It is all about what needs to be done in order to open a piston ring manufacturing industry

1. Project feasibility report
on
Agrawal auto parts Pvt. Ltd.
(Piston rings)
By:
KULDEEP AGRAWAL
Roll No:- MT14IND010
Industrial Engineering (2014-15)
Mechanical Engg. Department
VNIT Nagpur

2. Content
• Introduction
• Demand study
• Location study
• Raw material study
• Technical study
• Implementation schedule
• Financial aspects
• Financial analysis

3. Introduction
Piston ring is one of the most important part of the
Diesel/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.

4. Demand study
Piston ring is the one of the most replaceable part of the
diesel/petrol engines. It has great demand in the replaceable
market as well as in new engines market. For the last few
years there is noticeable 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
So, by maintaining quality and using proper marketing
techniques there is always a great market of this product

5. The piston rings would be supplied to:
• Porwal Auto Components
Ltd,Pithampur,Madhya Pradesh-91-7292-
405101
• Liugong India Pvt. Ltd, PLOT NO. 163, SECTOR
3, INDUSTRIAL AREA, Pithampur - 454774,
Madhya Pradesh, India
• Mahle engine parts Ltd ,Plot No 112, Sector 1,
Pithampur, Dhar - 454775, Industrial Area

6. Location study
Availability of land 400 sq.mt. land is available in
industrial sector 3 of Pithampur , Dhar
MP.
Approach to site Good road network ,connectivity with NH
79 and NH 59.
Transportation Rented vehicle for Transportation and
supply is available.
Water Personal bore water of land owner and
daily need is fulfilled by municipal
corporation water supply
Power Electricity available for 24 hrs at good
tariff .
Other facilities The amenities like post office, hospitals,
schools, petrol pumps, Bus services,
Banks are available near working site.

7. Raw material study
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.
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 or casting suppliers.
the blank of castings are taken from following suppliers-
• Indus Technologies, industrial sector 1,Pithampur,Madhya Pradesh.
• Raneka industries Ltd. Dhar, Madhya Pradesh.
• Porwal Auto Components Ltd, Pithampur , Madhya Pradesh.

8. Technical study
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.

9. CASTING BLANK
CLEANED AND GROUNDED
FACING
ROUGH AND FINISH BORING
AXIALLY TURNING
GAP CUTTING
PACKAGING

10. Quality Controls & Standards
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
eliminated.
Piston rings should be manufactured as per IS :
5791 -1971 & IS: 8422 for IC engines.

11. Production Capacity
Production Capacity (Per annum) = Production rate
per hour * Efficiency *Hours per shift * No. of shift
per day * No. of working days per month * No. of
months per annum.
Production rate per hour = 25
Efficiency = 75%
Hours per shift = 8 hours
No. of shift per day = 1 shift
No. of working days per month = 25 days
No. of month per year = 12 months

12. Now,
Production Capacity (Per annum) = 25*. 75 * 8 * 1
* 25 * 12
= 45000
Production Capacity (Per annum) = 45000 Sets.

13. Basis and Presumptions
1. The production capacity of the unit has been
worked out on the basis of single shift of 8 hours
a day for 300 working days a year ( i.e.25 days a
month ).
2. The unit is expected to work at 75% efficiency
of installed capacity.
3. Wages for labour, etc. have been considered as
per the prevailing market rates in accordance
with the Minimum Wages Act.

14. 4. The unit is assumed to run in a rented/leased building.
5. The cost of machinery and equipment's have been
taken as per the rates quoted by
manufacturers/suppliers.
6. The cost of raw material and other inputs are based
on current prices prevailing in local market.
7. Interest rate for fixed and working capital investment
have been calculated on an average rate of 14%.

15. Implementation schedule
Sr No. Activity Estimated
period
1. Preparation of the project report 1 month
a. Calling quotations 2 weeks
b. Preparation of Report 1 week
2. Provisional registration as SSI Unit 3 months
3. Clearance from Pollution Control Board 3 months
4. Financial Arrangements 1 month
5. Purchase and Procurement of Machinery and Equipment 1 month
6. Installation of Machines and Equipment 1 month
7. Electrification etc. 1 month
8. Recruitment of staff 1 month
9. Commencement of production 9 month’s
onwards

16. Financial aspects
1.Machinery & Equipments
Sr.
No.
Description Qty Price (Rs.)
1 Lathe machine,1800 mm bed with 3 H.P
motor
2 3,40,000
2 Lathe machine,900 mm bed with 2 H.P
motor
1 2,60,000
3 Face grinder with special attachment, 4 H.P
motor
1 60,000
4 Bench drill machine.12mm capacity 1 15,000
5 Bench grinder,250mm wheel dia,1H.P
motor
1 15,000
6 Gauges ,tools & other equipments LS. 40,000
TOTAL 7,30,000

17. • Installation & electrification charge @ 10% of
cost of machine = 73,000 Rs.
• Furniture & office equipment= 40,000 Rs
Total= 1,13,000 Rs.

18. WORKING CAPITAL ( per month)
1. Personnel
Sr. no. Designation No. Salary
(per month)
Total
1 Production Manager 1 25000/- 25000/-
2 Supervisor 1 15000/- 15000/-
3 Skilled worker 2 12000/- 24000/-
4 Unskilled worker 2 8000/- 16000/-
5 Store-keeper 1 10000/- 10000/-
6 Clerk-cum-Typist 1 10000/- 10000/-
7 Peon 1 7000/- 7000/-
8 Watchman 1 7000/- 7000/-
TOTAL 1,14,000/-

19. 2.Raw material (per month)
3.Utilities (per month)
Electricity & Water = Rs 40,000
Sr.
no.
Description Qty. Rs.
1 Piston ring castings @ Rs.48/kg 1300 Kg 62,400
2 Packing Material (Moulded hard
paper cartoon ) @ Rs. 10
500 5000
Total 67,400

20. 4. Other expenses (per month)
Sr. no. Description Rs.
1 Stationary 4000
2 Transport charges 25000
3 Telephone 4000
4 Maintenance 20000
5 Insurance 10000
6 Miscellaneous 12000
7 Rent 60000
TOTAL : 1,35,000

21. Total recurring expenditure (per month)
1+2+3+4 =3,56,400 /-
Total working capital (for 3 months)
3,56,400 x 3 = 10,69,200/-

22. TOTAL CAPITAL INVESTMENT
1. Fixed capital = Rs. 8,43,000/-
2. working capital = Rs. 10,69,200/-
Total = Rs. 19,12,200/-

23. Cost of production per annum
1. Total recurring cost per year = Rs. 42,76,800
2.Depreciation on machinery
& equipment @ 10% = Rs. 73,000
3.Depreciation on office furniture @ 20%
= Rs.8,000
4.Interest on total investment @ 14%
= Rs. 2,67,708
Total cost of production = Rs. 46,25,508

24. • Bank Name- SBI Bank, INDORE
• Principal amount – Rs. 14,00,000 /-
• Rate of interest – 14 % p.a.
SOURCE OF FINANCE

25. FINANCIAL ANALYSIS
Turnover (per year) :
Qty. Rate /set Value(Rs.)
45000 sets of piston
Ring
@ Rs.150 /- 67,50,000/-
Gross Profit (Per annum) = Total turn over -
(Per annum)
Total cost of
production
(Per annum)
Gross Profit (Per annum) = 67,50,000– 46,25,508
= 21,24,492/-

26. TAXATION
1. Corporate Tax in India :
= 30% Total Income
= 30% of Gross Profit
= 0.30 * 21,84,492
= 6,37,348/- INR
2. DDT( Director Dividend Tax)
= 15% (Gross Profit/Annum – Corporate Tax)
= 15% (21,84,492 – 6,37,348)
= 15% (15,47,144)/-
= 2,32,072/-
Total Tax payable = 6,37,348 + 2,32,072 = 8,69,420/-

27. Net Profit
= Gross profit – Tax payable
= 21,24,492– 8,69,42
= 12,55,072/-

28. Net profit ratio = Net profit per annum x 100
Turnover per annum
= 12,55,072X 100
67,50,000
= 18.6%
Rate of return
= (Net profit per annum x 100 )/Total investment
= (12,55,072x 100 )/ 19,12,200
= 65.6%

29. Break Even Point (B.E.P):
Fixed Cost
SR NO. Description Amount
(Rs)
1 Depreciation on machines and equipment
tools, fixtures and office equipment's
73,000
2 Building rent 7,20,000
3 interest on total investment 2,67,708
4 Insurance 1,20,000
5 40% of Salary & Wages 5,47,200
6 40% of other contingent expenses
(excluding rent & insurance)
3,12,000
Total Fixed Cost : 20,39,908

30. Production cost per annum: Rs. 46,25,508
Turnover : Rs. 67,50,000
Quantity produce per annum: 45000
Fixed cost: Rs. 20,39,908
Fixed cost+ production cost per unit*x=sales cost
per unit* x
BEP :
• Volume(x) : 43210 sets
• Pay back period : 11 months
• Sales : Rs. 64,81,500 (sales cost per unit*x)

31. 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

32. THANK
YOU