PROJECT PROFILE

ON
DOMESTIC LPG STOVE
*********************

PART – I

PRODUCT CODE : 340504005.

QUALITY & STANDARDS : IS:11480:1998 for LPG Grillers, Reaffirmed 2008.

IS:5116:1996 for General requirement for Domestic
and Commercial equipment , Reaffirmed 2007.

PRODUCTION CAPACITY : Quantity – 30,000 Nos. (per annum)

Value – 2,73,00,000/-

MONTH & YEAR OF : December, 2011.

PREPARATION

PREPARED BY : MSME - Development Institute,

Ministry of Micro, Small & Medium Enterprises,
Government of India
107, Industrial Estate, Kalpi Road,
Kanpur-208012.
Tele. 2295070, 2295071 & 2295073 (EPBAX)
Tele. No. 2295072 (SENET & TRC)
Tele/Fax No.: 0512- 2240143
email: [email protected]
Website: msmedikanpur.gov.in
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PROJECT PROFILE
ON
DOMESTIC LPG STOVE
*********************

PART – II

Introduction

L.P.G is the most convenient and clean fuel for domestic use and is very popular in this
modern age. The LPG stove industry is about 50+ years old and is mainly concentrated in
the small-scale sector. LPG is a by product formed during petroleum distillation and is
stored and marketed in gas cylinders of 14.2 KG ( for domestic purpose) capacity and
used generally for cooking stoves and to some extent for industrial purpose also. The
domestic LPG stove is primarily being used in the urban areas as well as in rural areas.
The industry of domestic LPG stove has grown considerably over the last 18 years and
offers a wide range of products i.e.:

i) Gas stove with one burner,

ii) Gas stove with two burners,
iii) Gas stove with two burners, one grill also called as cooking grill,
iv) Gas stove with three burners,
v) Gas stove with four burners etc.

Market Potential

In 1980, the Government of India had planned to push the exploration and production of
LPG from Bombay High Project, thereby providing tremendous push to the LPG Stove
Industry. More and more number of new connections are being released by the Govt. and
therefore the demand of LPG stove is also increasing day by day. Major portion of the
production of LPG Stove is contributed by MSMEs. Most of the units are located in the
state of Delhi and Haryana.

Basis and Presumptions

1. The basis for calculation of production capacity is on single shift, working of 25 days
per month on 75% efficiency. The time period required for achieving envisaged capacity
utilization is assumed as one year.

2. Break-even Point for the scheme has been calculated on full capacity utilization.
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3. Rate of interest has been taken @ 16% on an average. This, however, is likely to
change depending upon the location of the project.

4. Labour wages have been taken on the basis of minimum applicable. These are likely to
change depending upon the location of the project.

5. Rental charges of Rs. 80 per Sq. Mtr. per month have been taken on an average. This
figure is likely to vary depending upon the location of the unit.

6. Margin money requirement differs from project to project and type of entrepreneurs
such as women, SC/ST, physically handicapped etc. and the minimum margin money
usually asked by the financial institutions and banks is 15%. Margin money up to 25% in
some cases is also asked. The entrepreneurs may check the margin money requirement
from financial institutions for the project.

7. Terms of loan differ from one financial institution to another and in general minimum
gestation period is 6 months and it could be 2 years also. Maximum period for repayment
of loan is 7 years including gestation period. The entrepreneurs may find the exact terms
and conditions from the concerned financial institutions .

8. The cost of machinery and equipments as indicated in the scheme is approximate

ruling at the time of preparation of the scheme. The entrepreneur may check the exact
price for specific make and model of the machine selected.

9. Non-refundable deposits, cost of preparation of project report etc. may be considered

under pre-operative expenses.

10. The provision made in other respects viz; raw materials, utilities, overheads etc. is
drawn on the basis of standard variation and output. The cost indicated against each is
approximate based upon local market conditions and observations. The entrepreneur may
find out the exact cost from the concerned sources.

11. The operative period of this project is estimated to be about 10 years considering
technology obsolescence.

12. Calculations are based on manufacture of double burner stove only.

Implementation Schedule

It is envisaged that from the conception to commercial production, it may take about one
and half years, which also includes time for preparation of project report, provisional
registration, procurement of Machinery and Equipments, their installation and
electrification, clearance from all local authorities, obtaining loan from financial
institutions. However, the duration for implementation of project/unit may vary
depending upon the circumstance.
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Technical Aspects

Process of Manufacture

C.R. sheet is to be cut according to the desired length and width on the guillotine-
shearing machine. Then it has to be fed in the double action deep draw press for giving
shape of the body of LPG stove. The holes may be cut on power press in the body and
burrs must be removed. After that, the small holes are done on drilling machine. Then it
is sent for Ni-chrome plating. Then all bought out components like burners, burner tops,
pan supporting casting, Gas pipe assembly, gas cook assembly knobs, rubber rolls and
name plates etc. are to be fitted on the body. Finally the stove must be tested as per ISI
mark requirement and packed for despatching/selling.

Quality Control and Standards

The LPG stove may be manufactured and checked according to IS 11480:1998 and
IS 5116:1996. The following testing facilities are required for getting ISI certification
mark:

i) Strength testing equipment.

ii) Thermal efficiency apparatus.
iii) Combustion apparatus.
iv) Gas soundness testing equipment.
v) Floor wall and ceiling temperature-measuring equipment.
vi) Gas consumption testing apparatus.

Production Capacity (per annum)

Quantity Value

30,000 Nos. Rs. 2,73,00,000/-

Motive Power 50 KW.

Pollution Control

No pollution control is required in the unit as the unit has to get nickel crome plating
from outside. However, the general feature for pollution control must be taken into
consideration during the process of the unit.

Energy Conservation
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General precautions must be taken into consideration to conserve energy such as shunt
capacitors must be used on electric motors and carbide gas must be used with due care
while welding and general lighting system.

Financial Aspects

A. Fixed Capital
(i) Land and Building (In Rs.)
Covered area 200 Sq. mtr. on Rent 16,000
@ Rs. 80 per Sq.mtr. (per month) (200 × 80)

(ii) Machinery and Equipment

Sl. Description Ind./ Qty. Amount

No. Imp. (In Rs.)

1. Treadle guillotine Ind 1 2,00,000

shearing machine
cap. 1250×1.6 mm
with 3 HP motor and
accessories
2. Double action deep Ind 1 16,00,000
draw press 100 Tonne with
15 HP motor and
accessories
3. Power press cap. Ind. 1 6,00,000
100 tonne with
10 HP motor and
accessories
4. Power press cap. -do- 1 4,00,000
50 tonne with 5 HP
motor and
accessories
5. Circle cutting -do- 1 50,000
machine cap. 50mm
dia with one HP
motor and
accessories
6. Bench drilling -do- 1 40,000
machine cap. up
to 20 mm with
1 HP motor and
accessories
7. Double ended -do- 1 16,000
bench grinder
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200 mm wheel
size with 0.5 HP
motor and
accessories

8. Flexible shaft -do- 1 10,000

grinder
9. Edge folding -do- 1 50,000
press No. 12
10. Fly press No. 4 -do- 1 20,000
11. Gas welding set -do- 1 24,000
complete with all
accessories
12. Portable drilling -do- 2 10,000
machine 12 mm
cap. with motor
13. Spot welding set -do- 1 1,00,000
15 KW
14. Electric welding -do- 1 10,000
set cap. 300 amp

Cost of power connection 31,000

Electrification and installation 3,13,000

charges @ 10% of the
cost of machinery

Office furniture 40,000

racks etc.
Measuring 1,00,000
instruments and
testing apparatus etc.

Tools dies and 1,00,000

fixtures etc.

Total 37,14,000/-

(iii) Pre-operative Expenses 86,000/-

Total Fixed Capital (ii+iii) Rs. 38,00,000/-

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B. Working Capital (per month)

(i) Salary and Wages

Sl. Designation Nos. Salary Amount

No. (Rs.) (In Rs.)
a. Administration
i. Sales-cum-Marketing Manager 1 16000 16000
ii. Clerk-cum-Typist 1 5000 5000
iii. Accountant-cum-Cashier 1 7000 7000
iv. Chowkidar/Peon 2 4000 8000
v. Sweeper (part time) 1 2000 2000

b. Technical
i. Engineer 1 12000 12000
ii. Supervisor 1 10000 10000
iii. Skilled Workers 4 6000 24000
iv. Semi-skilled Workers 3 5000 15000
v. Helper 1 4000 4000

Total 1,03,000/-

Perquisites @15% 15,950/-

Total 1,18,450/-
(ii) Raw Material (per month)

Sl. Particulars Rate Qty. Amount

No. (Rs.) (In Rs.)

a. CR sheet 40000/ 10 tonne 400000

1.00 mm tonne
thickness
(20 SWG)

Bought out Components

b. Burners and 100/set 2500 pair 2,50,000

burners tops
(ISI mark)
c. Pan suppor- 24/set 2500 set 60,000
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ting casted
rings
d. Gas pipe 40 2500 nos. 1,00,000
assembly
e. Gas cock 160/pair 2500 pair 4,00,000
assembly
ISI mark
f. On and off 10/pair 2500 Nos. 25,000
knob
g. Name plates 2/each 2500 Nos. 5,000
h. Card board 24/box 2500 Nos. 60,000
boxes for
packing
Total 13,00,000/-

(iii) Utilities (per month) (In Rs.)

Power -7500 kWH @ Rs. 8/unit 60,000

Water - LS 1,000

Total 61,000/-

(iv) Other Contingent Expenses (per month) (Rs.)

i. Rent 16,000
ii. Telephone 1,000
iii. Postage and Stationery 1,000
iv. Transport Charges 5,000
v. Repair and Maintenance 5,000
vi. Nickel crome plating charges 2500 × 120 3,00,000
vii. Consumables like carbide, gas welding rods, 10,000
oxygen gas etc.
viii. Advertisement and Publicity 2,000
ix. Insurance 3,000
x. Miscellaneous/sales Expenses 7,000
Total 3,50,000/-
(v) Total Recurring Expenditure (per month)
[i + ii + iii + iv] = Rs. 18,29,450/-
Say = Rs. 18,30,000/-
(vi) Total Working Capital (for 3 months)
Rs. 18,30,000 × 3 = Rs. 54,90,000/-
C. Total Capital Investment

(1) Fixed Capital Rs. 38,00,000/-

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(2) Working Capital (for 3 months) Rs. 54,90,000/-

Total Rs. 92,90,000/-

Machinery Utilisation
The number of machines to be installed has been determined in such a way that planned
schedule of process will not cause any bottleneck in operation during bulk production. As
such the unit will make utilization of machinery envisaged.

Financial Analysis
(1) Cost of Production (per annum) (Rs.)

i. Total recurring cost 2,19,60,000

ii. Depreciation on machinery @ 10% 3,13,000
iii. Depreciation on office furniture @ 20% 8,000
iv. Depreciation on dies, tools and fixture @ 25% 25,000
v. Depreciation on measuring and testing apparatus @ 10% 10,000
vi. Interest on Total Capital Investment @ 16% 14,86,400
Total 2,38,02,400
Say 2,38,02,000

(2) Turnover (per year) Rs. 2,73,00,000/-

By sales of domestic LPG stoves
@ Rs. 910/- per stove 30,000 Nos.

(3) Net Profit (per year)

Turnover – Cost of Production
2,73,00,000 – 2,38,02,000 = Rs. 34,98,000/-

(4) Net Profit Ratio

= Net profit × 100
Turn over
= 34,98,000 × 100
2,73,00,000
= 12.8%
(5) Rate of Return
= Net profit × 100
Total Capital Investment
= 34,98,000 × 100
92,90,000
= 37.6%
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(6) Break-even Point

Fixed Cost (Rs.)
1. Total Depreciation 3,56,000
2. Total interest 14,86,400
3. Insurance 36,000
4. Rent 1,92,000
5. 40% of Salaries 4,94,400
6. 40% of other contingent expenses 1,48,800

Total 27,13,600/-

B.E.P. = Fixed cost × 100

Fixed cost + profit
= 27,13,600 × 100
27,13,600 + 34,98,000
= 43.7%

Addresses of Machinery Suppliers

1. M/s. Essential Machine Tools (P) Ltd.

5, Nyayamurthi, G.N Vaidya Marg, Post Box No. 2,
Behind State Bank, Fort,
Mumbai-400001
2.. M/s. Dutta Engg. Works
C-162, Mayapuri Indl. Area,
Phase-II,
New Delhi.
3. M/s. JNW Engineers
Commercial Complex,
Mayapuri Indl. Area, Phase-I,
New Delhi.
4. M/s. United Machine Co.
B-96, Mayapuri Indl. Area,
New Delhi.
5. M/s. Prem Engg. Works
20, Okhla Indl. Area,
New Delhi-110020.
6. M/s. Patel Indl. Corporation
2-B, DLF Indl. Area,
Nazafgarh Road, New Delhi.
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7. M/s. Mahalaxmi Engg. Works

20, DLF Indl. Area,
Nazafgarh Road,
New Delhi.

8. M/s. Simplicity Engineers

B-99, Mayapuri Indl. Area,
New Delhi.

9. M/s. Atlas Engg. Works

G. T. Road,
Batala

10. M/s. P. K. Engg. Works

B-1, Indl. Estate,
Aligarh.

11. M/s. S.S. Mechanical Works

Indl. Estate_B,
Ludhiana.

Raw Material Suppliers

Raw Material can be purchased from local market, as it is available easily. Moreover, it
can also be had from the Government Depots and Corporations