Profile No.

: 108 NIC Code:71100

CNC ENGINEERING WORKSHOP

1. INTRODUCTION:

Precision machining facilities are crucial for ancillaries of primary manufacturers. Good
manufacturing facilities for precision are hard to find in normal Engineering Workshops. Some
units with precision machining and other facilities are able to serve industries for critical
components. With focus, a CNC machine based Workshop can be established with specialized
facilities like dynamic balancing, wire cut EDM machine etc. and other general purpose
facilities viz. welding/ brazing /metallizing etc. facility.

2. PRODUCT & ITS APPLICATION:

The precision jobs demand engineering workshop with highly skilled manpower and better
machinery like CNC machine tools. The capability to execute precision jobs of either
component manufacturing or repairs, depend on the facilities and man power team.

Precision Job work activities involve manufacture of parts like shafts and stems, industrial
valves seats, gears, sprockets, dies and tooling for pharma, food, electronics, aerospace,
defense etc. industries. Also compressor and turbine parts, chemical pump and agitator
impellers, electric motor parts, medical equipment parts, auto parts like engine valves, tappets,
camshafts, gears.

3. DESIRED QUALIFICATIONS FOR PROMOTER:

Person is having Diploma or graduate in engineering and preferably having relevant

experience.
4. INDUSTRY OUTLOOK/TREND

Asia and especially India is expected to emerge as the largest manufacturing base for variety
of mass produced components requiring precision for the world. After China, India is emerging
as major industrial machines and Auto Industry. The vehicle production and growing vehicle
population, in developing countries and improvement in the economic conditions, is leading to
increasing investments by the industry players within the APAC region. In Asia, India has a
very prominent place as a manufacturing base due to its size and population enabling mass
production of products and components. If the auto sector alone is taken, it has expanded by
14.3 per cent because of strong growth in the spares or after-market sales to reach at a level
of Rs 2.92 lakh crore (US$ 44.90 billion) in the year 2017. The auto-components industry
accounts for almost seven per cent of India’s Gross Domestic Product (GDP) and employs as
many as 25 million people, both directly and indirectly. Besides, this, industrial machine
components and sub systems, white goods, building wares, plastic moulds and dies, hydraulic
systems, electronic peripherals and automation systems etc require services of precision
component manufacturing facilities viz CNC workshops.

At present, there are very few such CNC work shops, not more than 30 in number in large and
small medium sector of various types component manufacturers for auto and white goods
sector. The unit clusters are mainly located in North Indian centers like Punjab, Haryana, Delhi
and West UP, in Maharashtra around Pune and Bombay and Southern India near Bangalore,
Chennai and Hyderabad, in Gujarat around Ahmedabad, Rajkot and Surendranagar.

5. MARKET POTENTIAL AND MARKETING ISSUES. IF ANY:

Apart from automobiles, air and gas compressors mining equipment, trucks, buses, trains,
generator sets, forklifts, earth moving and material handling equipments, railways, Defence
sector etc require CNC precesion components. The demand is expected to expand at an
average growth rate of 15%.

The project of Precision CNC machine based engineering workshop will serve the critical
equipment industries. Depending on the location of unit, workshop can focus on job work to
produce parts for machinery manufacturing industries. Auto and stationary engines, and
industrial plants in the region around unit can be serviced for all precision dies and tooling and
other components. For aerospace, defense, chemical plants, pharma plant, textile industry,
food, dairy, pulp, paper and packaging industry, etc.

CNC engineering workshops are established by industries in house to meet the need of
precision machined components in India. However the new trend has been emerging to rely on
ancillary units supplying components, while the major branded products manufacturers are
focusing more on design, assembly & testing of final products and Marketing and servicing.
The OEM in industrial machines and auto sector are now relying more and more on ancillary
units among which a CNC workshop has always a good need for competent services of
Precision machining and sheet metal component engineering work shop.

6. RAW MATERIAL REQUIREMENTS:

The CNC machining job work entails the finish machining of cast or forged components for
OEMs sourcing the materials for workshops. Besides ancillary units also offer components for
job work. The unit mostly will not need the material for such work. However for special jobs
including materials in small volumes viz. repair and rebuilding activities shall require several
types of materials as per need like castings, forgings, steel rods and sections, plates etc. All
are available in market or they are arranged by the customers.

7. MANUFACTURING PROCESS:

The precision work shop can take up job work for parts like, I C engine valves, Industrial valve
pump and turbine, valve seats, impeller blades etc., large diameter and high speed rotating
machinery parts, automatic machine tooling and dies etc. that require close tolerances and
complex geometric profiles.

There is component specific process sequence for job work and repair replacement and
rebuilding activities. The most common processes carried out are turning, milling, shaping,
special threading, grinding, lapping, gear shaping, metallizing and finishing.
8. MANPOWER REQUIREMENT:

The unit shall require highly skilled service persons. The unit can start from 5 employees
initially and increase to 18 or more depending on business volume.

Monthly
Sr. No Type of Employees No of Employees
Salary
Year 1 Year 2 Year 3 Year 4 Year 5
1 Skilled Operators 20000 2 4 6 6 6
2 Semi-Skilled/ Helpers 7000 2 4 6 8 8
3 Supervisor/ Manager 25000 1 1 1 1 1
4 Accounts/ Marketing 16000 0 1 1 2 2
5 Other Staff 7000 0 0 0 1 1
TOTAL 5 10 14 18 18

9. IMPLEMENTATION SCHEDULE:

The unit can be implemented within 6 months from the serious initiation of project work.

Time Required in
Sr. No Activities
Months
1 Acquisition of Premises 2

2 Construction (if Applicable) 2

Procurement and Installation of Plant and
3 2
Machinery
4 Arrangement of Finance 2

5 Manpower Recruitment and start up 2

Total Time Required (Some Activities run
6
concurrently)

10. COST OF PROJECT:

The unit will require total project cost of Rs 104.24 lakhs as shown below:

Sr No Particulars In Lakhs

1 Land 15.00
2 Building 35.00
3 Plant and Machinery 41.05
4 Fixtures and Electrical Installation 2.65
5 Other Assets/ Preliminary and Preoperative Expenses 2.50
6 Margin for working Capital 8.04
TOTAL PROJECT COST 104.24

11. MEANS OF FINANCE:

The project will require promoter to invest about Rs 32.09 lakhs and seek bank loans of Rs
72.15 lakhs based on 70% loan on fixed assets.

Sr. No Particulars In Lakhs

1 Promoters Contribution 32.09
2 Loan Finance 72.15
TOTAL: 104.24

12. WORKING CAPITAL REQUIREMENTS:

Working capital requirements are calculated as below:

Sr. No Particulars Gross Amount Margin % Margin Amount Bank Finance

1 Inventories 2.52 40 1.01 1.51

2 Receivables 7.35 50 3.68 3.68

3 Overheads 2.35 100 2.35 0.00

4 Creditors 2.52 40 1.01 1.51

TOTAL 14.73 8.04 6.69

13. LIST OF MACHINERY REQUIRED:

Sr No Particulars UOM Quantity Rate Total Value

 Main Machines/ Equipment
1 Hacksaw machine Nos 1 80000 80000
2 CNC Lathe machine Nos 1 600000 600000
Precision CNC Milling machine and
3 Nos 1 850000 850000
all attachment
4 Heavy Duty Milling Machine Nos 1 500000 500000
5 EDM Machine Nos 1 900000 900000
6 Heavy duty Pillar Drill machine Nos 1 300000 300000
Precision Grinding /threading etc.
7 Nos 1 250000 250000
Attachments
8 Belt grinding Polishing machine Nos 1 100000 100000

9 Welding Brazing set Nos 2 80000 160000

10 Lapping machine Nos 1 90000 90000
Sub Total: 3830000
Tools and Ancillaries
1 Tools and gauges LS 1 200000 200000
2 Misc. tools etc. LS 1 75000 75000
Sub Total: 275000

Fixtures and Elect Installation

1 Storage racks and trolleys LS 1 15000 15000

2 Other Furniture LS 1 20000 20000
3 Telephones/Computer LS 1 30000 30000
4 Electrical Installation LS 1 200000 200000
Subtotal: 265000
Other Assets/ Preliminary and
LS 1 250000 250000
Preoperative Expenses
TOTAL PLANT MACHINERY COST 4620000

All the machines and equipment are available from local manufacturers. The entrepreneur
needs to ensure proper selection of product mix and proper type of machines and tooling to
have modern and flexible designs. It may be worthwhile to look at reconditioned imported
machines, dies and tooling. Some of the machinery and dies and tooling suppliers are listed
here below:

1. Techno Machines
 Chikkanahalli Road,
Opp. Shahi Exports (Unit No 6),
Near Annapoorneshwari Temple, Bommanahalli, 
BENGALURU-560 068, INDIA

2. S. S. Engineering Works
Ajit Khanna(Proprietor)
Plot No. 100, Sector 6 IMT Manesar, Gurgaon - 122050, Haryana, India

3. Taurus Private Ltd Co

No. 24, D 2 / E 3, Kiab Industrial, Area At Pivele
Kiab Industrial Area
Bengaluru – 560100 Karnataka, India

4. Micro Engineering Works;

No. 6/140, Gandhi Nagar, Nallampalayam Road Nanjai Gounden, Pudur, G. N. Mills
Post, Coimbatore - 641029, Tamil Nadu, India

5. S. G. Profile
Plot No. 201/1, Gala No. 56, Morya Industrial Estate, MIDC, Bhosari, Bhosari Midc, 
Pune-411026, Maharashtra, India

Other well known machine manufacturers can be searched from directories/ internet. Some
are listed here below:

ACME TOOLINGS, D-67, Phase 1, IDA Jeedimetla, Hyderabad – 500055,

Ace Manufacturing Systems Ltd., Batliboi Ltd. Mumbai, Bharat Fritz Werner Ltd., HMT Machine
Tools Ltd., Advani Oerlikon Ltd, Bombay, Lakshmi Machine Works Ltd., Lokesh Machines Ltd.,
Praga Tools Ltd., Toolcraft Systems Pvt. Ltd. etc

The above list of machine supplier is illustrative. There are many machinery, dies and tools
suppliers and consultants at several industrial clusters all over India where you may find
suppliers of services and machinery for a chosen product mix. Other well-known machine
manufacturers can be searched from directories/ internet.
14. PROFITABILITY CALCULATIONS:

Sr No Particulars UOM Year Wise estimates

Year 1 Year 2 Year 3 Year 4 Year 5

1 Capacity Utilization % 40 50 60 70 75
2 Sales Rs Lakhs 44.10 55.13 66.16 77.18 82.70
Raw Materials & Other
3 Rs Lakhs 15.10 18.87 22.64 26.42 28.30
Direct Inputs
4 Gross Margin Rs Lakhs 29.01 36.26 43.51 50.77 54.39
5 Overheads Except Interest Rs Lakhs 8.68 8.68 8.68 8.68 8.68
6 Interest Rs Lakhs 10.10 10.10 10.10 10.10 10.10
7 Depreciation Rs Lakhs 8.12 8.12 8.12 8.12 8.12
8 Net Profit Before Tax Rs Lakhs 2.11 9.36 16.61 23.86 27.49

The basis of profitability calculation:

Unit will have capacity of providing Job Work services to ancillary units for specific components
of up to 100,000 nos per year, depending on the type/ size of components and the complexity
and nos of machining and other operations involved. For high precision components in small
volumes and dies and mold components the cpacity may vary. The average cost of Job work
may depend on volumes and the range is taken as Rs. 100 pc for very large volume to
Rs.5000 per piece for smaller volumes and multiple operations.

The material requirements are almost nil as cast and forged components are supplied by
customers. One time toolings / wearing material costs is taken at market rates. The unit may
generate wastage/ scrap which is to be sold at @ Rs 20 ~ 80 per Kg depending on type. The
income of same is added. Consumables costs also considered based on prevailing rate.

Energy Costs are considered at Rs 7 per Kwh. The depreciation of plant is taken at 10 % and
Interest costs are taken at 14 -15 % depending on type of industry.

15. BREAK EVEN ANALYSIS

 The project is can reach break-even capacity at 37.01 % of the installed capacity as depicted
here below:

Sr. No Particulars UOM Value

1 Sales at Full Capacity Rs Lakhs 110.26
2 Variable Costs Rs Lakhs 37.74
3 Fixed Cost incl. Interest Rs Lakhs 26.90
% of Inst
4 Break Even Capacity 37.10
Capacity

16. STATUTORY/ GOVERNMENT APPROVALS

The unit will require state industry unit registration with District Industry center. No other
procedures are involved. For export, IEC Code and local authority clearances. The industry
registration and approval for factory plan, safety etc are required as per factory inspectorate
and labor laws. Other registration are as per Labor laws are ESI, PF etc. Before starting the
unit unit will also need GST registration for procurement of materials as also for sale of goods.
As such there is no pollution control registration requirements, however the unit will have to
ensure safe environment through installation of chimney etc as per rules. Solid waste disposal
shall have to meet the required norms.

17. BACKWARD AND FORWARD INTEGRATION

The machines and equipment offer scope for diversification in to producing several consumer
and industrial parts/ components and parts. The unit can utilize the spare capacities. As such
there is not much scope for organic backward or forward integration. The entrepreneur needs
to ensure proper selection of Job mix and also be careful in maintaining product parameters in
terms of dimensions, tolerances and geometric profiles along with final weights of products.

The workshop business needs building up reputation, ensuring reliability and quality of
services rendered. Also personal rapport of key persons can generate good business volumes
from OEM units and ancillary component unit. The location with good catchment area ensures
good market potential to new business units.

18. TRAINING CENTERS/COURSES

There are no specific training centers for production technology. However foundry technology
can be obtained by joining as apprentice in foundry units. The Prototype Development Centers
can provide some assistance and for foundry technology, casting, machining, dies and Tools
development, courses run by centers of excellence viz Indo German Tool Room at
Ahmedabad, Rajkot, Chennai, etc shall be helpful.

The most important scope of learning is in new product design and development by study of
the new product designs, product range, features and specifications of leading Brands /
competitors across the world by scanning the Internet and downloading data from websites of
Viz. North American, Europe, China etc markets.

Udyamimitra portal (link: www.udyamimitra.in) can also be accessed for hand-holding services
viz. application filling / project report preparation, EDP, financial Training, Skill Development,
mentoring etc.

Entrepreneurship program helps to run business successfully is also available from Institutes
like Entrepreneurship Development Institute of India (EDII) and its affiliates all over India.

Disclaimer:
Only few machine manufacturers are mentioned in the profile, although many machine
manufacturers are available in the market. The addresses given for machinery manufacturers
have been taken from reliable sources, to the best of knowledge and contacts.   However, no
responsibility is admitted, in case any inadvertent error or incorrectness is noticed therein. 
Further the same have been given by way of information only and do not carry any
recommendation.