Project Feasibility Report on

Precision Auto Pistons Pvt.Ltd.

ByAniket K. Kulkarni

Roll No:- MT14IND003

Industrial Engineering (2014-15)

Mechanical Engg. Department

VNIT Nagpur

IntroductionThe automotive industry is the key driver of anygrowing economy. The automobile industry comprisesautomobile and auto component sectors.

The component production range includes

• engine parts 31%,

• drive transmission and steering parts 19%,

• suspension and braking parts 12%,

• electrical parts 10%,

• equipment's 12%,

• body and chassis 9% and

• others7%.

This project report is mainly focussed on manufacture

of “automobile piston”, one of the most demanding

engine parts.

Auto piston is a part of automobile which reciprocates

in the engine cylinder to transmit power to the wheels. It

is generally made of Aluminium.

Raw material study

Aluminium Alloys are the preferred material for pistonsboth in gasoline and diesel engines due to their specificcharacteristics :- low density, high thermal conductivity,easy machinability, high reliability and very goodrecycling characteristics & Good corrosion resistance..

L M 13 Aluminium Alloy

Al-Si12Cu

(Al rest, Si 12, Cu 1.0, Fe 0.8, Mg 0.3, Mn 0.3 (wt.%))

Raw Material Supplier

1. Gold Star Alloys

Plot No. 276, Sector No. 7, Opposite Sahani GasIndustrial P. C. N. D. T. A, Bhosari,

Pune - 411026, Maharashtra.

2. All Metal India Private Limited

No. 94, B/2, Rasta Peth, Opposite Swami NarayanMandir ,

Pune - 411011, Maharashtra.

3. S. S. Enterprises, Chakan

Gate No. 347/1K, Behind Suvarna Fibrotech Company,AT Post Mahalunge, MIDC, Chakan ,

Pune - 410501, Maharashtra.

4. Samrat Enterprises

Vitthal Nagar, Near Radex Company, Pimpri Road,Landewadi, Bhosari, Pune-411039,

Maharashtra.

Demand Study

• The Indian automobile industry is growing at a veryhigh rate with sales of more than one millionpassenger vehicles per annum. The overall growthrate is 10-15 % for automobile industry and 28 % forautomobile component sector annually.

• Today’s competitive market has put all majorautomobile companies upfront to design anddevelop varieties of vehicles as per customerdemands. The replacement market is also likely toexpand. This indicates scintillating prospects formuch faster growth and development of new autocomponent industry.

The Auto Component Manufacturers Association(ACMA) has pegged domestic demand for autocomponents of $ 20-25 billion in 2015 -16from currentdemand of approximately $ 10 billion.

Technical study

Flow of Processes involved in Manufacture

of Piston by Casting Process :-

CASTING

X RAY INSPECTION

HEAT TREATMENT

MACHINING PROCESS

1) PIN HOLE BORING

2) CNC TURNING

i) Open end bore machining

ii)Rough outer diameter turning

iii) Grooves forming

3) DRILLING AND GRINDING

4)DEBURRING AND TIN COATING

5) REAMING

PIN FITTING AND FINAL INSPECTION

PACKEGING

Quality Controls & Standards

As per IS 7793 : 1975, Aluminium Alloys for I.C engine

pistons; basically four grades of the alloys have been

specified namely – 2285, 4658, 4928-A and 4928-B

with various alloying compositions like Si, Cu, Mg, Fe,

Mn, Ni, Zn, etc.

Hardness has been specified between 90 to 140 HB with

tensile strength ranging from 165 to 275 N/mm2 for

various grades.

Production Capacity :Production Capacity (Per annum) = Production rate

per hour * Yield rate * Efficiency *Hours per shift * No.

of shift per day * No. of working days per month * No.

of months per annum.

Production rate per hour = 12

Yield rate =95%

Efficiency = 70%

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) = 12 *.95 *. 70 * 8 * 1 * 25 * 12

= 19152 Nos.

= 19000 Nos. (Say)

Production Capacity (Per annum) = 19000 Nos.

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 70% efficiency of

installed capacity with yield rate of 95%.

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 16%.

Location study

Availability of land Rented 4000 sq. feet land is available in the industrial

region of Pimpri Chichwad.

Approach to Site Good network of Rail and Road transport. Near the

National Highway NH 4.

Transportation Rented vehicles for transportation and supply are

easily available near the working site.

Water Personal Bore water of land Owner is available for

drinking water and daily needs. Municipal Corporation

taps are also available.Power Electricity is easily available with 24 hrs.

Other facilities The amenities like Post office, Banks, Police station,

Petrol Pumps, Canteen, Bus services etc. are available

in this area.

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. FIXED CAPITAL

(i) Machines & Equipment's :Sr.No. particulars Qty. Rate per unit

(In Rs.)

Amount

(In Rs.)

1 Crucible tpye Tilting Furnace (Electrical), 250 kg 4 70000/- 280000/-

2 Boring Machine 1 50000/- 50000/-

3 Lathe Machine, Bed length 4’6”, swing

dia 350 mm, 1.5 KW / 2 H.P

4 60000/- 240000/-

4 Precision Lathe Machine 2 80000/- 160000/-

5 Pillar type Drilling Machine, 0.5 H.P 1 35000/- 35000/-

6 Bench Grinder double ended, 0.25 H.P 1 15000/- 15000/-

7 Tempering Furnace, 400°C 1 70000/- 70000/-

8 Laboratory comprising chemical and physical testing 1 200000/- 200000/-

9 Bench-Vice, Table, Fixtures, Measuring Instruments, Moulding

box, Die, Guages, etc.

L.S. 100000/- 100000/-

10 Generator and Other Electrical Accessories 1 100000/- 100000/-

Total = 1250000/-

(ii) Pre-Operative Expenses : Rs. 70000/-

(iii) Electrical and Mechanical installation @ 10% of Plant

and Machinery cost: Rs. 125000/-

(iv)Office/Lab. Furniture & Equipment's: Rs.100000/-

Total Fixed Capital = 1545000/-

2. WORKING CAPITAL (PER MONTH)

(i) Salary & Wages :

Sr.No.Salary & wages Nos. Salary Amount

1 Production Manager 1 22000/- 22000/-

2 Supervisor 2 12000/- 24000/-

3 Storekeeper 1 7000/- 7000/-

4 Office Assistant 1 9000/- 9000/-

5 Skilled Worker 4 10000/- 40000/-

6 Semi-skilled Worker 5 8000/- 40000/-

7 Unskilled Worker 3 6500/- 19500/-

8 Maintenance Fitter 1 9000/- 9000/-

170500/-25575

196075

Total =Perquisites (i.e. Bonus, Incentives, Allowances ) @ 15% =

Grand Total

(ii) Raw Materials :

Sr.No. Raw/Input Material Qty. Rate per

unit (In Rs.)

Amount

(In Rs.)1 Aluminium Alloy, Al-12%Si 480 Kg (Considering

piston weight 300 gm)

110/- 52800/-

2 Packing Material (Moulded

hard paper cartoon )

1600 10/- 16000/-

68800/-Total =

(iii) Utilities :

Sr.No. Utilities Consumption Rate per unit

(In Rs.)

Amount

(In Rs.)

1 Electricity 4000 Units 5/- 20000/-

2 Fuel 200 Litre 55/- 10000/-

3 Water 100 KL 10/- 1000/-

31000/-Total =

(iv) Other Contingent Expenses :

Sr.No. Particulars Amount

(In Rs.)

1 Land & Building rent 95000/-

2 Insurance 10000/-

3 Office stationary and postage 3000/-4 Publicity and advertisement 10000/-

5 Travelling and conveyance 12000/-

6 Legal and other expenses 8000/-

7 Repair and Maintenance 8000/-

8 Consumable stores 6000/-

Total = 152000/-

• Total Working Capital, i.e. Recurring Expenditure

(For 1 Month) = 447875/-

• Total Working Capital, i.e. Recurring Expenditure

(For 3 Months) = 1343625/-

• Total Capital Investment (Fixed + Working) =

28,88,625/-

Source of Finance

Bank Name- HDFC Bank

Principal amount – Rs. 23,00,000 /-

Rate of interest – 16 % p.a.

Loan Tenure : 8 years

TAXATION1. Corporate Tax in India :

= 30% Total Income

= 30% of Gross Profit

= 0.30 * 3293320

= 9,87,996/- INR

2. DDT( Director Dividend Tax)

= 15% (Gross Profit/Anum – Corporate Tax)

= 15% (3293320 – 987996)

= 15% 2305324/-

= 3,45,799/-

Total Tax payable = 9,87,996 + 3,45,799 = 1333795/-

FINANCIAL ANALYSIS1. Cost of Production (Per annum)

Sr. No. Particulars Amount (In Rs.)

1 Total annual Recurring Cost 5374500/-

2 Depreciation on Machines & Equipment's @10%(Excluding furnace)

90000/-

3 Depreciation on Furnace @20% 70000/-

4 Depreciation on Office/Lab Furniture & Equipment's @20%

20000/-

5 Interest on total Capital Investment @16% 462180

Total 60,16,680/-

2. Turn-over (Per annum)

3. Gross Profit (Per annum)

Gross Profit (Per annum) =

Total turn over (Per annum) – Total cost of production(Per

annum)

Sr.No. Item Qty. to be

sold/Anum

Rate per unit

including VAT @

13%

Amount (In

Rs.)

1 Automobile Piston 19000 480 9310000/-

Gross Profit/Anum = 9310000 – 6016680

= 32,93,320/-

4. Net Profit

= Gross profit – Tax payable

= 3293320 – 1333795

= 19,59,526/-

4. Profit Ratio

Net Profit Ratio = (Net profit per annum / Total turnover per annum) * 100

= (19,59,526 / 9310000)x100

= 0.2104

= 21.04%

5. Rate of Return (On Investment)

Rate of Return = (Net profit per annum / Total capital investment) * 100

= (1959526 / 28,88,625) * 100

= 0.6783

= 67.83%

6. Break Even Point (B.E.P)

Fixed Cost

Sr.No. Particulars Amount (In Rs)

1 Interest on total capital investment 462180/-

2 Total depreciation 90000/-

3 Building rent 1140000/-

4 Insurance 120000/-

Total 18,12,180/-

Production cost per annum: Rs. 60,16,680/-

Turnover : Rs. 93,10,000/-

Quantity produce per annum: 19000

Fixed cost: Rs 18,12,180/-

Fixed cost+ production cost per unit*x=sales cost per

unit* x

BEP :

• Volume(x) : 11050 pistons

• Pay back period : 7 months

• Sales : Rs. 53,04,000 (sales cost per unit*x)

ADDRESSES OF MACHINE & EQUIPMENT SUPPLIERS

For lathe, boring, drilling and grinding m/c,

1. Precision Machine Tools 16/1, Gopi Nath Estate, Part –II, Swami Narayan Chamber, NH-8 Ahmedabad – 382 415.

2. J.P Machine Tools Private Ltd. 1575, G.T Road, Dholewal Chowk Ludhiana – 141 003.

3. Simplex Engg. Works, G.T Road, ASR Bypass Chowk, Batala, Punjab.

For crucible furnaces

1. Steel Fast Engg. (P) Ltd.,16/2, Mathura Road,

Karkhana Bagh, Faridabad – 121 002.

2. D.G Enterprise, J.N Bose Road, Subhash Park,

Kolkata – 700 147.

Thank you