PROJECT PROFILE

ON

HOT CHAMBER VEHICLE

PAINTING AND REPAIRING

NIC Code : 50200

Product Code : 97102

Month & Year of Preparation: March, 2010

PREPARED BY

Micro, Small & Medium Enterprises Development Institute

Near Urkura Railway Station, Industrial Area,
Bhanpuri, Raipur (C.G.)
Phone : (0771) 2102700

1
1. INTRODUCTION:-
The repairing and painting of vehicle (two wheeler/four wheeler) on
labour charge basis is having high potential these days. The vehicles need
regular check up and servicing lfor tis smooth running. This is a labour
oriented unit and skilled labour are generally employed to get the quality of
work.

2. MARKET POTENTIAL:-
There is tremendous growth in the number of vehicles running on the
roads. As more people go in for purchasing these vehicles there would be
need for repairing, denting painting of vehicles. The project can be started at
any place but it is always better if it is established at a place where there are a
number of vehicles. The prompt and efficient service in such activity will not
find any problems in getting the job work.

3. PROCESS:-
The process involved in this industry depends upon the type and nature of
servicing needed for the vehicle broadly tinkering, overhauling, cleaning,
welding, painting, polishing etc.

The vehicle is cleaned firs. If any tinkering or denting is required, it is

carried out first after engine is separated from the chassis. The surface is
scraped and putti/luppum is applied and allowed to dry. After spray painting,
the vehicle is kept under the hot chamber electrically heated and then
polished, once it is dried.

4. FINANCIAL ASPECTS:-
A. Land & Building-

Open area with boundary wall & office (on rent) Rs. 6,000/-

Cost of construction of slope for four wheelers Rs. 1,80,000/-

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 platform, washing & servicing & water tank etc.
B. Machinery & Equipments:-

Sl. Machinery Quantity Amount

No. ______________ _________ (Rs.)
1 Arc welding machine 3 phase with 01 No. 30,000
cable & other accessories completed

2 Gas welding unit complete with hose, 01 No. 18,000

gas generator, welding torch, cylinder
etc.

3 Air compressor with 1 HP motor, hose 01 No. 30,000

pipe, spray gun etc.

4 Auto battery charger 12 volts complete 01 No. 9,500

5 Chain pully block with steel bars 2 ton 01 No. 12,000
capacity

6 Cost of hot chamber electrically heated 01 No. 1,20,000

7 Cost of car washing machine 2 HP 01 No. 68,000
electric motor with hose complete

8 Hand tools – spanner set, banal vice, -- 15,000

jacks, screw driver, plug wrench,
monkey plier, and wheel wrench,
denting & painting equipments

9 Testing equipments – Battery tester, 01 No. 8,000

compression tester, tune vulcanizing
etc.

10 Water pump set 1 HP 01 No. 9,000

11 Diesel generator 10 KV 01 No. 60,000
12 Furniture & Fixtures, tools, benches 18,000
etc.

Total cost of machinery & Equipments 3,97,500

Add. Transportation cost @ 10% of 39,750
machinery

Electrification and installation 15,000

Total: 4,52,250

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C. Working Capital Requirement (P.M.)

Personnel –

Sl. Particular Nos. Salary Amount

No. ___________ _____ (Rs. P.M.) (Rs.)
a. Manager cum supervisor 01 6,000 6,000
b. Accountant 01 5,000 5,000
c. Skilled Workers 04 3,500 14,000
d. Semi skilled workers 04 3,000 12,000
e. Unskilled workers 02 2,500 5,000
f. Storekeeper/Bill clerk 01 2,800 2,800
g. Watchment 01 2,000 2,000
______
Total: 46,800

Raw Materials/Consumables –

Sl. Particular Salary (Rs.

No. __________ (P.M.)
a. Welding electrodes 2,000
b. Gas Cylinder 2,000
c. Diesel, Mobile oil, grease etc. 4,500
d. Paints, varnishes, chemicals etc. 10,000
e. Screws, bolts and nuts, cleaning brushes etc. 4,000
f. Miscellaneous consumables 1,500
______
Total : 24,000

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 Other Contingent Expenses –
Sl. Particular Salary (Rs.
No. ___________ (P.M.)
a. Telephone 800
b. Conveyance & Traveling 2,000
c. Rent 6,000
d. Electricity charges 1,800
e. Water Charges 500
f. Stationery, postage etc. 800
g. Misc. Expenses 1,000
_____
Total : 12,900

Total Recurring expenditure (P.M.)

Sl. Particular Salary (Rs.

No. ___________ (P.M.)
a. Personnel 46,800
b. Raw Materials/Consumables 24,000
c. Other Contingent Expenses 12,900
______
Total : 83,700

5. TOTAL CAPITAL INVESTMENT:-

Fixed Capital –

Construction cost 1,80,000

Machinery & Equipments 4,52,250

Working Capital (For two months) –

Rs. 83,700 x 2 months 1,67,400

Pre-operative Expenses 15,000

_______
Total: 8,14,650

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6. COST OF OPERATING (PER ANNUM):-
1 Recurring Expenditure (83,700 x 12 months 10,04,400
2 Depreciation on machinery & Equipments @ 10% 39,750
3 Interest on Capital Investment @ 12% 97,758
________
Total: 11,41,908

7. REVENUE EARNINGS (PER ANNUM):-

1 Service charges by vehicle washing, Appx. 600 3,00,000
cleaning & minor repairs vehicles

2 Engine Overhauling including major Appx. 500 2,50,000

repairs vehicles

3 Spray painting, Denting & Chamber Appx. 185 9,25,000

drying vehicles

4 Other Misc. income from repairs, -- 50,000

battery charges etc. ________
Total : 15,25,000

8. PROFIT (PER ANNUM):-

Revenue Earned – Cost of Operating
15,25,000 – 11,41,908 = 3,83,092

9. PERCENTAGE OF PROFIT ON REVENUE –

3,83,092 x 100 = 25.12%
15,25,000

10. PERCENTAGE OF PROFIT ON CAPITAL INVESTMENT –

3,83,092 x 100 = 47.02%
8,14,650

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11. BREAK EVEN PONTS –
B.E.P. = Fixed cost x 100__
Fixed cost + Profit

= 4,96,068 x 100 = 56.43%

4,96,068 + 3,83,092

Fixed Cost –

Rent 72,000
Depreciation on Machinery & Equipments @ 10% 39,750
Interest on Capital Investment @ 15% 97,758
40% of Salaries & Wages 2,24,640
40% of Other Expenses 61,920
________
Total: 4,96,068

12. Addresses of Machinery Suppliers –

1. M/s. White India Machines, No. 18, 2nd Floor, School Road, Nandanam,
Chennai – 600035

2. M/s. Armstrong Smith & Co., 45, Armenian Street, Chennai – 60001

3. M/s. Hindustan Machine Corporation, Unit Building, J.C. Road,

Bangalore – 560002

4. M/s. Elgi Equipment Ltd., Mission school street, Secunderabad (A.P.)

5. M/s. Thermal Equipments, 2-Lataiee Bridge Road, Chennai.

6. M/s. Tempo Industrial Corporation, 394, Bhadkankar Road, Mumbai – 4

7. M/s. Therlek Electrical Furnace manufacturing Co., Tripunithera, Kerala.

7
8
 CONTENTS

Sl.
Particulars Page No.
No.

1. Executive Summary 01
2. Section 1 Present Indian Manufacturing Industry
03
Profile
3. Section 2 Manufacturing Technology Status 07
4. Section 3 Machining and Fabrication Units –
Process and Issues, Status in 13
Chhattisgarh State
5. Section 4 Details of Machinery and Process of
Manufacture in General Engineering and 52
Fabrication Industries
6. Section 5 Advanced Technologies Applicable in
General Engineering and Fabrication 54
Industries
7. Section 6 Technology Development Initiatives 58
8. Section 7 Machine Tools 62
9. Section 8 Technology and Other Initiatives 68

9
Technology study report on
“General engineering and fabrication Industries”
Executive Summary :

In 1990, India and China had almost the same GDP per capita. Since then, driven by its
manufacturing sector, China’s economy has grown much faster than has India’s and its GDP per
capita on a PPP basis is 90% higher than India’s GDP per capita. To achieve faster rates of economic
growth India urgently needs to strengthen its own manufacturing sector.
The growth in manufacturing sector is dependent on the investment climate. The structural reforms
since 1990s have made some progress. Despite recent setbacks, it is universally acknowledged that
the reforms process in India cannot be reversed and sooner or later these reforms will be
implemented. However, the long term competitive ability of Indian firms would depend on
production efficiency. Production efficiency, in turn, is dependent on ability to develop, import and
adapt new technologies among other factors.
India has made significant progress in various spheres of science and technology over the years and
can now take pride in having a strong network of S&T institutions, trained manpower and an
innovative knowledge base. Given the rapid pace of globalization, fast-depleting material resources,
increasing competition among nations and the growing need to protect intellectual property,
strengthening the knowledge base is an important issue. While India’s technical talent is recognized
world over, there have been serious institutional gaps in promoting industry-research institutions
interaction.
This report takes a critical look at the Indian manufacturing sector with respect to the technology and
scientific resource availability. The current technology status, technology development initiatives and
future imperatives have been identified to propel Indian manufacturing industry achieve high growth
rates in as far as General Engineering and Fabrication Industries are concerned.

Iron and Steel is crucial to development of any modern economy and is considered to be the backbone
of the human civilization. In fact level of per capita consumption of iron and steel is treated as one of
the important indicators of socio-economic development and living standard of the people in any
country. All major industrial economies are characterized by the existence of a strong iron and steel
industry and growth of many of these economies, at least in their initial stages of development has
been largely shaped by the strength of their Iron and Steel industries.
Products of Iron and Steel Industry are Pig Iron, Sponge Iron, Flat Steel Products, Long Products,
Alloy Steel products, foundry products etc. Major consumers of steel products are engineering
application, automobiles, construction and consumer durables.

GLOBAL SCENARIO-

Global Iron and Steel demand is rising on the back of accelerated infrastructure activity in China and
India.

Total output of Sponge iron in the world was 54.6 Million tons (Year 2004), an increase of 10% over
the previous year. The three biggest producers in the world are: India (9.4 MT); Venezuela (7.8 MT)
and Iran (6.4 MT). These four countries together account for around 40% of the global trade. China is
the biggest consumer of sponge Iron. Exports from India are less than 10% of its production, while

10
there is a marginal premium in exports along with the duty draw back facilities. The increase in
Demand for sponge iron is further fuelled by scarcity as it is being used as an alternative for metallic
scarp, as is the case of the India subcontinent. The demand supply gap in Iron and steel products and
machined parts is expected to increase and even the global industry is not prepared for this demand
onslaught. For these reasons it is expected that Iron and Steel prices, as a whole, will continue to firm
up.

As far as castings are concerned, the major producers of castings, ferrous and non ferrous are as
depicted in the table.

Country Castings (Million Tons) Operating Productivity/metal

Iron Steel Non- FerrousTotal Foundries casting plant
(Numbers) (Thousand
Tons/Year)
CHINA 14.83 1.77 1.55 18.15 12000 1.5
U.S.A. 8.26 0.99 2.86 12.11 2620 4.0
JAPAN 4.47 0.24 1.41 6.12 1713 3.5
GERMANY 3.68 0.18 0.86 4.72 651 7.0
INDIA 3.24 0.47 0.33 4.04 4500 0.6

India is the third leading nation in the production of Grey Iron and cast steel casting after China and
U.S.A. India has exported graded castings worth USD152.05 Million and sanitary casting worth
USD64.12 Million in 2003-04 mainly to USA and Europe. This has been strengthened and supported
by closure of some foundries in Europe due to global environment concerns. In fact lot of foundry
work has been shifting to low labor cost centers like India and Eastern Europe.

On the machining front, Germany, U.S.A. and U.K. have dominated the industry. Of late some Asian
countries have also emerged as a major force both in terms of production and consumption further
fuelling demand and driving growth of the industry. One of the key factors for growing stature of the
Asian countries is price competitiveness and availability of cheap manpower.

The machining and fabrication sector, which includes the global engineering projects, including auto
component industry, was expected to touch $1.9 trillion by 2015, of which around 40% ($700 billion)
was potentially expected to be sourced from low cost countries like India. Of the total global trade of
$185 billion, India’s share is merely 0.4% while China accounts for 1.2% and Mexico 5.9%. It is
expected that the present sourcing of Engineering projects and auto components from low cost
countries (LCCs) worth $65 billion may actually reach $375 billion by 2015.
(Reference : ASSOCHAM study dated April 8, 2005).

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Section 1
Indian Manufacturing Industry

Present Indian Manufacturing Industry

Profile :

The Indian economy is firmly on the path of steady growth. Even during the last decade when
other countries were in the grip of a massive slowdown, India continued to enjoy a comfortable
economic position. This recent spurt in growth is propelled by radical reforms such as the
removal of restrictions on foreign investment and industrial de-licensing. Tailoring the EXIM
policy to promote exports and aligning the import duties to meet WTO commitments further
contributed to this development. This trend is expected to continue over the next five years,
driven by a favorable business policy environment in terms of tax cuts, broadening tax base, and
reduced interest rates. The liberalization of the economy has opened new windows of opportunity
for manufacturing sector. Increasingly the success of manufacturing industries is dependent on
innovations, research and development. It is critical not only to remain competitive but also,
significant advantages can be gained by developing and commercializing new technologies With
a size of Rs. 1012 billion, the engineering sector exports stood at Rs. 303.6 billion in 2001-02 and
imports at Rs. 225.4 billion the same year. Indian engineering manufacturing sector employs over
4 million skilled and semi-skilled workers. The engineering manufacturing sector comprises of
Heavy engineering (70%) and light engineering (30%). India’s growing integration with the
global economy and the government’s recognition that infrastructure needs to be overhauled are
likely to ensure that the trend rate of growth increases in the next decade.

Importance of manufacturing sector in India’s economic growth :

The structural transformation of the Indian economy over the last three decades has been
spectacular growth of the services sector, which now accounts for about 50 per cent of the GDP.
However, the rapid growth of the services sector much before the manufacturing industry
attaining maturity is not a healthy sign. A knowledge -based economy cannot be sustained in the
long run unless it is adequately supported by a growing manufacturing economy. Moreover, a
service economy cannot continue to thrive on a long-term basis in a country where over 80 per
cent of the population is education below the middle-school level.

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Some sectors, such as IT, ITES and pharmaceuticals, will compete globally, employing perhaps
2% of the population and bringing wealth to many parts of India. At the same time, around 60%
of the population will remain dependent on the agricultural sector, sharing less than one-quarter
of India’s GDP. Without reform, the agriculture will continue to suffer from endemic
underemployment, low wages and monsoon dependency. This will result in continued urban
migration, but without the development of an industrial sector this will lead to rising
unemployment in the cities. Recognition that this pattern is unsustainable is growing. It is
estimated that India needs to create 7-8 million new jobs each year outside agriculture to stay at
its current unemployment level of 7 percent. Manufacturing jobs are ideal for workers
transitioning out of agriculture as service jobs require high level of education and
professionalism. The revival of manufacturing sector can create close to 2.5 Million new jobs
every year. With the removal of all quantitative restrictions on imports and the falling import
tariffs under the WTO regime, it is all the more important for the Indian industry to improve its
competitive edge. The sheer volume of international trade with over 70 per cent of the seven
trillion dollar market being in processed manufacturing, strongly indicates the necessity of
developing global competitiveness in this sector. Thus the above 8% growth of manufacturing
industry in India is critical to ensure healthy balance of income parity, employment generation
and sustenance of growth.

Industrial growth :

The manufacturing sector grew by 8.9% in 2004-05, comfortably outperforming the sector’s
long-term average growth rate of 7%. The sector has remained one of the engines of economic
growth since the start of 2005-06.
Industrial growth averaged 7.1% per annum in the 1980s. It accelerated slightly to 7.6% per year
in the first five years following the beginning of the economic policy reform process in 1991. In
the second half of the 1990s industrial growth trended lower at around 5% per annum. However,
since 2002-03 industrial growth has accelerated markedly on the back of recent strong GDP
growth. Rising disposable incomes, easy access to finance and the changing attitudes of India’s
rapidly rising middle class (with a traditional focus on savings) have resulted in a consumer
lending boom. Industrial growth rose above 8% in 2004-05, with consumer durables and non -
durables showing exceptionally strong growth. Capital-goods production has been growing at
double-digit rates since 2002-03, suggesting increased investment in the industrial sector and the
economy as a whole.

Critical Issues for growth :

The primary reason for Indian manufacturing not being competitive enough is the significant
presence of small-scale unregistered manufacturing units across the entire spectrum, even in
classically scale and capital-intensive segments. Such unregistered manufacturing accounts for 23
per cent of the total capital employed and 84 per cent of the workforce. Even the registered
manufacturing sector is highly skewed towards low scale. Eighty five per cent of factories in
India have less than 92 lakh invested in plant and machinery. While this is not to belittle the value
of small and medium enterprises, in India, a large number of such enterprises have been created
because of artificial market distortions. The deliberate fragmentation of units has been
detrimental to competitiveness.

13
The other important reasons for the Indian manufacturing being not competitive enough include: -
Poor quality of transport infrastructure across all sectors including port facilities (where
productivity is among the lowest in the world), surface roads, railways, airports and waterways. -
High cost of power. Industrial power continues to be among the most expensive in the world. It is
about 50 per cent more expensive than in China.
- High cost of capital: It continues to be 10-12 % against international average of 6-8 %.
The Government has to play a crucial role in providing the industry with a favorable investment
climate in terms of better infrastructure support, institutional finance at affordable rates of
interest, and designing fiscal policies aimed at promoting accelerated growth of the
manufacturing sector. In particular, special efforts are needed to upgrade infrastructure facilities.
At the same time, the manufacturing firms should concentrate on internal changes aimed at
improving efficiency and reducing costs. For E.g. a CII-Mckinsey study identifies the difference
in labour productivity across multiple sectors between India and China from 10% in TV assembly
to 360% in footwear.
Following imperatives are required at firm level:
- Upgrading manufacturing technology levels
- Redesigning organisation structures to enhance accountability and responsiveness
- Enhanced emphasis on attracting and retaining talent
- Eevolving product-mix strategies, explicitly factoring in the opportunities in export markets
- Re-engineering core processes to dramatically improve efficiency and drive business value
- Enhancing quality focus and customer orientation.

Industry Structure :
Although reforms have reduced licensing and regulation, heavy industry is still dominated by
public-sector enterprises. State-owned companies have accounted for the bulk of activity in steel,
non-ferrous metals (virtually 100% for copper, lead and zinc, and about 50% for aluminum),
shipbuilding, engineering, chemicals and paper. The government had pledged to reduce its
holdings in non -strategic public-sector undertakings to a maximum of 26%, and to close down
non-viable enterprises.

Profile of Key manufacturing sub-sectors :

Automotive

The automotive industry’s turnover stood at Rs. 878.6 billion in 2003-04 and has been one of the
fastest - growing sectors in recent years. Rising income levels, continuing poor public transport
systems, wider availability of car finance and the increase in the young population are the main
drivers of growth. Total production of vehicles rose from 4.2 m units in 1998-99 to 7.3 m units in
2003 -04. In volume terms, vehicle production is dominated by two-wheelers, which accounted
for 5.6 m units of total production in 2003-04.

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The production of passenger cars stood at 842,000 units in 2003-04, followed by three-wheelers
(340,000), commercial vehicles (275,000) and multi-purpose vehicles (146,000). Most local
product ion is sold domestically, but rising quality has contributed to a surge in vehicle exports,
which registered growth rates of over 50% in 2002-03 and 2003-04.

Steel
India produced 31.8m tones of crude steel in 2004 -05, making it one of the ten largest steel
producers in the world. A variety of grades are produced and the quality is at par with producers
such as South Korea and the US. Increased demand from China as well as strong domestic
demand, particularly by consumer -durables and automotive manufacturers and the construction
sector are the key drivers of production growth. Around 40% of output is produced in integrated
steel plants; the Remaining comes from mini-plants, of which over 180 exist, almost all in the
private sector.

Light Engineering

The size of Indian Light Engineering industry is estimated at Rs. 322 billion. In India, the light
engineering industry has a diverse industrial base with significant unorganized market. It is
estimated that light engineering sector contributes to 8-10% of total exports of the country and its
exports were Rs. 138 billion in 2002-03. The exports from the light engineering industry in India
mainly consists of structured steel products; motorcycles, cycles and auto components; electrical,
electronics, telecommunication and automation equipments; hand and machine tools; fans, filters
and pumps; and metal machine tool parts.
The Light Engineering Industry is a diverse industry with a number of distinctive sectors and sub
sectors. This sector includes low-tech items like castings, forgings and fasteners to the highly
sophisticated micro-processor based process control equipment and diagnostic medical
instruments. This group also includes industries like bearings, steel pipes and tubes etc. The
products covered under the engineering industry are largely used as input to the capital goods
industry.

Machine Tools
An industry, which has undergone a radical shift in its paradigm thinking, the Indian machine tool
industry is now recognized as a provider of low-cost high quality lean manufacturing solutions.
The industry resiliently supports all its users to enhance productivity as well as improve
competitiveness, for the betterment of the end user. The Indian machine tool industry is
approximately a Rs. 23000 million industry. There are 138 major companies manufacturing metal
cutting, metal forming, conventional and automated machine tools.

INDIAN SCENARIO :

The Indian Iron and Steel Industry is nearly a century old with Tata Iron and Steel Co. (Tata Steel),
the first integrated Steel Plant coming up 1907. At the time of independence in 1947, India already
has a small but viable Iron and steel capacity of around 1 million top per annum. Today India is the
10th largest producer of steel.
The initial period in the industry was dominated by bigger units. However 70’s sas the emergence of
small scale secondary Iron and steel producers in the private sector to bridge the gap between the

15
rising demand and stagnating supply from the existing integrated plants. During the 90’s Sponge iron
industry has been specially promoted so as to provide an alternative to steel melting scrap which was
increasingly becoming scarce.
Today, India is the largest producer of sponge iron in the world accounting for 12% of the global
output. Total production of sponge iron for our country was less than 5.6 million tons as recently as
2001, and has skyrocketed to nearly 9.4 million tons in 2004, an increase of 68% in only three years.
The year on year increase over 2003 was 22%. Indian demand and production are likely to further
firm up as explained earlier. The biggest sponge iron unit in India is M/s. Jindal Sponge Iron Ltd., at
Raipur. SMEs contribute 9.4 million tons (40%) to the national output. The major clusters for sponge
iron production are in Hazira, Bhandara at Gujrat, and are gas based. However, in the eastern part of
the country, the plants are coal based, owing to the local availability of coal.

In foundry sector India produced a total of 4.04 million (Ref: 38th Census of world casting
production-2004) tons, increasing close to 8 lakh tons over last year, 90% of the foundries in India are
in SSI sector. Major clusters for foundries in India are Howrah, Coimbatore, Belgauam, Bangalore,
Agra, Rajkot, Kolhapur, Hyderabad and Panipat.
In the machining and fabrication sector, despite still competition from countries like China and
Mexico, India is increasingly becoming a sourcing base for engineering projects and auto majors
seeking completely built-up units (CBUs) as well as outsourcing of components. India’s advanced
tooling and machining industry has enabled indigenization of capital equipment and reduced capital
costs in addition, India manufacturing sector has the potential of continuously improving capabilities
and operational excellence.

Section 2

16
Manufacturing Technology Status

Technology development is critical to a country's efforts in improving productivity, efficiency

and competitiveness of its industrial sector. Factor cost advantages are being replaced by
technology - related factors such as zero-defect product quality and international certification of
firms' quality assurance systems (e.g., ISO 9000) in determining international competitiveness.
Central to maintaining competitiveness is the ability of producers to respond quickly and
effectively to the changing demands of the international market. Technological cap abilities can
be best described in terms of three levels: the basic level involves the ability to operate and
maintain a new production plant based on imported technology, the intermediate level consists of
the ability to duplicate and adapt the design for an imported plant and technique elsewhere in the
country or abroad, while an advanced level involves a capability to undertake new designs and to
develop new production systems and components. Indian firms present a full spectrum of
technological capabilities - while there are few firms close to the international frontier in terms of
product design capability and process technology, technological capabilities of most players are
extremely limited due to growing technological obsolescence, inferior quality, limited range and
high costs. This adversely affects the ability of the organizations to respond to the challenges, not
only of increasing international competition from other low-wage countries like China, but also
from trade liberalization within the context of WTO. Most Indian manufacturing firms appear to
be stuck at the basic or intermediate level of technological capabilities. Though Indian
manufacturing industry has mastered standard techniques it has remained dependent for highly
expensive and complicated technologies.

Photo-4

17
Factors in Technological Competitiveness :

The technology competitiveness of a country is determined by a combination of policy factors

and industry specific factors. This section outlines the factors and their status In Indian context.

Policy Factors :
Import Substitution

The import strategy of the Indian government, which fostered the development of a wide range of
industries, also facilitated the unpack aging of technology imports, and hence helped absorption
and accumulation of technological learning. Though India achieved self-reliance in technologies
for local production and consumption owing to the policy of import-substitution and self-reliance,
it could not build capacity to create internationally competitive technologies to produce for
international markets. As a result, export competitiveness capabilities could not be acquired.

Human Resource Development and Technology Infrastructure :

The expansion of infrastructure for technical and higher education under the Scientific Policy
Resolution, 1958 has ensured an adequate supply of qualified technical personnel and high degree
of self-reliance – facilitating quick replacement of foreign personnel and absorption of imported
technology. Although Indian organizations are served by a network of national laboratories and
institutional infrastructure, these institutions generally fall short of quality when compared to
those in industrialized countries – putting India at a comparative disadvantage. The role of
national laboratories in designing and innovations varies from industry to industry. The main
determinants of success of national R&D institutes appear to be the nature and extent of
laboratory-industry
Interaction, the extent of market orientation of products and accessibility. Since most of the R&D
effort is limited to specialized institutes, rather than in-house, market orientation is a weak link.
Some key R&D institutes and testing facilities directly related to manufacturing industry are:
Central Manufacturing Technology Institute (CMTI)
Council of Scientific & Industrial Research (CSIR)
Central Mechanical Engineering Research Institute (CMERI)
Central Power Research Institute (CPRI)
Indian Institute of Petroleum (IIP)
National Institute of Foundry & Forge Technology (NIFFT)
Bureau of Indian Standards (BIS)
In-house R&D units of large enterprises

The range of activities of these institutes includes education/training (both academic and
practical), research and development (academic, practical, product, process and input material

18
related), provision of information services, and provision of services like testing & inspection etc.
Although the range of activities undertaken by these institutes is quite wide, resource constraints
with respect to budget, staffing and equipment limit their effectiveness in both quantitative and
qualitative terms. Some of them are located in areas away from the industrialized zones like
Mumbai, Delhi etc. Apart from R&D institutes, a number of engineering colleges - Regional
Engineering Colleges (RECs) and Indian Institute of Technology (IITs) – provide a steady stream
of engineering graduates, while the Bureau of Indian Standards (BIS) is responsible for activities
related to the
development, promulgation and maintenance of industrial and other standards. The culture of
collaborative research involving different institutes has not been promoted in past and the limited
resources are not pooled through networking to develop core technologies in sectors where Indian
industry has potential. Another vital link missing is the isolation of universities from R&D. While
universities are the major research centres in almost all developed countries, especially Germany,
Taiwan and Korea, in India they are isolated from scientific research and advancements. This is
largely because government funding of the research institutes does not goad them to seek funding
from industry and industry associations through fees and royalties charged for work performed.
This results in low commercial orientation. This has also affected the quality of higher scientific
education, which is becoming increasingly irrelevant over the years. Direct intervention
Public sector enterprises - i.e. HMT, EIL, BHEL etc. – initially emerged to be the nuclei for
technological development. Public sector industrial enterprises, because of the relatively large
scale of their operations, were able to finance and coordinate the requisite level of technological
activity – thereby overcoming high entry barriers for innovation.
Standardization of unit sizes
For process industries, the choice of unit size has an important bearing on the development of
local technological capability. Standardization of unit sizes by the government in the case of
power equipment, petroleum refining, and fertilizers has helped rapid absorption and mastery of
technologies because it has made possible the frequent replication of similar plants.

Structural and Industry-specific factors :

Technological maturity and pace of technological change

Technological self-reliance is achieved more easily in industries with relatively mature and stable
technologies, such as the process industries, than in those undergoing rapid technological change.

Availability of Scientists & Engineers

High quality human resources, and rich stock pool of engineers and scientists is necessary for
innovation. The availability of engineers and scientists determines the ability of a nation to
develop competitiveness through differentiation. In terms of availability and quality of scientists
and engineers, India scores very highly as seen in the table below.

19
However it is necessary to continuously upgrade the manpower skills in technical and techno
managerial dimensions. In a labour -surplus economy, new and efficient technologies tend to be
discouraged unless sufficient redeployment opportunities are created. These results in a vicious
cycle where new technologies are not introduced, the engineers and technicians continue to work
inefficiently, and the technical manpower quality deteriorates with respect to the world. Thus the
advantage accruing from the rich pool of engineers has been frittered away by not continuously
upgrading the talent pool. This has, in turn, resulted in the brain drain phenomenon leading to
flight of talent to advanced countries where the opportunities to upgrade exist. India has been
ranked low on the ability to retain its qualified manpower when compared with the reference
group of countries. Therefore, Indian scientific and engineering talent pool is at the disposal of
countries that create conditions conducive to the nurturing and advancement of this talent pool.

Technology Acquisition :
Technology acquisition has traditionally been viewed as a source of techniques necessary for
initiating production and hence was considered as substituting domestic R&D. In the absence of
the inflows of new and advanced technologies, however, there has been little incentive, direction
and capability to update the existing technologies. Technology continues to be sourced from other
nations, but the firm-level technology absorption is low. This is in sharp contrast to firms in
Taiwan and Korea, which absorb sourced technology and improve upon it.

20
The table shows that Capital Goods firms invest less than 1 percent of their sales turnover in
research and development. Also the private sector firms invest marginally more than the public
sector firms, which makes it look further worse, considering that the major machine tools firms
are in the public sector. This could be due to lack of confidence in domestic technology. In the
absence of the internationally competitive quality and standards in technology development,
industry has created demand for foreign technologies that are tested abroad and are easily
available.

Nature of international technologies markets :

The nature of international markets, in respect of the seller concentration and the degree of
vertical integration in an industry, affects national attempts to achieve technological self-reliance.
The choice of the mode of technology import has been found to influence local technological
capability building.

Product Technology :

World Bank study (1990) on the Indian Capital Goods sector notes that the share of human
resources devoted to design and engineering activity in Indian Capital Goods enterprises is low
compared to other industrialized countries - roughly 20 to 50 per cent of what might be expected
in comparable enterprises in those countries.
Sound product design and engineering work could have greater impact on ultimate product cost,
value and quality than comparable efforts undertaken further down the manufacturing chain. In
the firms that were sampled during the World Bank survey, there was evidence that greater
engineering resources are devoted to downstream manufacturing activities than upstream
conceptual design activities.

Process Technology :

21
India has the technical ability to achieve a high level of precision, yet Indian firms are unable to
produce quality products due to lack of supporting technologies, such as precision measuring,
material engineering and process control. The defect rates of final products are many times 5-10
time than that of Japan and those of USA. In addition, about 20 per cent of the firms have
equipment, which is more than 20 years old, and therefore obsolete. Most Indian firms are
vertically integrated
and rely far less on subcontracting arrangements, although such trend is beginning to emerge.

Summary :

The competing imports of products, increasingly allowed on quality and cost considerations, have
led to a greater consciousness of quality and costs on the part of domestic manufacturers. The
more liberalized technology import policy is also helping to bridge the technology gap. All these
factors are putting pressures on the organizations to develop best-practice technology, either by
importing or by generating their own. Few solitary achievements notwithstanding, there is clear
evidence that technological dynamism has not taken firm root in the Indian industry. In sum, the
disjointed policies in India with lack of focus have resulted in a weak innovation system and
under-utilization of research capabilities created during the first phase of growth. Thus, the
overall problem relates to the lack of appropriate linkages between different actors of the national
innovation system. India needs to address constraints on technology development as an important
part of its overall strategy for improving manufacturing sector competitiveness. The role of
government in enhancing technological competitiveness is critical to make this happen.

India: Global R&D Hub :

The Indian government has put in significant effort in last 50 years to develop the scientific and
technical infrastructure of the country. With more than 250 universities, 1,500 research
institutions and 10,428 higher -education institutes, India churns out 200,000 engineering
graduates and another 300,000 technically trained graduates every year. Besides, another 2
million other graduates qualify out in India annually.
The combination of state-of-the-art infrastructure and highly qualified manpower ensures that
India is poised to be the next Global R&D hub. This is increasingly being observed in Ind ustry as
large MNCs including GE, Microsoft, Bell Labs etc have opened there R&D Centers in India – a
first outside US for most of these output from India.

Global Comparison :

22
India has been spending 0.8% of its GDP in R&D which is much less than 2-3% range
amongmost of the developed countries. Even China and Brazil spend more than India on R&D.
This is reflected in the relatively poor rankings on innovation in the global competitive index.

23
Section 3
General Engineering and Fabrication Industry
Status in Chhattisgarh State-

Machining and Fabrication Units – Process and

Issues:
Raw Material: Machinery and fabrication units buy their material i.e. steel rods, sheets and plates
locally and through dealers. Retails branch of BSP also supplies in small quantity. Special steels
and stainless steel is procured from Kolkata and Mumbai. Sometimes inventories have to be
maintained for such items.

Products and Markets: More than 200 Machining and fabrication units- some only into
machining and many a combination of both – depend on NALCO, NTPC, L&T, OCL and Bhil
plants for orders. The units have to get registered with them to participate in there tendering
process. Bhilai Steel Plant and NTPC orders. Large consulting firms like EIL and Daniel
Consultant get some of their fabrication and machining of export items done at Rourkela.
However no direct exports are reported from the sub cluster.

Capacity of small and tiny units (tier III) are underutilized as they do not get sufficient orders. As
a whole the machining units lack market intelligence and expertise to bid for large machining and
fabrication works which they are capable to execute.

The units were having sufficient work few years back due to emergence of number of sponge iron
plants. With the present hold on setting up new sponge iron plants. Some of the machining and
fabrication units have to close shop.

The units feel that even though prices of raw materials and inputs have gone up they are getting
the same rate for there jobs which they used to get 5 years back. The delay in payments worsens
the situation.

Technology and working practices: Most of the units are using general purpose machines,
Drilling, Vertical boring machines, Lathes, and Shaping machines mostly purchased from Punjab.
Some units have installed imported second hand machines. There is no CNC or SPMs to be seen
at Rourkela.

Due to use of old machines which are not maintained properly, quality suffers. The entrepreneur
continue to use tools, jigs and fixtures which have outlasted their service life. Poor housekeeping
further hampers their work.

Improper shop floor layouts, lack of best manufacturing practices and lack of multiskill of the
workforce maker the productivity low. Safety measures are often ignored which causes frequent
injuries and loss of man days.

24
 Labour : Both contract labor and regular workers are employed in the machining and fabrication
units. The rate for machining a job varies from Rs. 300 to Rs. 400 per hour. Fabrication
contractors charge approx. Rs. 3000/ton for fabrication work contractual lobour is not properly
trained. There is shortage of skilled manpower.

Other Common Problems :

Absence of Operation Systems: No records or systems are in place to keep track of the
production, labor, maintenance etc. The units do not have the knowledge of batch costing, which
is necessary to exercise control when the next batch is taken for production.
High employee Turnover: Process engineers, Production supervisors, Mechanical and electrical
supervisors, fabricators etc. are in demand. They frequently change jobs for higher salaries.
Absenteeism is the major area of concern in the unskilled and semi skilled categories.
Poor Distribution Infrastructure in Power Sector: The units face problems in implementing
technological up-gradation (Ex. for setting up induction furnace units which are power intensive)
due top poor transmission and distribution system, which delays in getting additional power
connection.

Details of General Engineering/Fabrication industries of enterprises based in Chhattisgarh state is

enclosed herewith from pages ------ to -------, which are received by MSME-DI, Raipur. Even
though letters have been sent to all MSME-DIs and Br. MSME-DIs in the country, the response
was very poor in as far as furnishing details to us in respect of technology status of General
Engineering/Fabrication units in country is concerned.

25
 9.3 MACHINING & FABRICATION
VALUE CHAIN ANALYSIS OF MACHINING AND FABRICATION JOB
Physical and Mechanical
BASIS: ONE TON JOB
NUMBER OF MANDAYS: ONE WEEK

Manufacturing cost Rs. 70125/- Dispatch

Add profit approx. 28%

Interest for 60 days Rs.2000/- on final price

Final Price Basic Price Rs.
Inclusive of S.T. 90000/- Price inclusive of Administrative expenses Rs.68125/-
Administrative Expenses @5% of final price Rs.4700/-
@ 4% Rs.94000/-

Rs. 63425/-
Assembly 2 Man days Rs.1000/-
` 5. .
Z 1.5
0 Ton steel (Plates/ channels/ angles/
rods etc.) Rs. 62425/-
Basic : Rs.26000/- Ton

Approx. Rs.47000/- (Inclusive of E.D. + Cutting as per drawing 2% wastage Consumables i.e. Nuts, Bolts, Welding Rods etc. Rs.5000/-
S.T.)
Fabrication 2 Man days @
+ Rs.3000/Ton i.e.
Traders commission: @Rs.500/-Ton : Rs.4500/-
Rs.750/-
1.2 Ton steel Machining 40% of job. 2 Man
+ Rs.48125/- days Rs.300/hr Machining charges
Transport charges @Rs.250/Ton : i.e Rs.4800/-
Rs.375/-

Total Rs. 48125/-

26
Section 4
Details of Machinery and Process of Manufacture
in General Engineering and Fabrication
Industries-

Welding and cutting processes which are most extensively used are :
Manual Metal Arc, Tungston Inert Gas, MIG/MAG, Submerged Arc, Spot Welding and
Oxyacetylene Welding and Cutting. Resistance Seam, Projection & Flash Butt Welding and
Plasma Arc Welding & Cutting are comparatively less used. The processes which are sparingly
used are
- flux cored, electroslag, electrogas, electron beam and laser beam welding. In the arc welding
category, the pattern of usage broadly is:

- MMAW - Transformer Welding Sets 70%

- MMAW - Rectifier Welding Sets 18%
- MIG/MAG 8%
- TIG & SAW 4%

100%

There are around 12 major active units manufacturing welding equipment in the organised sector,
having individual annual production of about Rs one crore to Rs 50crores. Similarly, there are
approximately 40 active small scale units whose individual production ranges from Rs. 2 lakhs to
Rs.100lakhs.

Local consumption in 1992-93 of welding equipment was in the order of Rs 73 crores which has
increased to Rs350 crore in 2005-06.

There is an import of specialised category of welding equipment and the import level is Rs. 20
crores to 25 crores/year. The components and raw materials required for indigenous manufacture
of welding equipment have more customs duty than for complete equipment. There is very
marginal export from a few welding equipment manufacturers.

There are various problems faced by welding equipment manufacturers and the major ones are :

- Scattered Market

- Lack of quality consciousness amongst user Industry – particularly General Engineering and
Fabrication Industry.

- Low volume of demand for higher generation equipment.

- Quality of input raw materials is not upto the mark.

- Disproportionately high price of raw materials and components vis a-vis international prices.

27
- Advanced technology welding equipment is expensive to manufacture because most of the
power electronics components need to be imported.

Some of the larger and old companies manufacturing welding equipment do have a sound
manufacturing base in respect of production facilities, drawing and design capability, systematic
layouts and good work culture conducive to quality production (Advani, Esab, Jai Hind Sciaky
etc.). In these companies manufacturing technology methods involving plant and equipment are at
par with other good and progressive engineering units in the country.

As regards Product (Welding Equipment) Technology, it was based on foreign collaborations

from time to time from Switzerland, Germany, U.S.A., Sweden, U.K. and Japan. These units had
the credit of fully absorbing the technology then imported and they have not faced any serious
problems to get along with the collaborators.

Another set of welding equipment manufacturing companies, which started as small units but
presently have grown into medium sized units, though have overall manufacturing capability, are
lacking in upto-date, systematic and spacious production facilities. Product Technology is based
on in-house expertize. As regards manufacturing technology methods, they are depending on
sub-contracting, bought-outs and more labour-oriented manufacturing techniques.

28
Section 5

Advanced Technologies Applicable in General

Engineering and Fabrication Industries-

Thyristor, transistor and inverter type power sources are the things of the past industrialised
countries. Further development is the Synergic MIG/MAG welding sets wilh pulse frequency in
which electrode feed speed is linked with one or more pulse parameters.

In case of sub-merged rc welding the advancement available is the use of tandem wire heads
and/or addition of metal powder to increase the yield. In Japan, more than 407/ of welding is done
by this method in world's largest shipyard. In India, the extent of SAW is just 2% of the total
electric arc welding.

In case of TIG welding, use of hot filler wire and echanised/automatic movement of the TTG
torch and the wire feeding are the common sights in U.S.A., U.K. and Japan. A beginning in a
very small way has been made in India to produce "Tooled-up" TIG special purpose machines
for automobile and electrical equipment industry.

Advanced welding processes like Electron Beam Welding and LASER welding are being used in
the industrialised countries for production purposes also. Electron Beam Welding Equipment of 3
to 25 KW capacity and laser welding equipment upio 5 KW capacity are being
used. In India, these equipment are not manufactured and the use of processes are witnessing very
slow growth because of very exorbitant cost. These processes, however, are being mostly used for
R&D purposes. There has been increasing influence of electronics in the technologically
advanced welding equipment. Robotics in welding processes, microprocessor controlled welding
power sources, use of sensor technology are the examples of this advancement prevailing in
industrialised countries. India is devoid of such technological advancements in wclding field.

In the resistance welding field, the machinery currently used varies from old type to modern -
even for the same type of product e.g. one automobile manufacturer uses robot and special
purpose welding equipment while another uses pneumatic timer controlled equipment.
Updating of resistance welding technology had been a slow process, arising, if at all, due to
change of collaborator's practice. It was because of lack of exposure of manufacturers as well as
users to the state-of-the art technology in industrialised countries. This scene has started changing
after Japanese entered into the Indian automobile industry.

As regards the indigenous manufacture of complete welding equipment, technology gap

exists in the following items :

29
- Electron Beam Welding Equipment

- Laser Welding Equipment

- Electroslag Welding Equipment

- Friction Welding Equipment

-Stud Welding Equipment

-Welding Joint Sensing & Scanning Systems

-Water Jet Cutting Equipment

-Ultrasonic Welding Equipment and

-Inverter Type Welding Power Sources

R&D activities started taking proper visible shape only after 1970s with the establishment of
Welding Research Institute (WRI), Welding Research Laboratory (WRL) and also by some large
user industries. These R&D activities are more concentrated on welding joint design, fabrication
methodology, materials, testing etc. as compared to design & development of higher welding
equipment.

Based on the Study the following recommendations are suggested :

Attention need to be focused on improving the design, manufacturing methods and use of quality
input materials to produce comparatively efficient machines even in conventional type of welding
equipment. Introduction of ISI certification may be considered over the products of tiny and
cottage sectors.
Some manufacturers in organised sector also are not very careful about producing quality
products, resulting in more down-time at the users end. It is emphasised that both organised
sector as well as small scale sector provide quality products to the customers. A sizeable chunk of
welding sets (transformer type) are produced in the tiny & cottage sectors who are using low
grade laminations and poor quality insulation material, resulting in loss of electrical energy.

Conventional equipment manufacturers may go in for:

(i) edge winding of transformer coils instead of one layer above the other;

(ii) use of electronic choke system instead of stepped tappings;

(iii) provision of ON/OFF switches on welding transformers.

The reason is in layer above the layer winding heat generated in inner windings remain locked up
and more quantity of insulation material is required. Electronic choke system reduces weight and
heat loss. For want of ON/OFF switches, the welding set causes no load loss of electrical energy.

30
Use of aluminum conductor instead of copper windings should be preferred and no user industry
may specify copper as winding material in their tender specifications.

Over a period, tiny and small scale sectors may abandon the conventional transformer welding
sets of antiquated designs and produce thyristor controlled or fully thyristorised power sources.
Concerned bodies/organissations may make thyristorised designs available to these units at a
concessional charges with the assistance of R&D units like WRI & WRL etc. This is a one step
technological up-gradation and by doing so national energy saving can be effected.

The usage of semi-automatic welding process (MIG/MAG) in the country, though slowly
increasing, is just 8% of the total arc welding processes as compared to 50% in the industrialised
countries. This usage of MIG/MAG needs to be increased as the country would gain by way of
output and less energy consumption for the same amount of weld deposits obtained by MMAW.
For this, welding equipment manufacturing industry may come forward by offering semi-
automatic (MIG/MAG) machines at affordable prices. Today in the country the price ratio
between MMAW equipment and MIG/MAG equipment is 1:5 whereas this is 1:2 in industrially
advanced countries.

An automatic process like submerged arc welding has not picked up and spread as it should have
been. The usage is hardly 2 to 3%. Jobs like pipe welding, pipe to flange welding, railway wagon
components, crane manufacturing industries etc. can go in for SAW, but have not shown much
enthusiasm in this regard. Their difficulty is the non-availability of special purpose welding
fixtures/systems at affordable price. Such welding fixtures/systems are available off the shelf
abroad while in India a lot of time is lost in determining the need. Often having identified the
need, by the time fixture/system can be delivered, the need has already reduced.

The welding equipment manufacturing industry may have a proper tieup and can keep common
usage fixtures/systems used in Submerged .
Arc Welding process in CKD condition - backed up by modular designs so that at a very short
notice these can be assembled and provided to the users.

In this regard, the bottleneck of non-availability of small size permanent magnet DC motors for
cross slides and wire feeders and also liner bearings need to be removed and these are developed
indigenously.

Process equipment manufacturing industry in the field of chemical plants, refineries, food and
dairy plants, atomic plants are using manual TIG welding spending considerable productive time
and more rework. "Tooled up" TIG welding systems is the demand of user industry.

There is therefore a need to strengthen the effort on the part of welding equipment manufacturers
to provide fixtures and systems so as to make TIG process mechanised/automated. There could be
automatic feeding of filler metal, mechanised movement of TIG torch or the component to be
welded.
There is a need that Indian industry should switch on to manufacture and use of static power
source with solid state devices (thyristors) at the earliest. This may be based on inverter
technology. By this way tremendous amount of electrical energy may be saved per year.

31
 For encouraging quicker adoption of technology and wider use in industry, electronic devices
and components manufacturing companies (like BEL, ECIL, MELTRON, CEL etc.) should come
forward to develop high end technology and create facilities to manufacture the
same. These items are :

-High power electronic devices like Darlington power transistors,

fast recovery diodes, soft recovery diodes, MOSFET etc.

-Ferrite cubes and cores for inverter type welding power sources

-Tactile and inductive type sensors for making seam traders

R&D establishments can take up developmental work of welding equipment on their research
programmes and allocate suitable technical skills comprising of a team of engineers from
electrical, power electronics, mechanical and welding disciplines.

There is a need for establishing a centre for research and development at national level in the field
of Welding Equipment or enhancing the facilities of an existing centre. Welding Research
Institute Trichy could be one possibility.

As regards automatic/mechanised welding systems, collaboration arrangement between welding

equipment. manufacturer and machine tool manufacturer need to be established so as to derive
benefits of later's experience and capability.
For rapid development of MIG/MAG process in synergic mode (quite popular abroad) there is
urgent need for gas mixing units in the country.

At present only one or two gas manufacturing units have these gas mixing unit for their own use.
Users of MIG process have to essentially depend upon these two units for gases, which is very
difficult. Unless the users can prepare their own gas mixtures, this process may not develop to the
desired levels.

Gas regulators and flow meters for dry gases are being manufactured in the country, but not for
MIG/MAG welding, which requires CO2 gas. It has moisture most of the times. Indian
manufacturers may manufacture good quality regulators and flow meters for use in IG/MAG
process where CO2 gas is not essentially dry.

A task force needs to be formed which could have members from welding equipment, research
institutes and concerned government departments. This task force may identify the problems of
welding equipment industry and seek feasible solutions.

32
Section 6
Technology Development Initiatives-

Research Agencies-
India has a network of scientific and academic institutions engaged in wide spectrum of research.
Scientific research is carried out in about 250 research laboratories and institutions. A large part
of these belong to scientific ministries. A few research organizations under non-scientific
ministries and their public sector industries essentially carry out research programs of relevance
to the respective ministries. There are more than 1,500 private industries with R&D
establishments and a similar number of state-owned research centers. In addition, there are 264
universities, deemed universities and institutes of technology, where basic scientific research is
conducted in new and emerging areas through external and internal support. Most of the research
in the academic sector receives funding support from various scientific agencies of the
government, namely, Department of Space, Department of Atomic Energy, Department of
Science & Technology, Department of Biotechnology, University Grants Commission, and
others. In recent years, several non -scientific ministries have also come forward to fund R&D in
the project mode with the participation of public and private industry as well as of academic
institutions. This has given a new synergy in the promotion of technology in areas of concern.

33
Funding for R&D-

The Government of India allocates a budget for scientific and technological (S&T) activity under
an R&D fund. The allocation has increased from Rs. 828 Million in 1950-51 to Rs. 28800 Million
in 2000-01. In comparison, the share of industry in R&D has become of the order of Rs. 25162
Million, about 20 per cent of the government's contribution. The percentage share of major
scientific agencies in total S&T expenditure is approximately 70 percent. In the total S&T
expenditure by the government, the share of non-scientific ministries has been approximately 30
per cent combined for all sectors, including agriculture, rural development, energy, industry and
minerals, transport, communication and others. The total expenditure on R&D, including from
industry, is about 0.8 per cent of GNP for the past several years. Compared to most advanced
countries, which spent between 4 and 6 per cent on R&D, this proportion is quite low

Policies and targets-

34
The Government has facilitated S&T infrastructural development in the country through a policy
framework. A Science Policy Resolution (SPR) was adopted on 4 March 1958.The resolution
aimed to secure benefits from the acquisition of scientific knowledge and its application. It
emphasized training of scientific and technical personal to fulfill needs in the fields of science
and education, agriculture, industry and defense as well as to ensure an adequate supply of
scientists and to recognize their work. In January 1983, the government announced the
Technology Policy Statement (TPS), with the objective of attaining technological competence
and self-reliance, providing gainful employment, modernizing equipment and technology,
conserving energy and ensuring harmony with the environment.

In 2003, a new Science and Technology Policy was adopted with emphasis on:

- Optimal Utilization of Existing Infrastructure and Competence

- Strengthening of the Infrastructure for Science and Technology in Academic Institutions
- New Funding Mechanisms for Basic Research
- Human Resource Development
- Technology Development, Transfer and Diffusion
- Promotion of Innovation
- Achieve synergy between industry and scientific research
- Generation and management of Intellectual Property
- International Science and Technology Cooperation

Key Institutional Mechanisms

Department of Scientific and Industrial Research

The DSIR has been providing project based support to industries under the Programme Aimed at
technological Self Reliance (PATSER) for the development and demonstration of indigenous
technologies. Thirty-five technology development and demonstration projects were completed.
These resulted in the commercialization of products and processes and led to the filing of 20
patents.

Council for Scientific and Industrial Research-

As the national R&D organisation, CSIR provides through its 40 laboratories and 80 field centres,
scientific and industrial R&D for India’s technological development and for meeting its strategic
and defense needs.

Technology Development Board-

Technology Development Board (TDB) was set up by Government of India on 1st September
1996 and the operation of fund was assigned to Department of Science & Technology,
Government of India. The Board provides financial assistance in the form of equity, soft loans or
grants. TDBÕs participation in a project generally does not exceed 50 per cent of the project cost.
The projects funded by the Board include sectors such as medicine and

Science and Technology Entrepreneurship Parks-

The major objectives of STEPs are to forge linkages among academic and R&D institutions and
industry, to promote entrepreneurship among Science and Technology persons, to provide R&D
support to the small-scale industry and to promote innovation based enterprises.

35
National Innovation Foundation-
The Government of India started National Innovation Foundation (NIF) in March, 2000 by
providing a corpus fund of Rs 200 million. NIF is an autonomous body under the Department of
Science and Technology, Government of India. NIF is developing a National Register of Green
Grassroots Technological Innovations and Traditional Knowledge. It also seeks to develop a new
model of poverty alleviation and employment generation by helping convert grassroots
innovations into enterprises.

Technology Business Incubators (TBIs)-

Department of Science & Technology (DST), Government of India initiated this scheme during
2000-2001. Under the scheme, grants-in-aid is provided by the Department, both on capital and
recurring for a stipulated period. Presently, TBIs are being implemented at 12 locations in various
academic institutes.

New Millennium India Technology Leadership Initiative (NMITLI)

The Government of India has recognized the power of innovation and had launched a new
initiative during 2000 to enable Indian industry to attain a global leadership position in a few
selected niche areas by leveraging innovation-centric scientific and technological developments
in different disciplines.
In a very short span, NMITLI has crafted more than 25 path setting technology projects involving
over 50 industry partners and 150 R&D institutions with an estimated outlay of Rs.1,600 million.
These projects are setting new global technological paradigms in the areas such as nano material
catalysts, industrial chemicals, gene-based new targets for advanced drug delivery systems, bio-
technology, bio-informatics, low cost office computers, and improved liquid crystal devices and
so on.
The scheme is being implemented by Council of Scientific & Industrial Research (CSIR).

Conclusion

The research and development activities in India have been primarily government driven and
private sectors have traditionally made little investment in R&D. India has achieved great success
in developing and educating a significant chunk of human resources. The technical capabilities of
these resources are well and truly recognized the world over. However, there have been
institutional gaps leading to poor industry-academia interaction. The outcome has been low
practical orientation of
Indian research and lack of technology inputs to industry. India has taken initial steps in
rectifying this situation by redefining its Science and Technology policy, increasing the spend on
R&D, establishment of mission mode projects and enforcing Interactions between research
institutions and industry. However, it still has a long way to go in catching up with the developed
world and investing 2-3% of GNP in R&D, protecting Intellectual Property and establishing
product innovation culture.

36
Section 7
Sector Profiles

Machine Tools
Overview:

37
Machine Tool industry is the backbone of any economy.Machine tools are also an integral part of
general engineering and fabrication industries. It is the mother industry of Capital Goods Sector
which in turn determines the share of manufacturing in GDP of any country. The Indian machine
tool industry’s growth is directly linked to the growth of the manufacturing/ engineering industry.
The Indian engineering industry, user of machine tools of all types, manufactures goods worth
$32.6 billion. Due to India’s rapid modernization, engineering industry is now focusing on
green field projects as well as the upgrading of existing facilities.

The primary users of machine tools are in the automotive, automobile and ancillaries, railways,
defense, agriculture, steel, fertilizers, electrical, electronics, telecommunications, textile
machinery, ball and roller bearings, industrial valves, power -driven pumps, multi-product
engineering companies, earth moving machinery, compressors and consumer products industry
sectors. After an economic slow-down in 2000-2003, many of these industry sectors have shown
positive growth trends in the fiscal year 2003 -2004.

The Indian machine tool industry manufactures a range of both conventional and computer
numerically controlled (CNC) products such as metal cutting and metal forming tools. Indian
firms also offer many special purpose machines, robotics and handling systems. The Indian
Machine Tools Manufacturers’ Association (IMTMA) believes that CNC will be the growth
driver for the Indian machine tool industry in the future.

Approximately 75 percent of Indian machine tool producers have received ISO certification.
Government of India-owned Hindustan Machine Tools Limited (HMT) is the single largest
producer with a 32 percent market share.

Public Sector Enterprises like Hindustan Machine Tools Limited and Heavy Engineering
Corporation (HMTP) Limited besides Mysore Kirloskar Limited played significant role in
industrialization of India in the pre-liberalization era. In a period of 50 years, India also
established more than 1000 companies in private sector to produce machine tools both in small
sector as well as medium sector to meet the need of the manufacturing sector. However,
Liberalization of Indian Economy in 1991 seriously impaired the performance of this sector
because of various ailments of protected economy: high cost, obsolete technologies, fragmented
size, low investments, poor R & D base etc. Today, the structure of the machine tool industry is
rather skewed, 80% production coming from 25 companies and balance from over 300
fragmented small size companies.

Trends in Machine Tool Sector :

- The average growth in 2004-05 over 2003-04 was an amazing 47%. The Units expect to out
perform the market growth achieving 35% over the next 2 y ears (2005-06 & 06-07) and 25% in
the three years to follow (07-08, 08-09 & 09-10).

38
- Units have made dramatic productivity gains from Rs. 2 million to Rs. 3 million per employee. -
Investments in the last three years averaged a paltry USD 400,000 (17 million Rupees) per
annum, per unit. Whereas units have committed average investments of USD 1.2 Million (67
million Rupees ) per annum, per unit in the next two years. This is a clear indicator of their
confidence in sustainability of growth rates and a positive response to enhancing volumes. -
Average bought out content will remain at 60%, an indicator that part out sourcing and part in
house manufacture of critical parts will continue to remain as the business model of machine tool
units in the near term future.
- After languishing at less than Rs. 92 million per unit per annum, exports are set to exponentially
grow to 32.2 million per Unit per annum. A sign of growing acceptance of Indian Machine Tools
in the world markets.
- On a scale of 10, ‘Made in India’ brand equity has moved from a score of 3 in 1995 to a score of
6 in 2005. This is an indicator of growing convergence of Indian Machine Tool Industry in the
Global World of Manufacturing.

World Machine Tool Industry and India :

India machine Tool Industry is way behind Global majors in production, ranking 21st in 2003.
However, considering the growth prospects over the next 3 years and investments planned by the
local industry, it could jump several notches to about 15th position in this period.

Technology Status :

The technological competitiveness of the Indian Machine Tools sector is low. Indian machine
tools firms present a full spectrum of technological capabilities - while there are few firms close
to the international frontier in terms of product design capability and process technology,
technological capabilities of most players are extremely limited. The advantage due to high
availability of quality engineers and scientists is lost, partly due to brain drain and partly due to
stagnation of skill sets of scientists and engineers within India. India has a number of high quality
R&D institutions, but the industry –institute interactions are low, thereby reducing the chances of
creation of commercially viable technologies. Machine tools sector has a comparative
disadvantage with respect to both product and process technologies. In the case of the Indian
machine tools manufacturers, the human resources devoted to design and engineering activity is
about 20 to 50 per cent less than in other industrialized countries. Although Indian firms are
capable of achieving high levels of precision, they are unable to produce high quality products
due to lack of supporting process technologies such as precision measuring, material engineering
and process control. Firm level innovation is very low in India. Indian machine tools firms source
technology, but very few of them improve upon it. The research spending as a percentage of sales
amongst Indian firms is low when compared to the R&D spends of companies in Taiwan and
Korea. The major weaknesses are limited indigenous R&D capability and design innovation, low

39
productivity, high capital investment requirement, process capabilities, finishing, safety features,
costs, maintenance and operation, marketing and after sales service. Like the manufacturing
sector in general, the machine tool industry also suffers from low volume production, high cost of
finance and poor quality of power supply.

Technology Enhancements :

The Indian machine tool industry has made efforts for up gradation in design and productivity of
machine tools in the last few years. The industry upgraded a large number of older designs or
machine tools and evolves new machine designs to adapt to the specific requirements of the user
sectors. In view of the growing demand of user sectors for high productivity machines, the
percentage of CNC machines in the metal cutting sector has significantly improved. The number
of CNC machine tools produced has increased more than threefold in just two years. This reflects
increased acceptance of CNC Technology by user’s especially small companies and greater price
competitiveness of Indian CNC machine Tools. The most popular types of CNC machines
produced are CNC lathes, Vertical and Horizontal Machining Centers, Wire Cut EDM, CNC
External Grinders and Flexible CNC SPMs’.

Quality Move in Machine Tool Sector :

Nearly 100 of the 400 organised sector companies are ISO 9000 certified. Many products (Over
50) are also ‘CE’ marked. Several machine tools are TPM Compliant (Total Productivity
Maintenance), Indian machines now assure high CPK values, and some even guarantee uptime.
Finish and Aesthetics have dramatically improved so also have fits and fittings, safety features
and environment protection devices.

40
Technology Gaps :

There still remain technology gaps between Indian machines and machines from Germany or
Japan who are world leaders. These gaps are broadly of the following types:

Specifications – Rapid rates, tool change times, maximum spindle RPMS etc., are higher than
those of Indian machines. This becomes clear if one compares specifications of Indian machines
with those of the Japanese.

- Appearance – Though Indian machines have improved considerably over the years, they still
lag behind those produced by countries such as Japan and Germany with respect to presentation
details and appearance. This is because of the amount of attention that these countries pay to
detail. Difference in appearance could be a combination of colour schemes, curvature and
contours of the cladding, method of fastening the covers etc. These countries also pay attention to
chip evacuation, providing slopes so that chips do not accumulate. A lot of industrial design
inputs go into machine design.

- Reliability – Reliability is a part not reflected in appearance or presentation, but extremely

important to a customer. Some Indian manufacturers score higher than imported machines on
after sales service and spare parts supply. However, they are lower on specifications and uptime.
Several imported machines have such negligible downtime that for the customer, Indian
advantage is just not relevant. Indian manufacturers need to monitor MTBF (Mean Time Between
Failures) and MTTR (Mean Time to Repair).

- Technology – Although Indian machine tool industry has succeeded to a significant extent in
bridging technological gaps that existed vis -à-vis producers in advanced count ries such as Japan,
USA, Germany, significant gaps still exist in areas such as Turning Centres, Machining Centres
and NC Grinders, and particularly in the area of Gear -Cutting machines. The following areas of
technology development are still nascent in India:

High speed Machining: Reduction of machining time by increase of cutting speeds. The basis
of this is constituted by new machine concepts and the performance potential of cutting materials.

Dry Machining /Minimum Quantity Lubrication: reduction or elimination of coolants in

machining in order to reduce environmental and cost burdens.

Hard Machining: cutting and specifically finish machining of hardened materials by means of
a defined cutting edge (turning, milling, drilling boring)

Complete Machining: Integration of various machining processes such as turing, milling gear
cutting, grinding in a single machine to finish the work piece in one set –up.

Micro processing: metal – cutting and non –metal – cutting processes for generation of
miniaturized components, partially having geometric dimensions in the micron range.

Linier Direct Drivers: new highly dynamic drive elements of simple construction for direct
generation of linear movements.

41
Rapid Prototyping: rapid realization of prototypes and preproduction series of new products
for geometrical and functional testing.
Internal high pressure forming: Generation of complex geometries from a single work piece
by using high hydraulic pressure.

Near Net Shape Forming: Generation of the final contour of a work piece as to shape,
dimensional accuracy and surface quality, in a single forming process.

Technology Interventions :

The industry has identified the following Key Factors of Success for making machine tool
industry technically competitive. These are:

1. Technology Up-gradation:
Current level of domestic taxation are not conducive to investments. In order to encourage
investments, upgrade technologies and thereby competitiveness of manufacturing industry by
following mechanisms:

a. Establish “Manufacturing Technology Up-gradation Fund” which can provide finance at

reduced interest rates on long term basis
b. Credit Linked capital subsidy to SSI for the purchase of CNC Machines.
c. Accelerated depreciation of equipments to encourage investments and continuously
upgrade technology

2. Manufacturing Infrastructure:
For managing tenfold growth, the machine tool industry has to invest heavily in the industry. At
the same time investments will have to made in a manner that the manufacturing can remain
competitive and meet global benchmarks of productivity.
a. Encourage public private partnerships in establishing Machine Tool Parks at centers
where machine tool manufacturing clusters are active. Bangalore Machine Tool Cluster
meets 60% requirement of the country.

3. Promote Research Design & Development:

All machine tool exporting countries have well established research institutions that develop new
technologies & help industry to productionize these technologies like- Germany, France,
Switzerland etc. Though Government of India established Central
Machine Tool Institute in 1960, it has not been able to deliver its objective. The machine tool
industry is starved of technology development in the country and it requires priority attention of
the government.

a. Revitalize activities of CMTI for development of Machine Tool Technologies for the
benefit of Indian industries
b. CMTI should have satellite centers at key locations where machine tool manufacturing
SSIs are located to render service to them to improve their quality and technologies e.g.
Ludhiana, Faridabad, Rajkot, Pun, Hyderabad etc.
c. Encourage joint R & D projects resulting from Industry Institute interaction
d. Government Laboratories to focus on developing technologies that have impact on
manufacturing and machine tool technologies

42
4. Availability of Qualified People:
The industry requires knowledge workers in the field and there is acute shortage of these people.

a. Machine tool industry requires urgent focus on technology development. This requires
post graduates and research scientists for designing new products as well as absorption of
new technologies. More Engineering colleges need to be advised to offer graduate as well
as post graduate courses in Machine Tool Engineering including mechatronics.
b. To meet the demand of expert workmen Government ITIs must produce workmen having
basic knowledge of mechatronics - Diploma in Mechatronics needs to be introduced at
institutions offering diploma in engineering.

Conclusion :

The Indian machine tools industry has poor technology competence due to the inward looking
economic policies and dominance of public sector organizations. While this helped India initially in
attaining self-sustenance, it also led to adoption of obsolete technologies in the developed countries
and limited efforts to absorb and improve the imported technology. This is in contrast to the
experience of Japan and Korea which developed significant scale and technology competence. Today
India’s competence is primarily in design and tooling industry due to availability of low-cost skilled
manpower. Significant gaps exist in CNC controls, precision bearings and sensors.

43
Section 8
Technology and Other Initiatives-

Technology Initiatives-
This section highlights the technology initiatives required to enhance the technical
competitiveness of Indian manufacturing sector and profiles the initiatives of Korea to highlight
the importance of such changes.

Develop and restructure technology infrastructure to support firms striving to improve

their technological capabilities and competitiveness:

- Drive public R&D institutes and laboratories to become more demand -driven and service
oriented, and make the resource allocation (government budgetary support) more performance
driven. R&D institutes should acquire international accreditation for granting product
certification in India and for providing, in competition with private consulting firms, effective
technological extension services in order to help firms improve their manufacturing and design
capabilities.

- Improve coordination among R&D programs thro ugh merger and consolidation of institutions
that work in similar areas to create "Centres of Excellence". Institutionalise use of peer and
technical panel reviews of public R&D proposals and programs to promote joint public/ private
sector R&D activities for better monitoring and evaluation systems. - Promote strong linkages
between R&D institutes, universities, industrial extension agencies and manufacturing
enterprises. Emphasize on international cooperation between R&D institutes and build linkages
for technology development and technology transfer. Equip national institutes for providing
contract R&D services to international players.

- Promote industry networks for a consortium approach to industry R&D activities and integrated
development of new product designs and production processes, with the intensive involvement of
and collaboration with suppliers.

Focus on selected manufacturing technologies and products

44
- Encourage firms, through the dissemination of relevant information, to acquire arms’ length
technology through technology licensing, technology transfer agreement, reverse engineering and
adaptation to build their own capabilities
- Establish Technology Trackers in leading countries (Germany, Taiwan, Japan and USA) to
track
development of technology in key segments

- Encourage application of technologies (like business-to-business e-commerce, CRM, TPM,

TQM etc.) at the enterprise level through rapid build-up of awareness of need, diagnosis of
critical technological requirements, technology transfer management, and monitoring and
forecasting of technology, as well as entrepreneurship development.

- Promote technology -based FDI partnerships between foreign and local enterprises especially
inmedium -scale SMEs with the view of developing India as global outsourcing and
subcontracting base
- Establish entrepreneurship development programs at engineering and R&D institutes for
goaldirected
promotion of business ideas

- Maintain competitive pressures on the demand side by adopting a well-formulated competition

policy and intellectual property protection regime. Promote application of environment-friendly
and safety standards to upgrade the standardisation level to global level and hence promote export
competitiveness

Upgrade Technological capabilities of SMEs :

- Provide an effective outreach program to SMEs through designated public R&D institutes,
starting with effective dissemination of information on standards to help SMEs improve
technological capability

- Develop subcontracting and encourage integration of SMEs in the overall manufacturing sector,
through vendor improvement and certification programs, as suppliers of raw materials,
intermediate inputs and components

Provide fiscal benefits to manufacturing firms for R&D :

- Provide tax exemption and other incentives for R&D and in-plant technical training by using
any of the following instruments: tax credits for R&D expenses, and accelerated depreciation and
reduced import duties for investments in R&D facilities Utilize Technology Development Fund
(TDF) to finance indigenous R&D activities. Energize Technology Upgradation Fund (TUF) by
extending this grant to select non-textile industry and providing flexibility in its usage.


Develop technical education and training facilities :

- Revive interest for existing higher technical education towards core engineering stream by
revising outdated curriculum, adopting interdisciplinary approach and increasing relevance to
industrial application. Manufacturing industry should strive to attract and retain the best
engineering talents.

45
- Encourage private sector to establish and operate demand-driven technical training centres
through financial and other incentives, under carefully designed industry initiatives, supported
and coordinated by government, for quality control and accreditation systems

OTHER INITIATIVES-
INSTITUTIONAL LINKAGES :

Financial Institutions: Most of the units are financed through term loan and working
capital from banks and entrepreneurs equity. All major banks are having their branches in
Chhattisgarh. Each bank has its own assessment about the sector and is cautious in loan
disbursement. As per present report of banks in SLBCs (2010), General
Engineering/Fabrication units have very low NPA, so banks are willing to finance these
sectors.

NSIC is also providing finance in this sector in the state of Chhattisgarh.

District Trade and Industry Centres –

All DTIC help the industry in getting provisional and permanent registrations and also assist
large organizations like BALCO, NTPC, SECL and SAIL etc. to identify units for enlistment
as vendors. DTIC networks between entrepreneurs and MSME-DIs, NSIC, KVIC and
financial institutions etc. It also guides entrepreneurs to set up industries.

National Small Industries Corporation Limited – NSIC –

The prime aim of NSIC is to foster growth of small scale industries in India through various
developmental activities such as hire-purchase and leasing, raw material assistance,
marketing support, tender marketing, export development finance, composite term loan and
single point registration scheme.

MSME Development Institute in Raipur-

The office of MSME-DI in Raipur ------ to the need of MSMEs by giving various assistances
like – Project Report, Capacity Assessment, NSIC Inspection, Conducting various
programmes, like – on topic of IPR, WTO, Bar Code, ESDPs, MDPs, IMCs etc. Also the
institute is engaged in reimbursement towards ISO 9000/ISO 14000, Bar Code etc. MSME-
DI, Raipur also organizes Vendor Development Programme, Buyer Seller Meet etc. for the
benefit of micro and small scale enterprises.

Machining & Fabrication Units- (SWOT Analysis)-

Strengths-

46
 Easy availability of raw material, power and workforce.
 Existence of undergraduate and graduate technical institutions, including one of
high repute.
 Proximity to mother plants.
 Entrepreneurs are experienced in the core area of machining and fabrication.
 Cordial labor reations.
 Financial institution’s willingness to fund viable projects.

Weakness-

 Low technology levels.

 Dependence on one or two customers coupled by lack of market information.
 Lack of marketing skills.
 Absenteeism of workforce.
 Lack of guidance in cost management. Let us discuss this.

Opportunities-
 Increased infrastructure activity within and outside the country gives good scope for
executing large projects.
 Expertise of machining and fabrication of Sponge iron plants can be put into
maximum use in emerging sponge iron clusters in other states.
 Opportunity exists for common procurement of raw materials, consumables and joint marketing.
 Opportunity exists for becoming a competitive fabrication and machining centre for
automobiles and engineering projects due to 3M advantages.

Threats-

 Slowdown in infrastructure activities will adversely affect the units.

Action Plan :-
Machining and Fabrication-
 Sensitization of unit on cluster approach: Individual and group meetings with the units of
the cluster will be conducted to sensitize the units about the cluster approach.
 Fostering common vision: Exposure visit to other developed cluster and common meetings
will help to drive trust among the units. Sub cluster will be helped to slowly evolve a common
vision. A product association will be formed to drive the cluster activities.
 Awareness creation: Specialized inputs on product diversification, precision engineering,
quality improvement, productivity and management development programs in collaboration
with local and outside BDS would be planned for the cluster.
 Formation of consortia: After identification of common needs, consortia of like minded firms
would be facilitated. These consortia would be exposed to successful consortia in other clusters
and helped to evolve a common business plan. Slowly capacities of these consortia would be
built.

47
 Credit linkages: Smaller units of less than Rs. 40 lakhs per annum turnover will be focused
for assessing credit from financial institutions. If need be linkages with MFIs would also be
explored.
 Market development: All the three tiers of firms would be helped to build linkages with new
markets. For this visit of firms to potential customers and vice versa will be planned. Marketing
brochures, marketing CDs and other relevant tools will be deployed. Consortia will evolve
appropriate marketing channels as the needs emerge.

 Product diversification: To help firms reduce their dependency on job working new products
would have to be developed and marketed by the cluster. For this suitable BDS would be used
and activities would be driven on consortia platforms.
 Improvement in production efficiencies : Firms will be assisted to improve their production
efficiencies by improved welding, better shop floor practices, better inventory management,
joint procurements etc.
 Design development centre: To take up turnkey projects a common testing and design
development centre will be created in public private participation.
 Manpower development: To overcome the shortage of skilled manpower, the cluster would
jointly contribute resources to ITI, diploma institutes to train manpower as per the cluster
requirements, SISI training centre will be upgraded.
 Sub contracting relationships between the three tiers: Attempts would be made to develop
sub contracting relationships between the three tiers by constant dialogue and addressing needs
of the upper tier firms.

48
 PROJECT PROFILE

ON

“HACKSAW BLADE MANUFACTURING”

NIC Code : 28939

ASICC Code : 71303

Year of Preparation : 2010-11

PREPARED BY

Micro, Small & Medium Enterprises Development Institute

Near Urkura Railway Station, Industrial Area,
Bhanpuri, Raipur (C.G.)
Phone : (0771) 2102700

49
INTRODUCTION

A hacksaw is a fine-tooth saw with a blade under tension in a frame, used

for cutting materials such as metal. Hand-held hacksaws consist of a metal
frame with a handle, and pins for attaching a narrow disposable blade. A
screw or other mechanism is used to put the thin blade under tension.

A power hacksaw (or electric hacksaw) is a type of hacksaw that is powered

by electric motor. Most power hacksaws are stationary machines but some
portable models do exist. Stationary models usually have a mechanism to lift
up the saw blade on the return stroke and some have a coolant pump to
prevent the saw blade from overheating

MARKET POTENTIAL

The demand of hacksaw blade is considerably increasing day by day with

the growth of industrilisation,engineering sector,real estate,automobile
sector etc.It is used in almost every sector for cutting of materials like angle,
channel, flat plates, rods and such other things. It is also required in auto
repairing shops,general repairing workshops,fitting shops,welding shops and
technical institutes.Govt. department like Railway,Defence,PWD,Postal &
Telegraph and others are one of the main user of it. In India large nos. of
small enterprises are engaged in its manufacturing. By considering its
demand, new production unit has great prospect.

BASIS AND PRESUMPTIONS

 The information supplied is based on a standard type of

manufacturing activity utilizing conventional techniques of production
and optimum level of performance.
 75% of the envisaged capacity is taken as efficiency on single
working shift of 8 hrs & 300 working days in a year..
 Labour and wages are required as per present circumstances.

50
  The cost in respect of land & building, machine & equipment, raw
material & selling price of finished product etc are those generally
obtained at the time of preparation of project profile and may vary
depeding upon the location, make and for variety of resons.
 The interest on total capital has been assumed @ 14% p.a

IMPLEMENTATION SCHEDULE
 Selection of site & Preparation of bankable project report 3
months
 Filing of EM part-I with GM, DIC 3
days
 Submission of project report & sanction of finance
from financial institution/ Bank 4
months
 Procurement of Plant, machinery & equipment 1
month
 Commissioning and erection of Plant & machinery and trial run 3
months
 Purchase of raw material & recruitment of labour & staff 1
month
 Start of commercial production
Immediately as
soon as above
activities completed
 Filing of EM Part-II with GM, DTIC
Immediately after the
Enterprises has gone into
regular production

TECHNICAL ASPECTS

DESIGN

51
Blades are available in standardized lengths, and with anywhere from three
to thirty-two teeth per inch (tpi). The blade used is based on the thickness of
the material being cut, with a minimum of three teeth in the material.
Hacksaw blades are normally quite brittle, so care needs to be taken to
prevent brittle fracture of the blade. Bi-metal blades are meant to minimize
this risk.

RECOMMENDED TEETH PER 25MM (TPI) FOR EACH MATERIAL TYPE:

Material diameter (mm)

Material 10-30 30-100 100-250
Teeth per inch (25mm)
Free machining steel
Building irons 14-8 8-6 6-4
Structural steel
Heat-treated steel
14-8 8-6 6-4
Nitridated steel
Spring steel 14-8 8-6 6-4
High temperature steel
8-6 6-4 6-4
Stainless steel
Cast iron 10-8 8-6 6-4
Aluminium
6-4 6-4 6-4
Brass

The common sizes of hexablades are:

High carbon steel

Dimension (mm) TPI

250x12.5x0.60 18,24
300x25x0.80 18,24

52
300x12.5x0.60 14,18,24,32

High speed steel

Dimension (mm) TPI

250x12.5x0.60 14,18,24
300x12.5x0.60 14,18,24

Power hacksaw blade

Dimension (mm) TPI

350x25x1.20 10,14

MANUFACTURING PROCESS

Hacksaw blades (both hand & power hacksaw) are generally made up of
carbon steel or high speed steel strip rolls. The blank of required size is
obtained by fixing the strip rolls on the stand of semi automatic strip cutting
machine and punched a hole at their both ends. Then, teeth are being made
on the blank by milling or hobbing process. Once teeth are being cut, the
hacksaw blades are heat treated and tempered for the required hardness. The
last step in the manufacturing process is surface cleaning, painting, printing
and packing of the hacksaw blades for market supply.

The flow chart of the manufacturing process is given below:

Raw material

Strip rolls

cutting of blanks & punching at their ends

53
 teeth making on milling machine

heat treatment & surface preparation

painting & packing

PRODUCTION CAPACITY (per year)

Sr. no. item quantity

1 Carbon steel hand hacksaw 7,00,000
blade 250x12.5x0.60
2 Carbon steel power hacksaw 3,00,000
blade 350x25x1.20
3 High speed steel power 3,00,000
hacksaw blade 350x25x1.20

QUALITY CONTROL

The job should be checked after completion of each stage so that chance of
rejection at the end is eleminated. Hacksaw blades are manufactured as per
IS : 2594-1963. For the inspection process proper callibarated gauges &
equipment should be used.

POLLUTION CONTROL

54
As these unit do not create pollution, so there is no requirement of No
Objection Certificate from pollution control board.

POWER CONSUMPTION

Approx. power consumption is 50H.P

FINANCIAL ASPECTS

 FIXED CAPITAL

1. Land & building

600 sq. mtrs. With covered area of 300 sq. mtrs
10,000(approx.)on monthly rent basis

2. Machinery & Equipments

Sr. Description Qty Price (Rs.)

No.
1 Semi automatic metal strip cutting 1 3,70,000
machine,50mm with 5 H.P. motor
2 Strip straighting &cutting m/c cap- 1 4,50,000
50mm width, with 5 H.P. motor
3 Universal milling m/c with 1 4,00,000
attachment with 7 H.P. motor
4 Stamping m/c 1 25,000
5 Power press 20 T 1 4,50,000
5 Automatic temp. control heat 1 3,50,000
treatment plant,3 H.P motor,70kva
LT transformer
6 Bench grinder,250mm wheel 1 10,000
dia,1H.P motor

55
7 Rockwell hardness testin m/c 1 20,000
8 Gauges,tools & other equipments L.S 50,000

Total=
21,25,000

Installation & electrification charge @ 10% of cost of machine= 212500

13 Furniture & office equipment 20000
TOTAL 23,57,500

WORKING CAPITAL ( per month)

1. Personnel

Sr. Designation No. Salary Total

no. (per month)
1 Manager 1 7000 7000
2 Supervisor 1 5000 5000
4 Skilled worker 2 4000 8000
5 Unskilled worker 2 3000 6000
7 Store-keeper 1 4000 4000
8 Clerk-cum-Typist 1 4000 4000
9 Peon 1 3000 3000
10 Watchman 1 3000 3000

Total
40,000/-

2. Raw material (per month)

56
Sr. item Quantity amount
no. (kg)
1 12.5mm width & 0.60mm thick 1200 66000/-
carbon steel strip @ Rs.55/kg
2 25mm width & 1.20mm thick carbon 2200 105600/-
steel strip @ Rs.48/kg
3 25mm width & 1.20mm thick high 2600 208000/-
speed steel strip @ Rs.80/kg
4 Packing material L.S 50000/-

Total - 429600/- or say 4,30,000/-

3. Utilities (per month)

Electricity & Water Rs

40,000

4. Other expenses (per month)

Sr. Description Rs.

no.
1 Stationary 4000
2 Transport charges 5000
3 Telephone 2000
4 Maintenance 4000
5 Insurance 3000
6 Miscellaneous 5000
7 Rent 10000
33000
TOTAL

Total recurring expenditure (per month)

1+2+3+4 = 5,43,000/-

57
 Total working capital (for 3 months)
5,43,000/-x 3 = 16,29,000 /-

 TOTAL CAPITAL INVESTMENT

1. Fixed capital Rs.

23,57,500/-

2. working capital Rs.

16,29,000/-

Total = Rs.
39,86,500/-

FINANCIAL ANALYSIS

 Cost of production (per year)

Total recurring cost per year Rs.

65,16,000

Depreciation on machinery
& equipment @ 10% Rs.
21,2500

Depreciation on office furniture @ 20% Rs.

4,000

Interest on total investment @ 14% Rs.

5,58,110

Total cost of production Rs.

72,90,610

58
  Turnover (per year)

Item Qty.
Value(Rs.)

Carbon steel hand hacksaw 7,00,000

8,75,000
blade 250x12.5x0.60 mm @Rs.1.25/each

Carbon steel power hacksaw 2,00,000

44,00,000
blade 350x25x1.20 @Rs.22/each

High speed steel power hacksaw 1,00,000

32,00,000
blade 350x25x1.20 @Rs.32/each
Total -
84,75,000

 Net profit (per year)

=84,75,000 – 72,90,610

= 11,84,390 or say 11,84,000/-

 Net profit ratio

= Net profit per annum x 100

Turnover per annum

= 1184000 x 100
8475000
= 13.97 %
= 14%

 Rate of return

59
 = Net profit per annum x 100
Total investment

= 1184000x 100
3986500

= 29.70%

 Break even point

1. Fixed cost per annum Rs.

a. Depreciation on machinery
& equipments @10% 212500
b. 40% of other expenses
(excluding rent & insurance) 96,000
c. Depreciation on office furniture @20% 4,000

d. 40% of salary & wages

1,92,000

e. Interest on capital investment @14%

5,58,110

f. Rent 1,20,000

g. Insurance 36,000

Total= 12,18,610 Or say

12,18,000

2. Breakeven point

= Fixed cost x 100

Fixed cost + profit

= 12,18,000 x 100
12,18,000 + 11,84,000

60
 = 50.70%

13. Addresses of Machinery Suppliers –

1. Benco Thermal Technologies Private Limited , Plot Nos 236 And 237,
SIDCO Industrial Estate, Thirumudivakkam, Chennai - 600 044, India

2.Quartet Thermal Engineering Pvt. Ltd , : No. 2, Sion Vijayanand Chs Plot
No. 267, Scheme No. 6, Road No. 31, Near Gandhi Market, Sion, Mumbai -
400 022

61
3. Gauri Wood Craft , 2 K/46-A, B. P., Opposite FCI Godown, NIT,
Faridabad - 121 006

4. Industrial Thermal Engineers Plot 66/13, Phase No. 1, G. I. D. C., Vatva,

Ahmedabad - 382 445, India

5.JK Automation Gate No.12, Swami Samarth Indd. Co.- Op. Society, S-
116/4 MIDC, Bhosari, Pune - 411 026,

6.United Lathes India: G.T. Road, Jugiana, Opposite UCO Bank,, Ludhiana -
141 017, India

7.Asia Machines: No. 50, Balleshwar Upvan, Near Axis Bank, Bopal-
Ghuma Road, Ahmedabad - 380 058,

62
 PROJECT PROFILE

ON

“METALLIC WASHERS”

NIC Code : 28991

ASICC Code : 71354

Year of Preparation : 2010-11

PREPARED BY

Micro, Small & Medium Enterprises Development Institute

Near Urkura Railway Station, Industrial Area,
Bhanpuri, Raipur (C.G.)
Phone : (0771) 2102700

63
INTRODUCTION

A washer is a thin plate (typically disk-shaped) with a hole (typically in the

middle) that is normally used to distribute the load of a threaded fastener.
Other uses are as a spacer, spring (belleville washer, wave washer), wear
pad, preload indicating device, locking device, and to reduce vibration
(rubber washer). Washers usually have an outer diameter (OD) about twice
the length of their inner diameter (ID).
Washers are usually metal or plastic. Rubber or fiber gaskets used in taps or
valves to stop the flow of water are sometimes referred as washers but, while
they may look similar, washers and gaskets are usually designed for
different functions and made differently.
Common materials include steel, stainless steel, and plastic. Hardened
washers are steel washers that have been heat treated. Other materials
include aluminum, bimetals, bronze, brass, ceramics, copper, felt, fibers,
iron, leather, mica,

MARKET POTENTIAL

Being a general item washers are used in almost every sector of

Engineering.It is used in sectors like
mechanical,electrical,automobile,aeronautical,real estates etc. which require
it regularly and in bulk quantity. It is also uses in auto repairing
shops,general repairing workshops,fitting shops,welding shops and technical
institutes.Govt. department like Railway,Defence,PWD. In India large nos.
of small enterprises are engaged in its manufacturing. By considering its
demand, new production unit has great prospect.

BASIS AND PRESUMPTIONS

64
  The information supplied is based on a standard type of
manufacturing activity utilizing conventional techniques of production
and optimum level of performance.
 75% of the envisaged capacity is taken as efficiency on single
working shift.
 Labour and wages are required as per present circumstances.
 The cost in respect of land & building, machine & equipment, raw
material & selling price of finished product etc are those generally
obtained at the time of preparation of project profile and may vary
depeding upon the location, make and for variety of resons.
 The interest on total capital has been assumed @ 14% p.a

IMPLEMENTATION SCHEDULE
 Selection of site & Preparation of bankable project report 3
months
 Filing of EM part-I with GM, DIC 3
days
 Submission of project report & sanction of finance
from financial institution/ Bank 4
months
 Procurement of Plant, machinery & equipment 1
month
 Commissioning and erection of Plant & machinery and trial run 3
months
 Purchase of raw material & recruitment of labour & staff 1
month
 Start of commercial production
Immediately as
soon as above
activities completed
 Filing of EM Part-II with GM, DTIC
Immediately after the

65
 Enterprises has gone into
regular production

TECHNICAL ASPECTS

Washers are of different types and are used as per their requirement. Some
of the types are:

1.Plain washer 2.Lock washer 3.Spherical washer 4.Internal lock washer

5.Spring washer 6.Taper washer 7.Square washer 8.Check nut etc.

Washers are made up of some of the common materials like steel, stainless
steel, and plastic. Hardened washers are steel washers that have been heat
treated. Other materials include aluminum, bimetals, bronze, brass,
ceramics, copper, felt, fibers, iron, leather, mica,

Washers usually have an outer diameter (OD) about twice the length of their
inner diameter (ID).

MANUFACTURING PROCESS

Washers are generally made up by punching process. The method

comprising forming each washer in a successive operations from a washer
blank strip, a washer being punched out in a final punching operation.

The flow chart of the manufacturing process is given below:

66
 Raw material (metal sheet)

sheet cuting

punching

polishing

heat treatment & surface preparation

packing

PRODUCTION CAPACITY (per year)

Metallic washers - 50 MT

QUALITY CONTROL

Product should be thoroughly checked right from the selection of raw

material to the final stage of finishing. Different type of washers are
manufactured as per different standards, for example Spring lock washers
are manufactured as per following standards: IS : 3063-1994 and IS : 6735-
1994.where as plain washers are as per: IS : 2016 , IS : 6610 , IS : 5372-75
, IS : 5374-75 , IS : 6649-85

67
POLLUTION CONTROL

As these unit do not create pollution, so there is no requirement of No

Objection Certificate from pollution control board.

POWER CONSUMPTION

Approx. power consumption is 10H.P

FINANCIAL ASPECTS
 FIXED CAPITAL

1. Land & building 500 sq. mtrs.

With covered area of 300 sq. mtrs
5,000(approx.)on monthly rent basis

2. Machinery & Equipments

Description Qty Price (Rs.)

Sr.
No.
1 Power press inclinable 20 T 1 3,25,000
2 Hand operated shearing machine 1 20,000
3 Bench grinder,250mm wheel 1 10,000
dia,1H.P motor
4 Tumbling barrel machine 1 25,000
4 Gauges,tools & other equipments L.S 50,000

Total= 4,30,000

Installation & electrification charge @ 10% of cost of machine= 43000

13 Furniture & office equipment 20000
TOTAL 4,93,000

WORKING CAPITAL ( per month)

1. Personnel

68
 Sr. Designation No. Salary Total
no. (per month)
1 Manager 1 6000 6000
2 Supervisor 1 5000 5000
3 Skilled worker 1 4000 4000
4 Unskilled worker 1 3000 3000
5 Watchman 1 3000 3000

Total
21,000/-

1. Raw material (per month)

Required guage (8 SWG to 20 SWG)
of M.S sheet scrap @ Rs. 11000/MT 10 MT
1,10000/-

3. Utilities (per month)

Electricity & Water Rs

15,000

4. Other expenses (per month)

Sr. Description Rs.

no.
1 Stationary 4000
2 Transport charges 4000
3 Telephone 2000
4 Maintenance 4000
5 Insurance 3000
6 Miscellaneous 2000
7 Rent 5000
24000
TOTAL

69
Total recurring expenditure (per month)
1+2+3+4 = 1,70,000/-

Total working capital (for 3 months)

1,70,000/-x 3 = 5,10,000 /-

 TOTAL CAPITAL INVESTMENT

1. Fixed capital Rs.

4,93,000/-

2. working capital Rs.

5,10,000/-

Total = Rs.
10,03,000/-

FINANCIAL ANALYSIS

 Cost of production (per year)

Total recurring cost per year Rs.

20,40,000

Depreciation on machinery
& equipment @ 10% Rs.
43,000

Depreciation on office furniture @ 20% Rs.

4,000

Interest on total investment @ 14% Rs.

1,40,420

Total cost of production Rs.

22,27,420
Say
Rs.22,27,000

70
 Turnover (per year)

Item Qty.
Value(Rs.)
Different types of M.S
Washers avg.@ Rs.32,000/MT 60MT
19,20,000/

Scrap sheet @ 9000/MT 60MT

5,40,000/

Total - 24,60,000/

 Net profit (per year)

=24,60,000– 22,27,000

= 2,33,000/-

 Net profit ratio

= Net profit per annum x 100

Turnover per annum
= 233000 x 100
2460000
= 9.47 %

 Rate of return

= Net profit per annum x 100

Total investment

71
 = 233000x 100
1003000

= 23.23%

 Break even point

1. Fixed cost per annum Rs.

h. Depreciation on machinery
& equipments @10% 43000
i. 40% of other expenses
(excluding rent & insurance) 76800
j. Depreciation on office furniture @20% 4,000

k. 40% of salary & wages 100800

l. Interest on capital investment @14% 140420

m. Rent 60000

n. Insurance 36,000

Total= 461020
2. Breakeven point

= Fixed cost x 100

Fixed cost + profit

= 461020 x 100
461020 + 233000

= 66.42%

72
 14. Addresses of Machinery Suppliers –

1.Asia Machines: No. 50, Balleshwar Upvan, Near Axis Bank, Bopal-
Ghuma Road, Ahmedabad - 380 058,

2.Ess Kay Lathe Company: 127, Focal Point Batala, Batala - 143 505,

3.Emtex Machinery Private Limited: No. 4-E, Vandhana Building, No. 11,
Tolstoy Marg, Connaught Place, Delhi - 110 001

4.Modi Traders: 829, M. T. P. Road, ( Near Flower(Poo) Market Bus Stop)

R. S Puram, Coimbatore - 641 601

5.India International Marketing Company: No. B-73, Phase-1, Mayapuri

Industrial Area, New Delhi - 110 064, India

PROJECT PROFILE

ON

“PISTON RING”

NIC Code : 29121

73
 ASICC Code : 75156

Year of Preparation : 2010-11

PREPARED BY

Micro, Small & Medium Enterprises Development Institute

Near Urkura Railway Station, Industrial Area,
Bhanpuri, Raipur (C.G.)
Phone : (0771) 2102700

INTRODUCTION.

Piston ring is one of the most important part of the Deisel/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

The three main functions of piston rings in reciprocating engines are:

74
 1. Sealing the combustion/expansion chamber.
2. Supporting heat transfer from the piston to the cylinder wall.
3. Regulating engine oil consumption.

During the compression and power strokes, the compression ring seals the
combustion gases and prevents blow-by. Although blow-by is not
completely eliminated it is kept to an acceptable limit. During the
compression and exhaust strokes the cylinder walls are lubricated with oil by
throw off from the connecting rod bearings. Excess oil is wiped off by the
piston rings. Not only does the oil ring have the responsibility of wiping the
excess oil off the cylinder walls, but the job is also shared by all of the rings,
leaving a fine layer of oil on the wall to provide lubrication for the following
ring. As rings wear, the ability to perform these functions is decreased
resulting in oil consumption and blow-by. When this happens it is time for a
new set of rings.

MARKET POTENTIAL

Piston ring is the one of the most replaceble part of the diesel/petrol
engines.It has great demand in the replaceble market as well as in new
engines market.For the last few years there is noticeble 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
 Pumps
 Industrial Applications
 Cranes
 Gearboxes

So, by maintaining quality and using proper marketting techniques there is

alwayes a great market of this product.

75
BASIS AND PRESUMPTIONS

 The information supplied is based on a standard type of

manufacturing activity utilizing conventional techniques of production
and optimum level of performance.
 75% of the envisaged capacity is taken as efficiency on single
working shift.
 Labour and wages are required as per present circumstances.
 The cost in respect of land & building, machine & equipment, raw
material & selling price of finished product etc are those generally
obtained at the time of preparation of project profile and may vary
depeding upon the location, make and for variety of resons.
 The interest on total capital has been assumed @ 14% p.a

IMPLEMENTATION SCHEDULE
 Selection of site & Preparation of bankable project report 3
months
 Filing of EM part-I with GM, DIC 3
days
 Submission of project report & sanction of finance
from financial institution/ Bank 4
months
 Procurement of Plant, machinery & equipment 1
month
 Commissioning and erection of Plant & machinery and trial run 3
months
 Purchase of raw material & recruitment of labour & staff 1
month
 Start of commercial production
Immediately as

76
 soon as above
activities completed
 Filing of EM Part-II with GM, DTIC
Immediately after the
Enterprises has gone into
regular production

TECHNICAL ASPECTS

MATERIAL
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
 Bronze
 Aluminum Bronze
 Phosphor Bronze
 Steel
 Stainless Steels for use in high temperature

MANUFACTURING PROCESS

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.
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..

77
Piston Ring Coatings
After the completion of machining process the following surface treatments
for piston rings are principally designed to provide corrosion protection for
storage, enhance appearance and improve running.

 Bronze Coating
 Ceramic Chrome Plating
 Chrome Plating
 Copper Plating
 Molybdenum
 Phosphate Coating
 Plasma Sprayed Coating
 Tin Coating

PRODUCTION CAPACITY

Approxemetly 45,000 set of different sizes per year.

QUALITY CONTROL

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 eleminated. Piston rings should be manufactured as
per IS : 5791-1971 & IS: 8422 for IC engines.The entire operation of surface
treatment/ coating should be closely controlled. For the inspection process
proper callibarated gauges should be used.

POLLUTION CONTROL

As this unit doesnot comes under heavy polluted industry, although No

Objection Certificate from pollution control board should be taken.

POWER CONSUMPTION

78
As this is a small unit it has less power consumption, which is approx.
30H.P

FINANCIAL ASPECTS
FIXED CAPITAL

1. Land & building

Rs.

400 sq. mtrs. With covered area of 300 sq. mtrs

5,000(approx.)

on monthly rent basis

2. Machinery & Equipments

Sr. Description Qty Price (Rs.)

No.
1 Lathe machine,1800 mm bed with 2 3,40,000
3 H.P motor
2 Lathe machine,900 mm bed with 2 1 2,60,000
H.P motor
3 Face grinder with special 1 60,000
attachment, 4 H.P motor
4 Bench drill machine.12mm 1 15,000
capacity
5 Bench grinder,250mm wheel 1 15,000
dia,1H.P motor
6 Gauges,tools & other equipments L.S 40,000

Total=
7,30,000

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

13 Furniture & office equipment 20000
TOTAL 823000

79
WORKING CAPITAL ( per month)

1. Personnel

Sr. Designation No. Salary Total

no. (per month)
1 Manager 1 7000 7000
2 Supervisor 1 5000 5000
4 Skilled worker 2 4000 8000
5 Unskilled worker 2 3000 6000
7 Store-keeper 1 4000 4000
8 Clerk-cum-Typist 1 4000 4000
9 Peon 1 3000 3000
10 Watchman 1 3000 3000

Total
40,000/-

2. Raw material (per month)

Sr. Description Qty. Rs.

no.
1 Piston ring castings @ 1300kg 62,400
Rs.48/kg

3. Utilities (per month)

Electricity & Water Rs

20,000

80
 4. Other expenses (per month)

Sr. Description Rs.

no.
1 Stationary 4000
2 Transport charges 5000
3 Telephone 2000
4 Maintenance 4000
5 Insurance 3000
6 Miscellaneous 5000
7 Rent 5000
28000
TOTAL

Total recurring expenditure (per month)

1+2+3+4 = 1,50,400/-

Total working capital (for 3 months)

1,50,400/-x 3 = 4,51,200or say 4,51,000/-

 TOTAL CAPITAL INVESTMENT

1. Fixed capital Rs.

8,23,000/-

2. working capital Rs.

4,51,000/-

Total = Rs.
12,74,000/-

FINANCIAL ANALYSIS

81
 Cost of production (per year)

Total recurring cost per year Rs.

18,04,800

Depreciation on machinery
& equipment @ 10% Rs.
73,000

Depreciation on office furniture @ 20% Rs.

4,000

Interest on total investment @ 14% Rs.

1,78,360

Total cost of production Rs.

20,60,160

 Turnover (per year)

Qty. Rate
Value(Rs.)

45000 @ Rs. 58/-

26,10,000/-

 Net profit (per year)

=26,10,000 – 20,60,160

= 5,49,840 or say 5,50,000/-

 Net profit ratio

= Net profit per annum x 100

Turnover per annum
= 550000 x 100

82
 2610000
= 21.07 %
= 21%

 Rate of return

= Net profit per annum x 100

Total investment

= 550000 x 100
1274000

= 43..17%

 Break even point

1. Fixed cost per annum Rs.

o. Depreciation on machinery
& equipments @10% 73000
p. 40% of other expenses
(excluding rent & insurance)
96,000
q. Depreciation on office furniture @20%
4,000

r. 40% of salary & wages

1,92,000

s. Interest on capital investment @14%

1,78,360

t. Rent 60,000

u. Insurance 36,000

Total= 6,39,360 Or say 6,

39,000
2. Breakeven point

83
 = Fixed cost x 100
Fixed cost + profit

= 6,39,000 x 100
6,39,000 + 5,50,000 = 53.74%

15. 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

84