ABSTRACT

This project deals with the production of good quality of sponge iron at Kuarmunda,
which is one of the remote areas of Sundargarh but is rich in iron ores and the
transport facility is good as it is on the national highway. The firm is designed such
that its growth occurs fast; it grows in line with other industries. It should be that
much strong so that it can defend the existing status in the market. It can catch up the
leading demand in the market so that the consumers get their work done within
limited time.
Apart from the establishment of this project, it would also provide employment to the
poor people in the unskilled workers grade so that they don’t go beyond the line of
poverty. Basically the purpose of making this project is to make huge amount of profit
by utilizing the resources available at Kuarmunda. Since the commissioning of the
first Sponge iron unit in 1980, it has been a period of notable accomplishments for
Sponge Iron India Limited which has played vital role in developing and establishing
coal based DR Technology. Establishment and upgradation of coal based Sponge Iron
technology in the Country, innovations in the usage of Sponge Iron and its conversion
into Steel, conversion of waste material into value added products, visualization of
new concepts for updating technology and the unique expertise in total consultancy
for establishing new Sponge Iron plants have all contributed to the evolution of
Sponge Iron India into a 'Technology Corporation'. which our project also intends to
do.
TABLE OF CONTENTS
ABSTRACT...................................................................................................................1
TABLE OF CONTENTS...............................................................................................2
1. GENERAL INFORMATION....................................................................................2
4. MARKET POTENTIAL............................................................................................6
4.1 Present Demand and Supply of the Product :.......................................................7
4.2 Competition:.........................................................................................................7
With other sponge iron plants like Adhunik Metallics, Ganesh Metallics, Jindal
Steel Plant,Bhushan Steel Plant in the market..........................................................7
4.3 Target Clients: .....................................................................................................7
4.4 Marketing Strategy:............................................................................................7
1. Coal....................................................................................................................8
2. Iron Ore..............................................................................................................8
3. Dolomite.............................................................................................................8
PRODUCTION SCHEDULE......................................................................................12
6. DETAILS OF THE PROPOSED PROJECT...........................................................13
(A) LAND AND BUILDING:.................................................................................14
(B) MACHINERIES / EQUIPMENTS:...................................................................14
(C) MISCELLANEOUS FIXED ASSETS:.............................................................14
(D) PRELIMINARY AND PRE OPERATIVE EXPENSES:.................................14
(H) MAN POWER (Salaries/Wages) - Monthly .................................................16
(I) REPAIRS AND MAINTENANCE - Monthly:.............................................16
(J) SELLING AND DISTRIBUTION EXPENSES - Monthly:..........................16
(K) ADMINISTRATIVE EXPENSES - Monthly:.............................................17
.............................................................................................................................17
(L) INTEREST - Annual:....................................................................................17
(M) DEPRECIATION: ......................................................................................17
7. WORKING CAPITAL (one month) / One cycle.....................................................18
8. TOTAL COST OF THE PROJECT.........................................................................19
9. MEANS OF FINANCE...........................................................................................19
10. PROFITABILITY PROJECTIONS.......................................................................19
11. BREAK EVEN POINT..........................................................................................20

1. GENERAL INFORMATION

Name of the Entreprenuers:

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 sssss
ssss
Proposed Project:
Sponge Iron Plant.

Major Product / Services:

Sponge Iron.

Proposed Locations:
Orissa.

Type of Organization:
Private Limited.

2. ENTREPRENUER PROFILE :

1. Name :
Educational Qualification:

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 Technical Skills: C, C++, Oracle, VLSI

2. Name:
3. Educational Qualification: Bachelor of Technology
Technical Skills: C, C++, PLC, ETAP, SIMULINK, VLSI

4. Name :
Educational Qualification: Bachelor of Technology
Technical Skills: C, C++, Oracle, ETAP

4. Name :
Educational Qualification: Bachelor of Technology
Technical Skills: C, C++, Oracle, JAVA, Networking

3. TYPE OF THE PRODUCT / SERVICES:

1. Type of the Project :

Hard Core.
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 2. Product / Services Description :

It is a Product Oriented type of firm which includes processing and production of

sponge iron. Our firm deals with the ‘A’ grade quality of sponge iron . Its uses are
mainly in the yielding of ingot and Rods of best quality . Sponge Iron is the product
created when iron ore is reduced to metallic iron, usually with some kind of carbon
(charcoal, etc), at temperatures below the melting point of iron. This results in a
spongy mass, sometimes called a bloom, consisting of a mix of incandescent wrought
iron and slag.

Sponge iron is not useful in itself, but must be processed to create wrought iron. The
sponge is removed from the furnace, called a bloomery, and repeatedly beaten with
heavy hammers and folded over to remove the slag, oxidise any carbon or carbide and
weld the iron together. This treatment usually creates wrought iron with about three
percent slag and a fraction of a percent of other impurities. Further treatment may add
controlled amounts of carbon, allowing various kinds of heat treatment (e.g.
"steeling").

Today, sponge iron is created by reducing iron ore without melting it. This makes for
an energy-efficient feedstock for specialty steel manufacturers which used to rely
upon scrap metal.

3. Major Consumers:
Ram Rudai Steel Plant, Durgapur Steel Plant, Rourkela Steel
Plant, Ranigunj Steel plant.

PROMOTERS:
1. Major Promoter of our project will be loans taken from banks.
2. Capital from reliable and Supportive Capital Ventures.
3. The company with which our firm collaborates.
4. Our Sponsors who have donated us a large amount for the successful start of
this firm.
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4. MARKET POTENTIAL

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4.1 Present Demand and Supply of the Product :

The technologies trend of the present century has lead to the evolution of ‘A’ grade
sponge iron which right now has a demand of Rs 21,500 per ton in market. If this
product will be introduced in the market then it will be of great demand as producers
of the sponge iron are less but resources are more to be explored those are much
needed by the leading steel companies and many more core companies.

The supply of this product would be 400 tonnes per year which
would be utilized by all of its leading consumers and the left out product would be
used to furnish its own company at Kolkata.

4.2 Competition:
With other sponge iron plants like Adhunik Metallics, Ganesh Metallics, Jindal Steel
Plant,Bhushan Steel Plant in the market.

4.3 Target Clients:

Our main target clients are Raam Rudaai Steel Plant, Durgapur Steel Plant, Rourkela
Steel Plant, Raniganj Steel Plant for best quality production of Ingot , rods and bars.

4.4 Marketing Strategy:

The Marketing Strategy will be advertising the product in the media and by
company’s representatives by visiting various target clients and by making them
aware of the features, application and the type of technology used in production of
sponge iron in a stipulated time as required by them. Also by passing the tenders with
reasonable prices so that most of the companies can afford it we can sale the product.

4.5 Technical Know-how Availability

The details of the project were made after analysing the increasing need for sponge
iron in the market by the leading steel industries. The availability of resources in the
large amount is the major cause of this project’s formation.
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4.6 Raw Materials Required
Sponge iron manufacture is highly sensitive to raw material characteristics.
Therefore, it is essential to examine the chemical and physical characteristics of
raw materials, both individually and in combination. The basic raw materials for
the production of sponge iron are iron ore, non-coking coal and dolomite. Several
tests are conducted in the company laboratory to ascertain their suitability in a
rotary kiln.

1. Coal
Important factors determining coal quality are:

• Chemical properties such as fixed carbon, ash content, volatile matter, etc.:
&
• Physical properties viz, reactivity and ash fusion temperature.

The entire coal requirement for this project would be from Bihar.

2. Iron Ore
In sponge iron making, iron ore is reduced in solid state. Unlike in the conventional
steel melting processes, the gangue content of iron ore cannot be separated as a
slag. Therefore, it becomes imperative to select an ore with a high Fe content and a
low gangue content, to optimise yield during steel making. Apart from this, to
ensure a better kiln campaign life and output, the iron ore is made to undergo a
series of other tests viz. shatter, tumbler & abrasion indices, reducibility etc.
By virtue of its location, our project enjoys the proximity of good iron ore
reserves, suitable for sponge iron making, in the Northern part of Orissa. Its sources

of iron ore are from the Barsuan Mines, Kalta mines which has one of the finest
quality iron ore in the region.

3. Dolomite
Dolomite acts in the process as a desulphuriser, removing sulphur from the feed
mix during the reduction process. It is mixed in small proportion along with other
raw materials before charging into the kiln.
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4.7 Step By Step Description of the Manufacturing
Process from Raw Material to Finished Goods

(1) First of all the raw materials like the ores,coal etc are finely crushed by using
the crushers.
(2) The kilns have inlet feeders which consists of three substances namely Iron
ore, Dolomite and coal .
(3) The piston feeding of iron ore is 6 tonnes per hour .
(4) The piston feeding of coal is 3 tonnes per hour.
(5) The piston feeding for dolomite is 0.120 tonnes per hour.
(6) The outlet feeding is 2 tonnes of coal per hour.
(7) There are in all total 7 stages of temperature profile they are 1st zone - 750 C,
2nd zone - 850 C, 3rd zone - 920 C, 4th zone – 990 C, 5th zone – 1020 C, 6th
zone - 1030 C , 7th zone – 1040 C.
(8) After passing through the above stages of temperature in the kiln finally the
sponge iron is produced.

4.8 WORKING PRINCIPLE

In the rotary kiln considerable quantity of fines in the product between 3 and 5 mm in
size are generated which cannot be directly used in electric arc furnaces, because they
tend to get blown away while charging into the furnace. To overcome this problem
and to utilize this hitherto considered waste material, the Company engineered and
build a cold briquetting unit, the first of its kind in the country, for production of high
density Sponge Iron briquettes with improved carbon content a product ideally suited
as feed stock for electric arc furnace. Nearly 40% of heat energy is lost through waste
gases going up the stack in the rotary kiln process. Harnessing this wasted energy
could result in generating enough electric power to fully meet the requirements of
both the Sponge Iron units, through out the year.

Quality specifications Sponge Iron lumps with the following specifications:

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1. Size 3 to 20 mm (95% min)
2. Fe total 90% min
3. Fe metallic 81% min
4. Degree of metallization 88% min
5. Sulphur 0.045% max
6. Phosphorus 0.05% max
7. Carbon 0.1 to 0.3%
8. Non Magnetics 1.5% max
9. Packaging in HDPE bags only

THE MEASURES TAKEN FOR ESTABLISHMENT

OF PLANT

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a) Comprehensive testing of raw materials for the process.
b) Preparation of project report for an investment decision.
c) Basic and detailed engineering of the reduction unit and all the auxiliaries from raw
material preparation to storage and handling of finished products.
d) Preparation and selection of mechanical, electrical and instrumentation equipment
including refractories.
e) Inspection of equipment to ensure compliance of specifications and for meeting the
required standard from operational point of view.
f) Assistance in supervision of erection, start-up and commissioning.
g) Scheduling and monitoring the implementation of project with assistance in trouble
shooting during erection and commissioning.
h) Assistance in commissioning the plant and optimizing the plant operations.
i) Full performance guarantees for achieving rated capacity utilization.

FLOWCHART OF MANUFACTURING PROCESS

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 3 tonnes per
hour Coal
6 tonnes per
hour Iron ore 0.120 tonnes per
hour dolomite

KILN INLET
Iron ore, Dolomite
and Coal

KILN OUTLET
Feeding 2 tonnes of
Coal

7 Stages of
temperature

Sponge
Iron

PRODUCTION SCHEDULE

5.1 No. of Working Days per Annum – 286 days.

5.2 No. of Working Shifts(8 hours) per Day – There are 3
shifts (namely A, B, C)

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5.3 Installed Capacity (Annum) – 1,14,400 tonnes
5.1 Utilized Capacity (%) – 100
I - 2008 - 82
II - 2009 - 94
III - 2010 - 100

6. DETAILS OF THE PROPOSED PROJECT

This Project is about the production of A grade quality of Sponge Iron by utilizing the
recent most technologies in the yielding of iron from its ores.

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(A) LAND AND BUILDING:

Sr. No. Particular Area Required Total Value Remarks

1. Land 120 acers Rs.62,72,64,000 Sufficient land
2. Building 50 acers Rs.26,13,60,000 and Building
used up.
Total: Rs.88,86,24,000

(B) MACHINERIES / EQUIPMENTS:

Sr. No. Description Nos. Required Rate(Rs.) Total Value(Rs.)

1. Kiln (furnace) 4 40,00,000 1,60,00,000
2. Coolers 4 22,50,000 90,00,000
3. Crushers 4 25,00,000 1,00,00,000
4. Electrostatic 4 12,50,000 50,00,000
Precipitator
5. Computers 24 30,000 7,20,000
6. Printers 10 2,000 20,000
7. Scanners 5 2,500 12,500
Total: 4,07,52,500

(C) MISCELLANEOUS FIXED ASSETS:

Sr. No. Description Nos. Required Rate(Rs.) Total Value(Rs.)

1. Furniture T(40), C(40) 1,000 80,000
2. Coffee 1 5,000 5,000
Maker
3. A.C. 10 20,000 2,00,000
4. Office tools 10 5,000 50,000
Total: 3,35,000

(D) PRELIMINARY AND PRE OPERATIVE EXPENSES:

Sr. No. Particulars Amount (Rs.) Remarks

1. Interest during 2,50,00,000
implementation
2. Establishment 45,00,00,000 Sufficient to
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 Expenses establish
3. Start-Up 50,00,00,000
Expenses
Misc. expenses 97,50,00,000
Total

(E) SALES REVENUE:

Year Items Quantity sold per year Rate per Sales

unit(Rs.) realisation(Rs.)
2008 Sponge iron 1,44,000 tonnes 3,00,00,00 432000000000
0

(F) RAW MATERIAL (MONTHLY REQUIREMENT)

Sr. No. Items Quantity Rate(Rs.) Total Value(Rs.)

1. Iron ore 17,280 tonnes 4200 7,25,76,000
2. Coal 14,400 tonnes 3,500 5,04,00,000
3. A.C. 10 20,000 2,00,000
4. Office tools 10 5,000 50,000
Total: 12,32,26,000

(G) UTILITIES – Monthly

Sr. Particulars Annual Remarks

No. Expenditure(Rs)

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1. Power/Electricity 2,86,000 2MW/day
2. Water 30,000 45 lakh gallons/month
3. Coal/Oil/Stream 40,000 24,000 litres/month
4. Any other item ( Misc.) 20,000

Total 3,76,000

(H) MAN POWER (Salaries/Wages) - Monthly

Sr. Particulars No. Wages/Salaries per Annual

No. Month(Rs.) Expenses(Rs)
1. Skilled 110 15,000 – 35,000 60,000
2. Semi Skilled 155 10,000 – 15,000 40,000
3. Unskilled 300 4,500 - 6,000 10,000
4. Office Staff 30 7,000 – 8,000 22,000

Total 64,87,500 1,32,000

(I) REPAIRS AND MAINTENANCE - Monthly:

Sr. Particulars Amount(Rs)

No.
1. Computer and Electronic goods 5,000
2. Crusher maintenance 10,000
3. ESP maintenance 15,000
4. Vehicles 15,000
Total: 45,000

(J) SELLING AND DISTRIBUTION EXPENSES - Monthly:

Sr. Particulars Amount(Rs.) Remarks

No
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 1. Publicity Expenses 1,10,000 Sufficient for sale of
2. Traveling 3,00,000 product.
3. Freight 10,000
4. Commission 50,000
4,70,000
Total

(K) ADMINISTRATIVE EXPENSES - Monthly:

Sr. Particulars Amount(Rs.) Remarks

No
1. Stationery & Printing 20,000 Sufficient
2. Post/Telephone/Fax 50,000 Amount
3. Guest Entertainment Expenses 20,000

Total 90,000

(L) INTEREST - Annual:

Loan Interest (Rs) Installment(Rs.) Balance(Rs.)

Amount
(Rs)
70,00,00,000 1,40,00,000 5,00,000 1,35,00,000

(M) DEPRECIATION:

Sr. Type of Asset Cost of Depreciation Amount(Rs.)

No. Asset (WDV)
1. Buildings 23,13,60,00 10% 2,31,36,000
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 0
2. Plant and 2,04,58,000 33% 67,51,140
Machinery
3. Moulds and 4,07,52,000 50% 2,03,76,000
Equipments
Total: 5,02,63,140

7. WORKING CAPITAL (one month) / One cycle

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 Sr. No. ITEM Amount (Rs.)
1. Raw-Material 12,32,26,000
2. Salary/Labour 64,87,500
3. Administrative expenses 90,000
4. Repairs and maintenance expenses 45,000
5. Selling and distribution expenses 4,70,000

8. TOTAL COST OF THE PROJECT

Sr. No. Particulars Total Value(Rs.)

1. Fixed Capital 10,00,00,000

2. Working Capital margin 13,03,18,500

3. Preliminary & Pre-operative Expenses 97,50,00,000

4. Cost escalation & contingencies 10,00,00,000

Total 130,53,18,500

9. MEANS OF FINANCE
Sr. No. Particulars Amount Remarks
(Rs.)
1. Own Investment 50,00,00,000
Some amount from
2. Term Loan 70,00,00,000 the sponsors.

Total: 120,00,00,000

10. PROFITABILITY PROJECTIONS

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 Sr. Particulars Amount(Rs)
No.
1. Annual sale realization 432,00,00,00,000
2. Cost of manufacturing and servicing 12,32,26,000
A Annual working capital 13,03,18,500
B Annual interest on loan 1,40,00,000
C Annual depreciation 5,02,63,140
Total: 19,45,81,640
3. Gross profit / Loss (A-B) 11,63,18,500

11. BREAK EVEN POINT

Break Even Point = (Fixed Cost ) * 100 / (Fixed Cost + Profit )

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The Fixed Cost is primarily associated with the cost that doesnot change with respect
to time which are fixed assets like land, building, machinery and equipments.

Break Even Point = (88,86,24,000) * 100 / (88,86,24,000 + 40752500)

= 95.61

CONCLUSION

Thus we have formulated the action plan that takes both the short term and long term
goals into account, and good use of every resource. Accept, Adapt and Achieve; these

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are the three watch words for success in today’s ever-changing situation. We would
stick to our goals inspite of the keen competitions in the market. Keeping in view the
needs and demands of our employees we would also try our level best to provide them
good facilities and yield good profit in the forthcoming years.

REFERENCES

1. http://www.businessplan.com.
2. http://www.bplan.com
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