1

NORTH EASTERN REGIONAL INSTITUTE OF MANAGEMENT

FEASIBILTY REPORT OF ADIRTHA STEEL

FURNITURE

SUBMITTED TO SUBMITTED BY

MR. SAMANYA BARUAH PARTHA PRATIM MAHANTA

FACULTY MBA 2nd

SEM

2

PREFACE

The project or feasibility report is detailed statement of information about the project and its

various aspects. The purpose of the report is to find out, as the very outset, whether the

project is sound from the economic, technical and financial points of view.

The detailed investigation involved in the preparation gives the entrepreneur a better insight

into the project, allowing him to make changes, if necessary. Besides, it is a must for getting

loan from financial institutions.

The report consists mainly of three sections:

I. Economic feasibility: It will cover an estimation of present and future demand. Present

capacity of production, competition, imports, exports, scale of operation, marketability, etc.

II. Technical Feasibility: It covers the technical aspects of the project such as the

manufacturing process, availability of machinery and equipment, availability of raw

materials, etc.

III. Financial Feasibility: This deals with estimation of the cost of plant and machinery, cost

of land and building, cost of production, annual turnover, etc.

This project report gives us the opportunity to know the planning procedure of establishing a

new venture.

Partha Pratim Mahanta

3

ACKNOWLEDGEMENT

A project cannot be completed individually. It takes lot of people and their consistent support

to make the project successful. A lot of people contributed directly and indirectly to complete

the project. I express my sincere gratitude to all those who have helped me to successfully

completed the project.

At first I would like to convey my gratitude towards my uncle Mr. Hemchandra Talukdar,

who is a proprietor of Modern Steel Furniture and Engineering, without his help it would be

impossible to have this project done.

Words run short to express my deep gratitude, which I sincerely owe to Mr. Bhabesh

Talukdar for his advice, co-operation and guidance on collection of data. I would also like to

thank a Retailer of Athgaon, they immensely helped lot to complete my project and I would

also like to thank, Indian Institute of Entrepreneur, Guwahati, from where I got the secondary

data related to steel furniture business.

Lastly, I would like to offer my sincere gratitude to. Mr. Samanya Baruah, faculty Member,

NERIM for his valuable suggestion, guidance and support through the period of preparing

this project.

Partha Pratim Mahanta

4

CONTENTS

TOPICS PAGES

Summary of the project 1-3

Economic viability and marketability 4-7

Technical feasibility 8-12

Financial Feasibility 13-20

Annexure 21-25

5

SUMMARY

6

I. SUMMARY OF THE PROJECT

1. Name of the items : Steel furnishers

2. Name of the unit : Adirtha Steel Furniture

Address : Betkuchi, Bhetapara

Guwahati

3. Telephone No : Office : 0361-2365019, +91-9706328817

Factory: 0361-2365020, +91-9954751027

4. Name of the promoter : Mr. Partha Pratim Mahanta

Khanapara, Guwahati-781022

5. Constitution of the firm : Sole Proprietorship

6. Qualification :

DEGREE YEAR INSTITUTE/UNIVERSITY

B.COM (Management) 2011 K.C.Das Commerce College,

Gauhati University

MBA (Marketing & Finance) 2013 North Eastern Regional

Institute of Management

(NERIM), Dibrugarh

University

7. Work Experience :

NAME OF THE

ORGANISATION

ITEMS MANUFACTURED DURATION

Modern Steel Furniture and

Engineering (MSFE)

Guwahati

Steel Furniture

3 years

7

8. Family background :

Name and address of the units/ items manufactured

Mr. Hem Chandra Talukdar,

Proprietor of Modern Steel Furniture and Engineering (MSFE)

Pathsala, Barpeta-

Phone No: +91-9678235249 (M)

+91-9864607083 (M)

9. Proposed location :

Factory : Mr. Amarendra Mahanta

Betkuchi, Bhetapara

Guwahati

Show Room : Ranee Bazar,

Joyanagar, Guwahati-781022

10. Estimated Project Cost : Rs. 24.50 Lakhs

11. Name and Address : IDBI Bank

of the Bank : Branch: Pan Bazar

Guwahati- 781001

12. Scheme of the Loan : Funding Under Credit Guarantee Scheme for

Micro and Small Enterprises (CGMSE)

13. Sanction Loan Amount : 20.00 Lakhs

14. Interest Rate : Interest Rate linked to Base Rate

15. Repayable Period : 7 years

16. Rate of Return on Total : 22.91 %

Capital Investment

17. Break-Even Point : 65.44 %

8

ECONOMIC

VIABILITY

9

I. ECONOMIC VIABILITY AND MARKETABILITY

INTRODUCTION: The rapid development of steel capacity is indeed a logical corollary of

any program of rapid industrialization for a developing country. Steel is used as a basic

material in the manufacture of metal products, electrical machinery. To Jawahar lal Nehru,

the first Prime Minister of India, steel was a symbol of the strength of the economy, and a

portent of the glory of India of the future.

India has many intrinsic advantages in the production of steel. Some of the richest iron ore

mines with the highest iron content are to be found in India. What is more, coal and iron ore

are found in close proximity to each other. In fact at one time, the cost of production of steel

in India was much lower than in other countries.

The growth of the steel industry is summarized in the given below Table. From 1950-51 to

2009-10, there was rapid growth of production of steel in India. As a result of which, the

demand for steel products has been grown-up. The government planning provides a helping

hand towards the growth of production of steel in India. However at the time when the Tenth

Plan was formulated, there was general slowdown in the major steel consuming sectors.

There were also restrictions imposed by major steel importing countries.

(million tones)

YEAR FINISHED STEEL

1950-51

1980-81

1990-91

2000-01

2007-08

2008-09

2009-10

1.0

6.8

9.6

30.3

56.1

57.2

59.7

Source: Economic Survey, 2010-11. RBI handbook of Statistics on the Indian Economy (2009-10)

10

SCOPE: Fancy furniture showrooms are mushrooming across urban India as young,

upwardly mobile professionals splurge on luxurious living room sets, baroque bedroom

basics and stylish kitchens. The spurt in real estate activity and burgeoning growth in the

information technology and services sectors has led to a mammoth increase in demand for

Steel furniture in India.

International consulting firm Technopak Advisors estimates that the steel furniture market in

India is likely to witness a compound annual growth rate (CAGR) of about 30 per cent over

the next three years. In fact, global steel furniture industry research and consulting firm, CSIL

Milano has classified India as one of the 14 largest steel furniture markets in the world.

India‟s rapidly expanding economy is seeing growing affluence, both in urban and rural

areas. The tremendous growth of the mass media is also resulting in millions of middle-class

Indians aspiring for better lifestyles. Furniture-makers are catering to the urban middle class

need for stylish homes in compact apartments.

The non-organised sector, which accounts for nearly 85 per cent of the furniture made in

India, mostly uses wood as a raw material for the home segment, while the organised sector

produces wooden, metal and steel furniture mainly for office use. Increasingly, moulded steel

furniture, iron furniture, board furniture and even bamboo are gaining in popularity.

The Indian construction industry, ranked twelfth in the world, is experiencing maximum

growth and in turn, has created a huge demand for steel furniture and allied products. In

India, the home furniture segment accounts for 65 per cent of the furniture market, the office

segment about 20 per cent and garden furniture the remaining.

With the Indian economy and the real estate sector continuing to grow at a phenomenal pace,

demand for office and home furniture is expected to expand.

11

MARKETABILITY: The demands for these items are increasing day by day due to

development of living standards in rural and urban areas. There is a good demand for these

items mainly for offices, institutions, commercial places in all areas, towns/big villages.

Proposed Selling Arrangement: The furniture produced from the “Adirtha Steel Furniture.”

will be distributed by our own showroom and to various distributor of Steel furniture across

the entire North-east and mostly in greater Guwahati.

Target Places:

1. Guwahati:

Dispur

Ganeshguri

Zoo-road

Maligaon

Beltola

Chandmari

Geetanagar

Hatigaon

Azara

Lakhtokia

2. Entire North-East (in some extent)

Target Customers:

Corporate houses

Offices

Flats

Upper and Middle Class Families

12

TECHNICAL

FEASIBILITY

13

II. TECHNICAL FEASIBILITY

MANUFACTURING PROCESS: The manufacturing process of steel furniture‟s

involves mainly cutting of sheets, tubes, flats to desired size, folding, bending, drilling,

punching, riveting and assembling as per the drawings. Finally, the items are to be spray

painted.

Figure: 1 MANUFACTURING PROCESS OF STEEL FURNITURE

Steel Raw

Cutting

Bending

Polishing

Acid Bath

Final Product

14

SPECIFICATION:

ADDRESS:

BUREAU OF INDIAN STANDARDS

Manak Bhavan

9 Bahadur Shah Zafar Marg

IN-New Delhi 110002

Tel: +91 11 23 23 79 91

Fax: +91 11 23 23 93 99

E-mail: ird@bis.org.in

Web: www.bis.org.in

INDIAN STANDARD INSITUTE (ISI)

INTERNATIONAL ORGANISATION FOR STANDARDIZATION

- ISO:9001:2008, ISO:14001:2004 certified

The Adirtha Steel furniture will be made with the best quality CRCA sheets as per INDIAN

STANDARD INSITUTE (ISI) standard and International Organization for Standardization

(ISO). It ensures durability & sturdiness of the product. The CRCA sheets used for product

are chemically treated with 8 tank pre-treatment processes like de-rusting, degreasing & zinc

phosphatising, which make product rust-free and long lasting. All Adirtha steel furniture will

be powder coated & oven baked with the help of electrostatic instruments this make product

scratch resistant & superior in finish. All Adirtha steel furniture will be provided with our

own „ADIRTHA‟ 7 lever locks for added security.

15

PLANT ECONOMICS

COMPONENTS TO BE PURCHASED FROM OUTSIDE

S.NO. NAME OF THE

COMPONENT

QUANTITY SPECIFICATION

1. Mirror and Glasses 25 Mirror as per the size

and glass for other

utilities

2. Designing materials 25 Handles, Hanger etc

Shift Per Day 1

Working Days Per Annum 300

Turnover Per Month

Steel Almirah (8 Gaze)

Show Case

10

15

16

INSTALLED CAPACITY:

S.NO. NAME OF THE

COMPONENT

QUANTITY

1. Lathe Machine 30

2. Welding Machine 30

3. Sheet Bending 30

PROPOSED CAPACITY TO BE UTILISED

S.NO. NAME OF THE

COMPONENT

QUANTITY

1. Lathe Machine 25

2. Welding Machine 25

3. Sheet Bending 25

MOTIVE POWER REQUIREMENT (Approximately)

S.NO. NAME OF THE

COMPONENT

VALUE

1. Electricity 6, 500

2. Diesel 1, 500

17

FINANCIAL

FEASIBILITY

18

III. FINANCIAL FEASIBILITY

1. FIXED CAPITAL:

LAND AND BUILDING

OFFICE AND SHOWROOM FURNITURE

S.No.

Particulars

Amount (Rs.)

1.

Land 3600 sq. f @ Rs. 12.00 Lakhs per kottah

12, 30, 000.00

2.

Boundary walls and other expenses

56, 000.00

3.

Working Shed 1820 sq. f @ Rs. 65/sq. ft

1, 20,120.00

4.

Office 96 sq. ft. @ Rs. 115/sq. ft.

11,040.00

5.

Show Room

66, 000.00

6.

Registration (AIDC)

10, 000.00

TOTAL

14, 93, 160.00

S.No.

Particulars

Amount (Rs.)

1.

Office Furniture

5, 000.00

2.

Showroom Furniture

25, 000.00

TOTAL

30, 000.00

19

PLANT AND MACHINERY (Quotation has been attach)

Total Fixed Capital:

Land and Building = Rs. 14, 93, 160.00

Office and Show Room Furniture = Rs. 30, 000.00

Plant and Machinery = Rs. 3, 39, 968.00

Total = Rs. 18, 63,128.00

S.No.

Particulars

Quantity

Rate (Rs)

Amount

(Rs.)

1.

Lathe Machine - 6ft

1

1,65, 000.00

1,65, 000.00

2.

Welding Machine 350 AMP

Capacity

1

16, 850.00

16, 850.00

3.

Sheet Bending Machine – 7ft

1

51, 500.00

51, 500.00

4.

Grinding Machine – 4ft

1

6, 500.00

6, 500.00

5.

Bench grinding Machine -

150 mm

1

6, 150.00

6, 150.00

6.

Stand Drill Machine – 1ft

1

16, 500.00

16, 500.00

7.

Gas welding and with set

1

8, 500.00

8, 500.00

8.

Spray painting Machine – 1hp

200 lbs

1

19, 880.00

19, 880.00

9.

Loose tools and installation

@10%

L.S

29, 880.00

29, 088.00

10.

Electrification

L.S

20, 000.00

20, 000.00

TOTAL

3, 39, 968.00

20

2. WORKING CAPITAL

RAW MATERIALS COMPONENTS REQUIREMENT (MONTHLY)

S.No.

Particulars

Unit

Cost/Kg

(Rs.)

Quantity

Required

(Kg)

Total Cost

1.

CRCA Sheets

60.00

800.00

48, 000.00

2.

Angle Flat Channel etc.

50.00

550.00

27, 500.00

3.

Welding Electrodes

2, 500.00

5 Case

12, 500.00

4.

Primer/Red oxide

2, 700.00

60.00

8, 100.00

5.

Paint/Putty

2, 800.00

70.00

5, 600.00

6.

Fittings and Extra

Charge

1, 500.00

L.S

1, 500.00

TOTAL

1, 03, 200.00

STAFF AND LABOUR (MONTHLY)

S.No.

Category

Nos.

Salary/Wages (Rs.)

Total Amount

(Rs.)

1.

Manager

1

12, 000.00

12, 000.00

2.

Sales Executive

1

8, 000.00

8, 000.00

3.

Store Manager

2

4, 500.00

9, 000.00

4.

Skilled Worker

2

4,000.00

8, 000.00

5.

Semi-Skilled Worker

4

3, 000.00

12, 000.00

6.

Accountant

1

6, 000.00

6, 000.00

7.

Chowkidar/Peon

2

2, 000.00

4, 000.00

TOTAL

59, 000.00

21

UTILITIES AND OVERHEADS (MONTHLY)

S.No.

Particulars

Amount (Rs.)

1.

Rent (Show Room)

8, 000.00

2.

Power Electricity (Both in Industry and Show-

Room)

6, 500.00

3.

Diesel

1, 500.00

4.

Tools Replacement

2, 500.00

5.

Stationery and Telephone

1, 000.00

6.

Tax License and Insurance

1, 500.00

7.

Repair and Maintenances

1, 200.00

8.

Travelling Expenses

1, 000.00

9.

Carriage (Inward/Outward)

3, 000.00

10.

Advertisement and Publicity

500.00

11.

Office Expenses/ Contingency

1, 500.00

12.

Miscellaneous Expenses

500.00

TOTAL

28, 700.00

Total Working Capital Required (Monthly):

Raw Materials = Rs. 1, 03, 200.00

Salaries and Wages = Rs. 59, 000.00

Utilities and Overheads = Rs. 28, 700.00

Total = Rs. 1, 90, 900.00

22

3. TOTAL CAPITAL INVESTMENT

S.No.

Particulars

Amount (Rs.)

1.

Fixed Capital

18, 63, 128.00

2.

Working Capital for three months

(3 × Working Capital / Month)

5, 72, 700.00

TOTAL

24, 35, 828.00

4. COST OF PRODUCTION PER MONTH

S.No.

Particulars

Amount (Rs.)

1.

Working Capital

1, 90, 900.00

2.

Interest @ 18 % per annum on Total Capital

Investment ( 24,35,828 ×18

100 ×12 )

36, 537.42

3.

Depreciation

Land and Building @ 5 %

( 14,93,160×5

100 ×12 )

Plant and Machinery @ 15% per annum for 1 month

( 3,39,968 × 15

100 × 12 )

Office and Show room furniture and equipment @

20% per annum for 1 month

( 30,000 × 20

100 × 12 )

6, 221.50

4, 249.60

500.00

TOTAL

2, 38, 408.52

23

5. SALES TURNOVER (MONTHLY)

6. PROFITABILITY (MONTHLY)

Sales Revenue = Rs. 2, 85, 000.00

Profitability

Profit Per Month = Rs. 46, 500.00

Profit Per Annum (46, 500 × 12) = Rs. 5, 58, 000.00

S.No.

Particulars

Quantity

Rate (Rs)

Amount

(Rs.)

1.

Steel Almirah (18 Gaze)

10.00

15, 000.00

1, 50, 000.00

2.

Steel Show case

15.00

9, 000.00

1, 35, 000.00

TOTAL

2, 85, 000.00

Particulars

Amount (Rs)

Sales Revenue

2, 85, 000.00

Less: Cost of Production

2, 38, 500.00

TOTAL

46, 500.00

24

7. PROJECT RATIOS

(a) Percentage Return of Sales Turnover = Profit

Sales Revenue

= 46,500

2,85,000 × 100

= 16.32 %

(b) Rate of Return on Total Capital Investment = Profit Per Year

Total Investment

= 5,58,000

24,35,828 × 100

= 22.91 %

8. FIXED COST

Interest on Total Capital Investment = Rs. 36, 538.00

Depreciation on Land and Building = Rs. 6, 222.00

Depreciation on Plant and Machinery = Rs. 4, 250.00

Depreciation on Office and

Show-Room Furniture = Rs. 500.00

Rent = Rs. 8, 000.00

50 % Power Electricity = Rs. 3, 250.00

40 % of Salary and Wages = Rs. 23, 600.00

40 % of Overheads = Rs. 5, 680.00

TOTAL FIXED COST = Rs. 88, 040.00

9. BREAK-EVEN POINT (BEP) = Fixed Cost

Fixed Cost +Profit

= 88,040

88,040+46,500 × 100

= 65. 44 %

25

ANNEXURE

26

ANNEXURE I

ADDRESSES OF MACHINERY SUPPLIERS

1. Ravinder Engineering House

AT Road, Guwahati, Assam- 781001

Phone: 0361- 2545869

2. Tirupati Tools and Machinery

AT Road, Guwahati, Assam- 781001

Phone: 0361- 2548387

3. Nilachal Machines and Tools

SJ. Road, Athgaon,

Guwahati, Assam - 781001

4. D.G Machineries

AT Road, Guwahati, Assam- 781001

Phone: +91- 9207023523

5. Janata Machineries Stores Pvt. Ltd.

AT Road, Guwahati, Assam- 781001

Phone: 0361- 2546590

6. Humdard Engineering Works

AT Road, Guwahati, Assam- 781001

Phone: 0361- 2548193

27

ANNEXURE II

ADRESSES OF RAW MATERIAL SUPPLIERS

1. Apana Trunk Factory

SJ. Road, Athgaon,

Guwahati, Assam – 781001

Phone: 0361- 2545435

2. Associated Iron & Steel Co.

Bhanuka Complex Block,

SJ. Road, Athgaon,

Guwahati, Assam – 781001

Phone: 0361- 2739039 / 2542381

3. Pawan Steel

SJ. Road, Athgaon,

Guwahati, Assam – 781001

Phone: 0361-2731941

4. Steel Sales Corporation

SJ. Road, Athgaon,

Guwahati, Assam - 781001

5. Apna Sail Shop

SJ. Road, Athgaon,

Guwahati, Assam – 781001

6. Kamrup Steel Traders

SJ. Road, Athgaon,

Guwahati, Assam - 781001