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1.

0 INTRODUCTION

Steel Almira, drum, trunk and box are the most popular variety of steel products in the
homely affaire and these are purchased round the year by people from all income segments.
Competition is not as fierce as in case of branded Almira & steel products. There are some
national as well as regional established brands for small steel products but they are not in
regulated drum manufacturing market. This provides an ample opportunity to a new entrant
as the market is not dominated by some brands and with good quality and competitive
pricing, it is possible to capture adequate market share.

2.0 PRODUCT

2.1 Applications
Steel Almira, drum, trunk and box are made from steel sheets.

2.2 Compliances and Quality Standards


Not mandatory.

3.0 MARKET POTENTIAL

3.1 Demand and Supply


There is a very large market for Steel Almira, drum, trunk and box and they can be
sold at all such places where people do resides. Retailing has to be done through small
shops as well as big stores.

3.2 Marketing Strategy:


There is also institutional market consisting of school, canteens, railway and airline
caterers, and so on. There will be a competition from other small manufacturers and it
can be effectively overcome by offering good quality and attractive design, providing
lucrative margins to retailers and charging very economical price. Volumes would
compensate for low profit margins.

3.0 MANUFACTURING PROCESS

It is very well established and standardised. A steel Almira, drum, trunk, and box manufacturing
process require a sinker whose job is to shape the steel sheet with a sledgehammer. It takes several
hours of pounding on the sheet to produce the shape required. The design varies according to the end
product required. Then the sheet is placed over an open fire, usually outdoors. It is heated for several
hours (burned) to harden the steel for further shaping. Once the shape is achieved, the sinker cuts the
sheet to the proper skirt length for the instrument that is being made.
The process flow chart is as under.
Procuring Steel Sheet

Cutting the Sheet

Shaping the cut sheet by sledgehammer

Further heating

Re-shaping and final joining

Getting the final product of Steel

5.0 CAPITAL INPUTS

5.1 Land and Building


Land of around 150 sq.mtrs. with built up area of 100 sq.mtrs. would be adequate.
Production hall would occupy around 60 sq.mtrs. and balance area can be utilised for
storage and packing. Land rent for 12 months may cost Rs. 18,000/- which include
INR 1,500/month rent.

5.2 Machinery
Machineries required to cut the sheet and meant for shaping

Item Qty. Price (Rs.)


Cutting, Painting & Shaping Machine 1 1,00,000
Total 1,00,000

5.3 Raw Materials


The most important raw material would be steel sheet. The monthly requirement of
600 Kgs of Steel sheet even at 100% utilisation is not very significant.
6.0 MANPOWER REQUIREMENTS

Particulars Nos. Monthly Salary Total Monthly Salary


(Rs.) (Rs.)
Worker 1 6,000 6,000
Total 72,000

7.0 TENTATIVE IMPLEMENTATION SCHEDULE

Activity Period (in months)

Application and sanction of loan 30


Site selection and commencement of civil work 5
Completion of civil work and placement of
5
orders for machinery
Erection, installation and trial runs 5

8.0 DETAILS OF THE PROPOSED PROJECT

8.1 Land and Building


Particulars Area (Sq.Mtrs) Cost (Rs.)
Land & Building 250 1500/month
Total 18,000

8.2 Machinery
The total cost of machinery is expected to be Rs. 1 lacs as explained earlier.

8.3 Preliminary & Pre-operative Expenses


There will be several pre-operative expenses like registration, establishment,
travelling and administrative charges, interest during implementation, trial run
expenses etc. An amount of Rs. 10,000/- is provided towards that.
8.4 Cost of the Project & Means of Financing
(Rs. in Lacs)
Item Amount
Land and Building 0.18
Machinery 1.00

Manpower requirement for a year


0.72
Working Capital Margin (with raw material) 3.00
Total 5.00
Means of Finance
Loan from Bank 5.00

Financial assistance in the form of grant is available from the PMEGP scheme, Govt.
of India.

9.0 PROFITABILITY CALCULATIONS

9.1 Sales Revenue at 100%

The selling price is taken at Rs. 8 lac/- per year for 600 kg which is lower by 25% to 30%
than the prevailing prices.

9.2 INTEREST
Interest on loan of Rs.5.0 lacs is computed @ 12% per annum considering complete
repayment in 6 years.

9.3 Depreciation
It is calculated @ 20% on machinery.

10.0 PROJECTED PROFITABILITY


(Rs. in lacs)
No. Particulars 1st Year 2nd Year
A Installed Capacity ----- 600 Kgs ----
Sales Realisation 9.00 9.00
B Cost of Production
Raw Materials 3.00 3.00
Salaries 0.72 0.72
Land and Building 0.18 0.18
Machinery 1.00 1.00
Total 5.00 5.00

Interest + Principal Payment (12% p.a. for 6


1.173 1.173
Years)

11.0 PROJECT ANALYSIS


(Rs. in Lacs)
No Particulars Amount
[A] Sales 9.00
[B] Variable Costs
Raw Materials 3.00
Salaries 0.72
Building 0.18
Interest + Principal Payment 1.173 5.173
[C] Income [A] - [B] 3.827