Steel Fabrication Profile

STEEL FABRICATION/STEEL SHUTTER/STEEL GRILL
INTRODUCTION:
Fabricated steel products cover a host of items such as steel furniture, storage tanks, grill gates,
rolling shutter etc. Of these items, steel furniture which are strongly consumer-oriented are a
separate class of products. The other items such as gates, grills, tanks and rolling shutter may be
categorized together while there are a number of steel furniture units in the north-eastern region.
Units manufacturing items like tanks, gates, grills, rolling shutter are few in number and hence
there are good prospects in the line for entrepreneurs, especially those who are technically
qualified.
ABOUT THE PRODUCT:
The unit propose to manufacture steel fabricated items like gates, grills, rolling shutters and steel
tanks which are required both for domestic and commercial establishments. These steel products
are the only replacement of wood in terms of cost and durability. These products will be varied in
shapes and sizes as per the demand.
MARKET POTENTIAL:
1It is assumed that the housing shortage is about 7 lakh in urban areas and 70 lakh in rural
areas. To mitigate the housing shortage in about five years time about 1.25 lakhs urban dwelling
per year and 14 lakhs rural dwellings per year would have to be constructed. It may be
conservatively assumed that an average at least about 90,000 urban dwellings and 10 lakh rural
dwellings are constructed per year. Assuming that out of the new dwellings to be constructed the
requirement of gates, grills, rolling shutters, tanks would be about 5% in case of rural dwelling
and 20% in case of urban dwelling the demand for these products estimated as under:
Rural
Nos./year
Gates
Grills
Rolling shutters
Tanks
Urban
Nos./year
48750
195000
120
32500
19500
156000
30
13000
Total
Nos./year
68250
351000
150
45500
@ 6 grills per rural dwellings and 12 grills per urban dwelling.

Thus, the total demand potential for gates, grills, rolling shutters and tanks for dwellings is
estimated at about 464900 lakh Nos./year tonne. Besides the above demand, there is a
significant industrial demand where the sizes of these products would be much higher. For
instance, factories would require M.S tanks for storing water and these may have capacity of the
order of 20 KL against 1 KL for domestic applications. Industrial units would also require large
size gates, grills and rolling shutters. Considering that only 5% of the potential demand is tapped
by the tiny units, there is scope for 20 25 more tiny units with the following product-mix.
Quantity
Nos./year
Unit weight
Kg.
Weight
Tonne
9.45
3.7.5
Gates
Grills
75
375
126
10
Rolling shutter
10 ft.x 8.5ft.= 855 qtl.
Tanks 1000 ltrs.
150
225
855 qtl.
85
Gates, grills, tanks
Shutter 5 qtl.
361
12750 qtl.
19.13
32.33
12750
SUGGESTED CAPACITY:
The annual production of 32.33 tonne & 12750 sq.ft of rolling shutter
assumptions.
No.of working days per annum
:
No.of shifts per day
:
Annual fabricated tonnage gates, grills & tanks
:
Annual fabricated square feet shutter
:
is based on the following

300
8
32.33
12750
INFRASTRUCTURE:
The main infrastructure facilities required are
(a)
Covered area Working Shed 1000 sq.ft.
(b)
Utilities Power 10 KW.
(c)
Raw materials and its availability: The major raw materials is mild
steel in the form of steels, square
bars, angles, locks and flats.
Welding electrodes are the major
consumables used. The requirement of these materials depending
on the product to be manufactured
is given hereunder:
i) Gates
Gate Size
3.6 M x 1.20 M
(12 x 4)
ii) Grills
Grill size
1.20m x 1 M
1000 ltrs.
iii) Tanks
Raw Material per gate

(a) 99 Bars 12mm = 80 Kg.
(b) Angles 40 x 40 x 5mm = 40 Kg.
(c) Flats 30 x 5mm = 12 Kg.
Flats 20 x 5mm = 12 Kg.
2mm MS Sheet for all tanks

1 x 1 x 1m 659 m = 95 Kg.
iv) Shutter
10 ft. x 8.5 ft.
Sheets, locks, rolling wheel,
spring, shaft 140 kg. per shutter
of 10 x 8.5 size.
The annual requirement of major raw materials are given below:
Kg/year
M.S. Sheets
32250
M.S. Square bars
6000
M.S. Angles
3000
M.S. Flats
6000
Shaft, rolling wheel for shutters,
Sheets, locks, spring etc.
21000
68250 Kg.
Electrodes
24300 Nos.
The various steel raw materials such as angles, bars and flats are not manufactured in the north
eastern region. These products are available from Steel Authority of India Ltd. (SAIL) and Tata Iron
and Steel Company (TISCO) from their stock yard and also from local dealers. Welding electrodes
would be available from stockists for Indian Oxygen, Advani Oerlikon etc.
SUGGESTED LOCATIONS:
The suggested locations are
Assam
Arunachal Pradesh
Tripura
Meghalaya
Mizoram
Manipur
Nagaland
Sikkim
:
:
:
:
:
:
Guwahati, Sibsagar, Tezpur, Kokrajhar, Silchar.

Naharlagun, Itanagar
Dharmanagar
Tura, Shillong
Aizawl
Imphal
:
:
Dimapur.
Gangtok & other Dist. H. Q.
362
PRODUCTION PROCESS:
The main process steps are
(A. Cutting or shearing of the materials to size.
(B. Welding the sized material as per design of product to be made.
(C. Grinding edges and surfaces to smoothness.
(D. Providing a coat of red oxide paint to the article produced.
TOTAL CAPITAL REQUIREMENT:
The total capital requirement for the project including fixed capital and working capital is
estimated at Rs 6.29 lakhs. Of this, the project cost comprising fixed capital and margin money
on working capital is Rs 2.62 lakh.
(Rs in lakh)
(A. Fixed Capital:
Land and Building
On rent
Plant & Machinery
1.80
Misc. Fixed Assets
0.40
Preliminary & Pre-operative expenses
0.20
Total (A)
2.40
(A. Working Capital:
Raw materials
1 month
1.75
Finished goods
10 days
0.58
Working expenses
1 month
0.31
Receivables
10 days
1.25
Total (B)
3.89
Grand Total (A+B)
6.29 lakh
MEANS OF FINANCE:
Bank Finance
Margin Money and NEF
75%
25%
4.72 lakh
1.57 lakh
6.29 lakh
COST OF PRODUCTION:
The annual operating expenses are estimated at Rs 26..76 lakhs as given below:
(Rs. in lakhs)
Raw materials
Utilities
Wages & salaries
Rent
Other overheads
Selling expenses @ 2.5% of annual sales
Interest on Term Loan & Working Capital
Loan @ 15% Depreciation
21.00
0.72
2.40
0.36
0.24
1.12
0.70
0.22
Rs. 26.76 lakh
TURN OVER:
Based on a total production of 47 tonnes rolling shutters 150 nos. of finished products comprising
of gates, grills, tanks and rolling shutter and selling rate of Rs 47,000 per tonne 12750 sq.ft.
rolling shutter, the annual sales realization is estimated at about Rs.45 lakhs per year.
PLANT & MACHINERY:
The major equipment required are
a) Shearing machine
b) Electric arc welding machine
c) Electric grinding machine with electrical
accessories
d) Electric and stand drilling machine
e) Misc. tools
363
:
:
1 No.
2 sets
2 sets
:
:
2 sets
3 sets
RAW MATERIALS:
Production
_________
Nos.
Cost Rate
Weight/Nos. Kg.
A. Gates
B. Grills
C. Tanks
D. Rolling shutter
68250
351000
45500
150
E. Electrodes
F. Red oxide Paint
243000
--
SALES REALIZATION:
Item
Kg/sq.ft Rate
Gate, grill and tanks

Rolling shutter
Cost
Rs. lakh
68250 Kg.
30
20.47
__
L.S.
---
0.41
0.12
21.00
Total (Rs lakh)
47250 Rs 47/kg.
150 Nos.of
Shutter of
10 x 8.5
Rs 180/sq.ft.
22.20
22.95
Total 45.15
Say Rs 45.00 lakh P.A.
PROFITABILITY:
Based on the sales realization of Rs 45.00 lakhs and the operating expenses of Rs 26.76 lakhs,
the profit at working capital would be Rs 18.24 lakh per year. This works out to a return on
investment of 289%. The plant would break even at about 17.68% of the targeted annual
production.
Total capital requirement
:
Rs 6.29 lakhs
Equity capital
:
Rs 1.62 lakhs
Annual sales realization
:
Rs 45.00 lakhs
Annual operating expenses
:
Rs 26.76 lakhs
Annual Profit
:
Rs 18.24 lakhs
Return on sales
:
40.53%
Break Even Point
:
17.68%
No. of persons employed
:
10 Nos.
BREAK-EVEN POINT ANALYSIS:
(At 100% Capacity Utilization)
A.
Variable Cost:
Raw materials
Utilities
Selling Expenses
B.
Semi-Variable Cost:
Wages & Salaries
Rent, Insurance etc.
Depreciation
Administrative overhead
Interest
Total
Total
C.
D.
E.
Sales Realization
Contribution (C A)
B.E.P. B/D x % on installed capacity
MACHINARY SUPPLIER:
1.
M/s Industrial Engg & Traders,

Tokobari Road, Athgaon,
Guwahati
364
(Rs.lakh)
21.00
0.72
1.12
22.84
2.40
0.36
0.22
0.24
0.70
3.92
45.00
22.16
17.68%

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What are the main products that the unit proposes to manufacture?

What is the estimated annual demand potential for the main products?

STEEL FABRICATION/STEEL SHUTTER/STEEL GRILL

@ 6 grills per rural dwellings and 12 grills per urban dwelling.

is based on the following

Raw Material per gate

2mm MS Sheet for all tanks

Guwahati, Sibsagar, Tezpur, Kokrajhar, Silchar.

Gate, grill and tanks

Total (Rs lakh)

M/s Industrial Engg & Traders,

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