depreciation on machinery & equipment @ 10% = Rs. 73,0003.Depreciation on office furniture @ 20%

= Rs.8,0004.Interest on total investment @ 14%

= Rs. 2,67,708 Total cost of production = Rs. 46,25,508

• Bank Name- SBI Bank, INDORE

• Principal amount – Rs. 14,00,000 /-

• Rate of interest – 14 % p.a.

SOURCE OF FINANCE

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/-

TAXATION1. 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/-

Net Profit

= Gross profit – Tax payable

= 21,24,492– 8,69,42= 12,55,072/-

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%

Break Even Point (B.E.P): Fixed CostSR NO. Description Amount

(Rs)

1 Depreciation on machines and equipment tools, fixtures and office equipment's

73,000

2 Building rent 7,20,0003 interest on total investment 2,67,7084 Insurance 1,20,0005 40% of Salary & Wages 5,47,2006 40% of other contingent expenses

(excluding rent & insurance)3,12,000

Total Fixed Cost : 20,39,908

Production cost per annum: Rs. 46,25,508Turnover : Rs. 67,50,000Quantity produce per annum: 45000Fixed cost: Rs. 20,39,908Fixed cost+ production cost per unit*x=sales cost per unit* xBEP :• Volume(x) : 43210 sets• Pay back period : 11 months• Sales : Rs. 64,81,500 (sales cost per unit*x)

Addresses of Machinery Suppliers – • 1.Emtex Machinery Private Limited: No. 4-E, Vandhana

Building, No. 11, Tolstoy Marg, Connaught Place, Delhi - 110 001,

• 2.R. K. Foundry And Engineering Works: G.. T. Road, Batala - 143 505, India

• 3.Accurate Auto Lathes Private Limited: Dugri Road, Near Canal Bridge, Ludhiana - 141 002, India

• 4.Atul Machine Tools: Metoda GIDC, Plot No. P-103, Opp. Makrana Marble, Kalawad Road, Metoda, Rajkot - 360 003,

• 5.Memco Machinery Mart , No. 4094, 1st Floor, Kuch Dilwali Singh, Ajmeri Gate, Delhi - 110 006, India

THANK YOU