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					3
           Automotive Chain (Motorcycle
                      Chain)

              PRODUCT CODE               : 343401002
              QUALITY AND STANDARDS      : IS 11740:1986
              PRODUCTION CAPACITY        : Qty.     : 3.42 lakhs (per annum)
                                           Value    : Rs. 239.4 lakhs
              MONTH AND YEAR             : February, 2003
              OF PREPARATION
              PREPARED BY                : Small Industries Service Institute
                                           Industrial Area-B, Ludhiana-141 003 (Punjab)
                                           Tel. Nos.: 0161- 531733-34-35
                                           Fax: 0161- 533225
                                           E-mail: sisildh@ldh.nic.in
                                           Website: www.sisildh.com
                                           Telegram: SMALLIND




    INTRODUCTION                                   demand of motorcycles is also
                                                   increasing. As such, there is a demand
       Chain is an important link to transfer      for motorcycle chains to meet the
    power from engine of a motorcycle to           replacement market as well as for supply
    the rear driving wheel through sprockets.      to the O.E.M. units.
    Automotive chains are of different sizes          Therefore, there is a great potential
    based upon the power to be transmitted.        for this item and considerable scope to
    The size employed upon the most                set up new units in this line.
    popular motorcycle in the Indian market
    is of 12.7 mm × 8 mm dia × 7.85 mm             B ASIS AND PRESUMPTIONS
    width rollers. The lengths of the chain
                                                     1. The Project Profile has been
    for such models of motorcycles are
                                                        prepared on the basis of single
    either of 120 links or 118 links. This
                                                        shift of 8 hours each day, 25 days
    scheme is based on 120 links.
                                                        in a month and at 75% efficiency.
    MARKET POTENTIAL                                 2. It is presumed that in the first year,
                                                        the capacity utilisation will be 60%
      Motorcycle has become a common                    followed by 70% in the next year
    mode of conveyance as a result of                   and 80% in the subsequent years.
    modern life style. As the population is          3. The rates of salaries and wages
    rapidly increasing day by day, the                  for skilled workers and others are
                                                            A UTOMOTIVE CHAIN (MOTORCYCLE CHAIN)    17


           the minimum rates in the State/            ii)   Rollers are drawn into cups on
           Neighbouring States.                             compound die sets from CR steel
      4.   Interest rate for fixed and working              strips and then pierced on an
           capital has been taken on an                     automatic S.P.M.
           average rate of 16% whether                iii) Bushes are manufactured by
           financed by bankers or by                        curling process on a S.P.M. from
           Financial Corporations.                          cold rolled strip with rounded
      5.   Margin money required is                         edges.
           minimum 30% of the project                 iv) Pins are cut on an automatic
           investment.                                      Header Machine to required
      6.   The rental value of the workshed                 length.
           and other built up/covered area            v) Barrelling
           has been taken at the rate of              vi) Heat Treatment
           Rs. 25.00 per square meter.                vii) Barrelling
      7.   The rates quoted in respect of             viii) Colouring
           machines, equipment and raw
                                                      ix) Block Assembly on automatic
           materials are those, prevailing at
                                                            machine.
           the time of preparation of this
           Project Profile and are likely to          x) Chain assembly on automatic
           vary from supplier to supplier and               machines.
           place to place. When a tailor              xi) Rivetting
           made project profile is prepared           xii) Greasing
           necessary changes are to be made.          xiii) Packing.
IMPLEMENTATION SCHEDULE                             Quality Control and Standards
                                                      BIS has prepared a standard
Sl.No. Activity                           Period
                                                    specification No. IS 11740 :1986 on
i.     Preparation of Project Report:
                                                    chains for motorcycle and the quality
       a) Calling quotations             1 Month
                                                    should conform to the same.
       b) Preparation                    2 Weeks
ii.    Provisional Registration as SSI   1 Week     Production Capacity (per annum)
iii. Financial Arrangement               3 Months
                                                    Item                 Qty.     Amount (In Rs.)
iv. Purchase and procurement of          2 Months
    machines and equipments                         Automotive Chain     342000 Nos. 2,39,40,000
                                                    (Motorcycle Chain)   (Excluding 5%
v.     Installation of Machines          1 Month                         provision made
vi. Electrification                      1 Month                         for stage
                                                                         rejections)
vii. Recruitment of Staff and Workers 1 Month
                                                    Motive Power                        160 KW.
TECHNICAL ASPECTS
                                                    Pollution Control
Process of Manufacture                                 The building/workshed, specially heat
      i)   Outer and inner link blank are cut       treatment section is to be provided with
           from cold rolled steel strips on         exhaust fans. Provision has also been
           S.P.M. with progressive die sets.        made for neutralising of the cyanide
18   A UTOMOTIVE CHAIN (MOTORCYCLE CHAIN)


     salts. Necessary permission from Pollution            Sl. Description               No.   H.P.    Amount
     Control Department/ Board is required.                No.                                         (In Rs.)
                                                           4. Special purpose roller      2      2     1,30,000
     Energy Conservation                                      cups Punching Machine
                                                              complete with automatic
       i) Machine Shop should be well                         feeding systems and
            ventilated and should have                        electricals etc.
            transparent roof sheets to get                 5. Special purpose curling     2      4     2,60,000
            sufficient light during day time.                 and cutting machine
                                                              complete with automatic
       ii) The periodic maintenance of                        feeding system and
            Machines should be carried out.                   electrical etc.
       iii) Shunt capacitors should be used                6. Special purpose bush        2      3     2,00,000
            to improve the power factor.                      making and sizing
                                                              machine complete
                                                              with automatic feeding
     FINANCIAL ASPECTS                                        system and electricals

                                                           7. Automatic header            1      2      50,000
     A. Fixed Capital                                         machine for cutting of
                                                              rivetting pins complete
     (i) Land and Building (Rented)                           with electricals etc.
     Built up area/covered area:
                                                           8. Automatic special           1      1      50,000
     a) Store and Office                    50 Sq. Mtrs.      purpose lock pin
                                                              turning machine
     b) Working Shed                       300 Sq. Mtrs.      complete with
                                                              electricals etc.
     c) Heat Treatment Section              75 Sq. Mtrs.
                                                           9. Tumbling barrels            4      8     1,30,000
     d) Packing Section                     25 Sq. Mtrs.
                                                              complete with gear
                       Total              450 Sq. Mtrs.       box motor and
                                                              electricals etc.
                       Total   Rs. 11,250 (per month)
                                                           10. 30 KW electric rotary      2    100     7,50,000
     (ii) Machinery and Equipments                             retort type gas
                                                               carborising furnace
     Sl. Description               No.   H.P.   Amount         30 Kg. Cap, complete
     No.                                        (In Rs.)       with electricals etc.

     Production unit                                       11. 15 KW salt bath furnace    2     40     2,50,000
                                                               electrically operated
     1. Single action power        2      15    4,00,000       charge cap. 30 Kg.
        press cap. 75 tonnes
        complete with                                      12. Automatic chain block     2       4     4,00,000
        automatic feeding                                      assembly machine
        system and electricals                                 complete with electricals
        etc.                                                   and feeding system.

     2. Single action power       1        2     40,000    13. Automatic chain            2      4     3,80,000
        press cap. 10 ton                                      assembly machine
        complete with electricals                              complete with
                                                               electricals etc.
     3. Single action power        1       5    1,50,000
                                                           14. Pneumatic chain            1      2      9,00,00
        press cap. 50 tonnes
                                                               stretching machine
        complete with
                                                               complete with 1 HP
        automatic feeding
                                                               Compressor and
        system and
                                                               electricals
        electricals etc.
                                                                                       Total          32,80,000
                                                                A UTOMOTIVE CHAIN (MOTORCYCLE CHAIN)                19


Sl. Description                No.   H.P.    Amount     Sl. Description                  No.    H.P.     Amount
No.                                          (In Rs.)   No.                                              (In Rs.)
Testing Section                                         Electrification and Installation
15. Hardness Testing           1       —     1,00,000       Charges including cost of power             4,59,750
    machine with spare                                      connection and security deposit
    set of diamonds and                                     @ 10% of cost of machinery
    steel balls and                                         and equipment
    standard test
                                                            Total Cost of Machinery and                50,57,250
    samples
                                                            Equipments
16. Chain fatigue              1       2      75,000
                                                        (iii) Cost of Office Equipment,                 1,00,000
    testing machine
                                                              Furniture etc.
                             Total           1,75,000
                                                        (iv) Pre-operative Expenses                     1,00,000
    Tool Room And Machine Section
                                                            Total Fixed Capital                        52,57,250
17. 1500 mm Bed sliding        1       2     1,00,000       (i +ii + iii+iv)
    surfacing and screw
                                                                                    Say                52,58,000
    cutting centre lathe
    machine complete
    with electric motor,                                B. Working Capital (per month)
    starter etc.
                                                        (i) Personnel
18. 500mm × 200mm              1     1.5      60,000
    traverse Horizontal                                 Sl. Designation            No.       Salary     Amount
    spindle surface                                     No.                                (In Rs.)     (In Rs.)
    grinding machine
                                                            Administrative
    complete with
    electricals etc.                                    1. Manager                  1          7000        7000

19. 12mm cap. Precision        1     0.5      20,000    2. Engineer                 1          8000        8000
    drilling machine                                    3. Accountant               1          2500        2500
    complete with                                       4. Clerk/Typist/            3          2000        6000
    electricals etc.                                       Store Keeper
20. Double ended bench         1     0.5       7,500        Technical
    grinder 200 mm
                                                        5. Foreman                  2          4000        8000
    wheel dia. with motor.
                                                        6. Heat Treater             1          3000        3000
21. 24" stroke shaping         1       3      80,000
    machine complete                                    7. Skilled Worker           14         2000      28000
    with electric motor                                 8. Semi-skilled Worker      6          1750      10500
    and other
                                                        9. Peon/Chowkidar           3          1500        4500
    electricals etc.
                                                        10. Sweeper                 1          1100        1100
22. Universal milling          1       5     2,00,000
    machine size No. 2                                                              Total                78,600
    alongwith vertical                                      Add Per-quisites @ 15% of salary             11,790
    attachment and                                                                  Total                90,390
    dividing head
    complete with                                                                   Say                  90,400
    electricals
                                                        (ii) Raw Materials         Including           Packaging
23. Pollution Control Equipment        3     2,50,000   Requirements
24. Marking and measuring              —      75,000
                                                        Sl. Particulars            Qty.        Rate/    Amount
    instruments
                                                        No.                        MT            MT     (In Rs.)
25. Special purpose toolings           —     3,50,000   1. Medium carbon      27            21000        567000
    and other petty                                        steel sheet 19 SWG
    equipments
                                                        2. CRCA, DD Grade      8.20 20000                164000
                           Total            11,42,500      steel strips 19 SWG
20   A UTOMOTIVE CHAIN (MOTORCYCLE CHAIN)


     Sl. Particulars           Qty.     Rate/     Amount      Working Capital (for 3 months) 15,86,000 × 3
     No.                       MT         MT      (In Rs.)                                    = Rs. 47,58,000
     3. CR. Steel strip        5.5      30000     165000      C. Total Capital Investment
        11 mm × 1 mm
        thick with Rounded                                    (i) Fixed Capital                        Rs. 52,58,000
        edges (rolled from                                    (ii) Working capital for 3 months        Rs. 47,58,000
        wire)                                                                              Total     Rs. 100,16,000
     4. Low Carbon 4.5mm       8.5      30000     255000
        dia steel wire
                                                              FINANCIAL ANALYSIS
     5. Liquid carburising    4000       10        40000
        materials             liters per ltr.                 (1) Cost of Production (per year) Amt. (In Rs.)
     6. Ammonia Gas             25     2500        62500      (i) Total recurring cost                  1,90,32,000
                             Cylinders Cyld.
                                                              (ii) Depreciation on machinery               5,08,300
     7. Packaging             30000      0.70      21000           and equipments @ 10%
        cartons etc.           Nos.      each
                                                              (iii) Depreciation on Dies / Tools/             15,000
     8. Misc. O/B items                    LS      96000            measuring instruments
                                Total           13,70,500           etc. @ 20%
                                                              (iv) Depreciation on office                     20,000
     (iii) Utilities                               (In Rs.)        equipment @20%
     1. Power 19200 units @ Rs. 3.50/unit          67200      (v) Interest on total                       16,00,000
     2. Water                                         800         investment @ 16%

                                Total              68000                                   Total        2,11,75,300
                                                                                           Say          2,11,75,000
     (iv) Other Contingent Expenses               (In Rs.)
                                                              (2) Turnover (per year)
     1. Rent                                      11,250
     2. Postage and Stationery                      1,000     Item                Qty.    Rate (Rs.)     Value (Rs.)

     3. Consumable Stores                         10,000      Motorcycle       342000         70/       2,39,40,000
                                                              Chain             Nos.         chain
     4. Telephone Charges                           1,500
                                                              (3) Net Profit (per year) (Before Income Tax)
     5. Repair and Maintenance                      7,000
     6. Transport Charges                           5,000             Profit      = Sales - Production Cost

     7. Advertisement and publicity                 5,000                         = Rs. 2,39,40,000 – 2,11,75,000
     8. Insurance                                   2,000
                                                                                  = Rs. 27,65,000
     9. Taxes                                       1,500
     10. Sales Expenses                           10,000      (4) Net Profit Ratio
     11. Miscellaneous Expenses                     3,000                      = Net Profit × 100
                                                                                 Turn over per year
                                Total             57,250
                                Say                57300                       = 27,65,000 × 100
                                                                                 239,40,000
     (v) Total Recurring Expenses (per month) (Rs.)                            = 11.5%
     1. Raw Material                            13,70,500     (5) Rate of Return
     2. Personnel                                 90,400
                                                                               = Net Profit × 100
     3. Utilities                                 68,000                         Total Invesment

     4. Other Contingent Expenses                 57,300                       = 27,65,000 × 100
                                Total           15,86,200                        10016000

                                Say             15,86,000                      = 27.6%
                                                                A UTOMOTIVE CHAIN (MOTORCYCLE CHAIN)   21

(6) Break-even Point (% of total Production envisaged)      6. M/s. Simplicity Furnaces Ltd.
(i) Fixed Cost (per year)                         (Rs.)
                                                               55-B, Phase-II, Mayapuri,
                                                               New Delhi.
(a) Total Depreciation                     5,43,300
(b) Rent                                   1,35,000         7. M/s. Sant Machine Tools
(c) Total interest                       16,00,000             G.T. Road, Near Dholewal Chowk,
(d) Insurance                                24,000            Ludhiana.
(e) 40% of salary and wages                4,33,920         8. M/s. Raj Enterprises
(f) 40% of other contingent expenses       2,11,440            628, Industrial Area-B,
    (Excluding rent and Insurance)                             Ludhiana.
                             Total       29,47,660          9. M/s. Basant Mechanical Works
(ii) Net Profit (per year)            Rs. 27,65,000            (Regd.)
   B.E.P.                 = Fixed Cost × 100                   720-722, Basant Road,
                            Fixed cost + Profit                Industrial Area–B,
                          = 51.5%                              Ludhiana.
Addresses of Machinery and                                  10. M/s. Deep Industries
Equipment Suppliers                                             Oswal Street No. 1,
                                                                Industrial Area–B,
   1. M/s. Milton Machine Tools                                 Ludhiana.
      P.B. No. 30,
      Sonepat (Haryana)                                   Addresses of Raw Material Suppliers
   2. M/s. Godly Machine Tools (P) Ltd.                     1. M/s. Rolled Strips and Profiles Ltd.
      C-190, Phase-VI,                                         Karur (Kerla).
      Focal Point,                                          2. M/s. Avon Cycles Ltd.
      Ludhiana.                                                Ludhiana.
   3. M/s. Research and Development                         3. M/s. Special Steels Ltd.
      Centre for Bicycle and Sewing                            Mumbai and
      Machines, Focal Point,                                   Bhagwan Chowk, Ludhiana.
      Ludhiana.                                             4. M/s. Steel Strips Ltd.
                                                               Industrial Area-B,
   4. M/s. Vishkarma Electric Furnaces
                                                               Ludhiana-141003.
      St. No. 2, Partap Nagar,
      Ludhiana–141003                                       5. State Small Industries and Export
                                                               Corporations.
   5. M/s. Kalsi Machine Tools
      Gill Road,                                            6. M/s. Steel Authority of India Ltd.
      Ludhiana-141003                                       7. Open Market.

				
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