PROJECT PROFILE ON LPG CYLINDER

INTRODUCTION:

         LPG Cylinder is an essential item for filling liquefied petroleum gas used for cooling purpose. The body of LPG cylinder is deep drawn in two pieces then these are welded together to make a compact unit without any leak and defect etc. LPG cylinders are in use in 5 Kg., 12 Kg., 14.2 Kg. & 19 Kg. capacities. To ascertain the quality, safety and performance certain regulations are applicable such as BIS standardization and Explosive Lincence etc. While all the cylinders are spray-painted with a signal red colour. BPC cylinders have yellow ring around the bung. HPC cylinders in blue ring and IOC cylinder are fully red. In case of 19 Kg. cylinder the top is painted olive green. The cylinders carry their complete history with regard to their serial number, Tare/ Gross weight, water capacity, ISE monogram test date, manufacturer identification and year of manufacturing.

(i) Market:

         LPG Cylinders are not available in the market. These are mainly purchased by the public sector companies managing LP Gas distribution. These are mainly:

        M/s. Indian Oil Corporation.
        Hindustan Petroleum Corporation
        M/s. Bharat Petroleum Corporation

         Initially the distribution network of these companies was continued to urban areas only but with the rapid change in the living conditions of the society the requirement of LP gas is increasing very steeply. Now with the opening of LP Bottling Plants in the private sector undertakings the demand of LPG cylinder will keep on growing. Furthermore, to give more impetus to the rural population recently it has been announced to supply small size cylinders of 5 Kg. capacities to the rural population. The demand of LPG cylinders will also be in the upward position with the continuity of DBC system to the consumer by the distribution companies. The demand and supply balance is in favour of demand which will continue to outstrip supply. LPG is a good substitute for petrol in spark ignition engines. Its clean burning properties in a properly twined engine, give reduced exhaust emissions, extended lubricant and spark giving rise to the demand of LPG cylinders.

Basis & Presumption:

        1)      It has been assumed to work 1800 hours per annum at minimum 75% working efficiency on single shift working.
        2)      A period of 3 years after commencing the commercial production has been considered for achieving full/                  envisaged capacity.
        3)      Labour wages has been considered as per the prevailing market rates and the minimum wages fixed by the                  authorities.
        4)      Interest on fixed and working capital investment has been calculated at an average rate of 15% per annum.
        5)      The cost of land and building has been calculated as per the prevailing market prices and these rates likely to                  vary from place to place.

Implementation Schedule:

        The following activities are required to be completed during the implementation schedule:

1
 Preparation of project report
2 weeks
2
 Selection of product
4 weeks
3
 Selection of Industrial site
2 weeks
4
 Provisional registration
2 weeks
5
 Application for finance & getting loan sanctioned
24 weeks
6
 Recruitment of manpower
6 weeks
7
 Purchase & installation of machinery
16 weeks
8
 Trial run
1 week

         It is necessary to obtain permanent registration certificate from the concerned District Industries Centre after commencement of commercial product.

TECHNICAL ASPECT:

i. Process of Manufacture:

         The LPG cylinders are manufactured as per the BIS specification number 4093-1967 with necessary amendment. To manufacture LPG cylinders first sheet is cut to size on cutting machine to make blanks. These blanks are now deep drawn on deep drawing power press to two halves of the cylinder. Other parts such as foot ring, backing strip, top ring and turned components are manufactured separately. Now both the halves are joined with a backing strip prior to their welding. After welding complete cylinder undergo stress relieving normalizing process in suitable heat treatment furnaces. After stress relieving sand blasting is done. The following tests are carried out during the process of manufacturing of the LPG cylinder:
Quality checks, visual hydraulic and pneumatic tests for pressure, stretch and bursting etc. are done. Finally, cylinders are marked, cleaned and painted with high gloss corrosion resistant paint/ coating etc.

QUALITY STANDARD:

         LPG cylinders are manufactured as per BIS Standard No. 4093-1967 with latest amendment. The working pressure should be 16.87 kg/cm2 at 148o F. A cylinder has 33.3 liters of water capacity and its weight ranges from 15 kgs, 17.8 kgs approximately. The cylinders are tested at a pressure of 25.31 kgs/cm2. Further it is suggested to refer to the following standards also.

        1.      IS: 1870-1970 – Class-I valve pad or bung.
        2.      IS: 1079-Foot ring and backing strip
        3.      IS: 3224- Valve
        4.      IS: 3737-Part-2 Self Closing valves.

PRODUCTION CAPACITY:

        Total turnover with the proposed plant and machinery will be of the order of Rs.
        per annum.

         Approximately 130 KW motive power will be required.

         Manufacturing of LPG cylinder does not pose any major problem of pollution. However, it is suggested that due care should be taken in installing suitable air cleaning systems such as exhaust etc. in sufficient numbers particularly in painting area.
         It is suggested that suitable majors should be provided to conserve energy by installing suitable shunt capacitors on all the machines and equipments etc.

FINANCIAL ASPECT:

         Land 1500 sq. mtrs. @ Rs.1000/- per sq. m. ..                     Rs. 1,500,000/-

Built up Area:

1
 Office
10 m x 5 m @ Rs. 2000 Per sq.m
1,00,000
2
 Store
15 m x 7.5 m @ Rs. 1250 Per sq.m
1,40,625
3
 Working shed
30 m x 25 m @ Rs. 1250 Per sq.m
9,37,500
4
 Paint Shop
6 m x 5 m @ Rs. 1250 Per sq.m
37,500
5
 Misc. items including boundary wall, godown etc.
L.S.
75,000

        

Total cost of land and building

        = Rs.27,90,625/-

Say = Rs.28,00,000/-

PLANT & MACHINERY:

Sl.No.
 Description
Ind / Imp
Qty./ Nos.
Price (Rs.)
1
 Motorized guillotine sheet shearing machine cap. 2000 x 4 mm. complete with 7.5 HP electric motor & accessories, complete with blocks, broaches, front and backside gauges, sheeting holding device starter etc.
Ind.
1
3,70,000
2
 Power operated circle cutting machine to cut sheet up to 3.15 mm (10 SWG) and blank up to 36” complete with 3 HP electric motor and accessories, pulley, belt, stand, motor attachment, reduction gear etc.
Ind.
1
85,000
3
 Double action deep drawing power press 400 tones capacity to draw shell up to 450 mm deep complete with electric fittings etc.
Ind.
1
5,00,000
4
 Power press 100 tones capacity complete with 7.5 HP electric motor and accessories.
Ind.
1
2,20,000
5
 Trimming machine to trim off edges of drawn pieces.
Ind.
2
60,000
6
 Submerged Arc welding machine complete with all the accessories electric fittings etc.
Ind.
2
5,50,000
7
 Arc welding machine 400 amps with 21 KVA air-cooled complete with all the accessories.
Ind.
2
40,000
8
 Stress relieving furnace oil fired 5700 mm x 1400 mm x 450 mm complete with blower, pipeline temperature control equipment etc. with 5 HP electric motor and all accessories.
Ind.
1
2,00,000
9
 Sand blasting machine 36”x36”x31” size complete with motor electrical fittings etc.
Ind.
1
50,000
10
 Air compressor 200 CFM capacity complete with motor electrical fittings etc.
Ind.
1
80,000
11
 Spray-painting gun complete with all the accessories.
Ind.
1
80,000
12
 Backing oven 15’x8’x4’ size complete with electrical heating fitting and accessories.
Ind.
1
60,000
13
 Powers press 75-tone cap. Complete with 5 HP electric motor & accessories. No. of stroke 45, Bed area 510x560 mm.
Ind.
1
2,00,000
14
 Valve fixing machine
Ind.
1
15,000
15
 Weighing machine/ platform 500 Kgs.
Ind.
1
10,000
16
 Zinc metallising plant
Ind.
1
75,000
17
 Lathe machine 10’ bed length admit between centres 84” complete with 3 HP electric motor and starter etc.
Ind.
1
95,000
18
 Lathe machine 6-6” bed length admit between centers 38” center height 12”complete with 2 HP electric motor and starter etc.
Ind.
1
75,000
19
 Double ended bench grinder 250 mm wheel size complete with 1 HP electric motor and accessories.
Ind.
1
5,500
20
 Geared drill machine 1 ½ cap. With 2 HP electric motor & accessories.
Ind.
1
27,500

Testing Equipment:

Brust testing machine Ind. 1  
Universal testing machine Ind. 1  
Hydraulic testing machine Ind. 1  
Different types of measuring & inspection instruments. Ind. L.S.  
Pollution control equipments Ind. L.S.  
Energy conservation equipment Ind. L.S.  
Electrification and installation charges @ 10% of cost of machine & equipment. Ind. L.S.  
Cost of dies, jigs & fixtures. Ind. L.S.  
Cost of office equipments/ working tables etc. Ind. L.S.  
Cost of material handling equipment, trolleys, bins, pallets etc. Ind. L.S.  
Total Plant & Machinery   L.S.  
Say   L.S.  

Pre-Operative Expenses:

WORKING CAPITAL (Per Month):

(1) Personnel:
Administrative /Supervisory:

Sl.No.
 Description
Nos.
Salary
Total
1
 Manager
1
6,500
6,500
2
 Engineer
1
6,000
6,000
3
 Foreman/ Supervisor
3
4,500
13,500
4
 Accountant
1
4,000
4,000
5
 Typist-cum-Clerk
2
3,500
7,000
6
 Store-Keeper
1
3,000
3,000

Technical:

1
 Skilled Worker
10
4,000
40,000
2
 Semi Skilled Worker
10
3,000
30,000
3
 Unskilled Worker
15
2,500
37,500
4
 Peon/ Chowkidar
2
2,000
4,000
Total salary
 
 
1,11,500
Add Perquisites @ 15% of salary
 
 
17,000
Total
 
 
1,28,500
Say
 
 
1,29,000

ii. RAW MATERIALS

Sl.No.
 Particulars
Ind. / Imp.
Qty.
Rate
Value (Rs.)
1
 Deep drawing quality sheet 3.15 mm thick
Ind.
135 MT
31,000
41,85,000
2
 Valve
Ind.
7500 Nos.
22.00
1,65,000
3
 Bung
Ind.
7500 Nos.
11.00
82,500
4
 Ring Upper
Ind.
7500 Nos.
11.00
82,500
5
 Bottom foot ring
Ind.
7500 Nos.
7.5
56,250
6
 Packing material
Ind.
L.S.
L.S.
18,750
Total raw materials
45,90,000

iii. UTILITIES (per month):

1
 Power
@4.00 per unit
46,800/-
2
 Water
 
1,000
3
 Furnace oil 3000 ltrs.
@ 12.00 per litre
36,000
Total
 
83,800

iv. Other Contingent Expenses:

1
 Postage and stationery
2,000
2
 Telephone
5,000
3
 Repair and maintenance
25,000
4
 Transportation charges
30,000
5
 Advertisement & publicity
3,000
6
 Insurance
2,500
7
 Taxes
7,500
8
 Sales expenses
7,500
9
 Consumable stores like paint/ welding
2,25,000
10
 Misc. expenses/ X.Ray, testing charges etc.
12,500
 
 Total
3,20,000

TOTAL RECURRING EXPENDITURE:

1
 Staff & labour
1,29,000/-
2
 Raw materials
45,90,000/-
3
 Utilities
83,800/-
4
 Other contingency expenses
3,20,000/-
 
Total
51,22,800/-

Working capital for 3 months

        = 15,36,84,00/

Say = 1,53,70,000/

TOTAL CAPITAL INVESTMENT:

1
 Fixed Capital
68,30,000/-
2
 Working capital for 3 months
1,53,70,000/-
 
 Total
2,22,00,000/-

FINANCIAL ANALYSIS:

1.Cost of Production per year:

Total recurring cost per year
6,14,80,000
Depreciation on machinery & equipments
4,03,000
Depreciation on dies, jigs and fixtures
78,750
Depreciation on office equipment
10,000
Depreciation on building
22,50,00
Interest on total capital investment @ 15% per annum.
33,30,000
Total cost of production
6,55,29,750

TURN OVER ( per annum ):

Sl.No.
 Item
Qty.
Rate (Rs.)
Value (Rs.)
1
 LPG cylinder 14.2 Kgs. Capacity
90,000
800
7.20,00,000/-
2
 By sale of scrap
80 MT
9,000
7,20,000/-
Total
7,40,00,000/-

NET PROFIT PER YEAR:

        Total Turnover - Cost of production

        = 74000000 - 65529750

        = 8470250/-

PROFIT ON SALE:

        Net profit per year x 100 / Total Sale

        = 8470250 x 100 / 7,40,00,000

        = 11.44% or say 11%

Rate of Return:

        Net profit per year x 100 / Total Investment

        = 8470250 x 100 / 2,22,00,000

        = 38.15% or say 38%

BREAK EVEN POINT:

Fixed Cost:

1 Depreciation on machinery & equipments, tools, fixtures and office equipments. 4,03,000/-
2 Depreciation on building 22,50,00/-
3 Interest on total investment 33,30,000/-
4 40% of salary and wages 51,600
5 40% of utilities & other contingencies expenses 41,000
  Total fixed capital 68,30,000/-

B.E.P.:

        = Fixed cost x 100 / Fixed Cost + Profit

        = 6830000 x 100 / 6830000 + 8470250

        = 683000000 / 15300250

        = 44.63% or Say 45%

Additional Information if any:

        1.     Unit can produce other pressed items and similar types of cylindrical parts with this plant and machinery.
        2.     At later stage the unit can add tool room machinery for making and repairing dies, fixtures, tools etc.
        3.     It is proposed that machinery will be utilized at 75% efficiency.

Address of Machinery & Equipment Suppliers:

        1.     M/s. Economic Machine Tools, 21,
                Dr. V.B.Gandhi Marg ( Forbes Street ),
                Fort- Mumbai-32.
        2.     M/s.Ashoka Machine Tools Corporation,
                A-15, Mayapuri, Indl. Area,
                Phase-I,New Delhio-110015
        3.     M/s.Master Engg. Works (Regd.),
                G.T. Road, Dholewal,
                Opp. Indian Oil,Ludhiana.
        4.     M/s.International Machine Tools Corpn.,
                5, Nyayamurti G.N. Vaidya Marg
                ( Bank Street),P.O. Box-799,
                Behind State Bank,Fort- Mumbai-23.
        5.     M/s. Parekh Machine Tools,
                5, Khetra Das Lane (Beside Broadway Hotel),
                Kolkata-700012.
        6.     M/s. Indian Furnace Co. Ltd.,
                B-102, 10th Floor, Himalaya House,
                Kasturba Gandhi Marg, New Delhi-1100-01
        7.     M/s. Wesman Engg. Co. Pvt. Ltd.,
                B-99 Mayapuri Indl. Area,
                New Delhi-110064
        8.     M/s. Manjeet Engg. Industries,
                71/1, Najatgarh Road,
                New Delhi-15.
        9.     M/s. Metalizing Equipment Co.,
                Chopasni Road,Jodhpur ( Rejasthan)

Names & Addresses of Raw Material Suppliers:

        1.     M./s. Steel Authority of India,
                Sail House, Near Nandan Hotel,
                G.S.Road, Guwagahati-781001
        2.     Local market.