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Project management assignment Group no: 9

DETAILED PROJECT REPORT ON CLOCK AND WATCH UNIT

SUBMITTED TO Dr. Santhosh P Thampi SMBS

SUBMITTED TO
Group Members Abhijith k k Dhanya Mohanan Nisha P Somu Sabna Sams Sebastian Lawrence Shyama Kakkat

Clock Manufacturing Unit


Production Capacity Qty. : 1,80,000 Nos. (per annum) Value : Rs. 2,20,00,000

Introduction The electronic quartz analog clock has brought a revolution in the clock industry. The quartz clocks were introduced in the Indian market in 1977- 78 and since then market as well as production in India has been growing at a tremendous rate. Some of the main features of the quartz clock are; high accuracy, no winding required, works in any position, very low power consumption, hardly any service required and the longer life of the clock. Market Potential Consumer electronics sector has achieved a production of Rs. 127000 crore in 2001-02 compared to Rs. 26000 crore productions in 1996-97. During the year 2001, the production of electronic clock was of the order of Rs 210 crores. The electronic Quartz Clocks are technically superior to the mechanical ones. Since the raw materials and components are available at a cheaper rate, the price of the electronic clocks has come down substantially. This reduction in prices has boosted the demand.

Pricing of Quartz Analogy Clocks The customer price of Clock ranges from Rs. 60 to Rs. 450. Different types of clocks in the market, and their prices are as follows Type of Quartz Clocks Ordinary Plastic Case Good finished Plastic case and Anodized Dial Ordinary Picture Laminated Picture Striking (Ordinary) Striking (Quadraphonic) Pendulum (Simple) Pendulum Striking Price Range (Rs.) 60 - 80 80 -150 100 -150 180 - 250 200 - 300 280 -380 250 -350 300 - 450

Basis and Presumptions

The basis for calculation of production capacity has been taken on single shift basis on 75% efficiency.

The maximum capacity utilization on two shifts basis of 8 hrs. Each for 300 days a year. During first year and second year of operations the capacity utilization is 60% and 80% respectively. The unit is expected to achieve full capacity utilization from the third year onwards. The salaries and wages, cost of raw materials, utilities, rents, etc. are base on the prevailing rates. These cost factors are likely to vary with time and location. Interest on term loan and working capital loan has been taken at the rate of 12% on an average. This rate may vary depending upon the policy of the financial institutions/agencies from time to time. The cost of machinery and equipments refer to a particular make/model and prices are approximate. The break-even point percentage indicated is of full capacity utilization. The project preparation cost etc. whenever required could be considered under preoperative expenses. The essential production machinery and test equipment required for the project have been indicated. The unit may also utilize common test facilities available at Electronics Test and Development Centres (ETDCs) and Electronic Regional Test Laboratories (ERTLs) set up by the State Governments and STQC Directorate of the Department of Information Technology, Ministry of Communication and Information Technology, to manufacture products conforming to Bureau of Indian Standards.

Implementation Schedule The major activities in the implementation of the project has been listed and the average time for implementation of the project is estimated at 12 months Name of Activity Preparation of project report Registration and other formalities Sanction of loan by financial institutions Plant and Machinery (i) Placement of orders (ii) Procurement (iii) Power connection/ Electrification (iv) Installation/Erection of machinery/Test Equipment Procurement of Raw materials Recruitment of Technical Personnel etc. Trial Production Commercial Production Period in Months (Estimated) 1 1 3 1 2 2 2 2 2 11 12

Notes

Many of the above activities shall be initiated concurrently. Procurement of raw materials commences from the 8th month onwards.

When imported plant and machinery are required the implementation period of project may vary from 12 months to 15 months.

Technical Aspects Process of Manufacture The Quartz wall clock will be assembled and for assembly other raw materials such as quartz clock movement, Cabinet, hand etc., will be purchased from the market. In this project profile, it is assumed that the complete Quartz movement is procured from outside. The movement is fitted into Cabinet case which is fitted with dial and the hands are mounted on the movement and after the glass and back cover of Cabinet are fitted. The needles have to be properly fitted at accurate position on dial which shows time. Finally, the battery should be put into the clocks put for testing for at least 2 days before despatch.

Production Capacity ( per annum) Quantity 1,80,000 Nos. Motive Power Value (Rs.) 2,20,00,000 15 KW

Pollution Control The Govt. accords utmost importance to control environmental pollution. The small-scale entrepreneurs should have an environmental friendly attitude and adopt pollution control measures by process modification and technology substitution. India having acceded to the Montreal Protocol in Sept. 1992, the production and use of Ozone Depleting Substances (ODS) like Chlorofluoro Carbon (CFC), Carbon Tetrachloride, Halons and Methyl Chloroform etc. need to be phased out immediately with alternative chemicals/solvents. A notification for detailed Rules to regulate ODS phase out under the Environment Protection Act, 1986 have been put in place with effect from 19th July 2000. The following steps are suggested which may help to control pollution in electronics industry wherever applicable

In electronic industry fumes and gases are released during hand soldering/wave soldering/Dip soldering, which are harmful to people as well as environment and the end products. Alternate technologies may be used to phase out the existing polluting technologies. Numerous new fluxes have been developed containing 2-10% solids as opposed to the traditional 15-35% solids. Electronic industry uses CFC, Carbon Tetrachloride and Methyl Chloroform for cleaning of printed circuit boards after assembly to remove flux residues left after soldering, and various kinds of foams for packaging.

Many alternative solvents could replace CFC-113 and Methyl Chloroform in electronics cleaning. Other Chlorinated solvents such as Trichloroethylene, Perchloroethylene and Methylene Chloride have been used as effective cleaners in electronics industry for many years. Other organic solvents such as Ketones and Alcohols are effective in removing both solder fluxes and many polar contaminants.

Energy Conservation With the growing energy needs and shortage coupled with rising energy cost, a greater thrust in energy efficiency in industrial sector has been given by the Govt. of India since 1980s. The Energy Conservation Act, 2001 has been enacted on 18th August'2001, which provides for efficient use of energy, its conservation and capacity building of Bureau of Energy Efficiency created under the Act. The following steps may help for conservation of electrical energy

Adoption of energy conserving technologies, production aids and testing facilities. Efficient management of process/ manufacturing machineries and systems, QC and testing equipments for yielding maximum Energy Conservation. Optimum use of electrical energy for heating during soldering process can be obtained by using efficient temperature controlled soldering and desoldering stations. Periodical maintenance of motors compressors etc. Use of power factor correction capacitors. Proper selection and layout of lighting system; timely switching on-off of the lights; use of compact fluorescent lamps wherever possible etc.

Financial Aspects Fixed Capital Land and Building Land 300 Sq.Mtr @ 3500/ Sq. Mtr Value Civil construction Boundry wall, gates and road inside the factory Value Built up area = 500 Sq. Mtrs for office, stores, assembly and testing, security room, workers room, bore well and water, raw material and finished goods store on two floors @ Rs. 6000 / Sq. mtr Value Total civil cost = 10,50,000 + 4,00,000 + 30,00,000 Rs. 10,50,000 Rs. 4,00,000

30,00,000 Rs.44,50,000

Machinery and Equipments

Description Quartz Clock Tester Digital Multimeter (3 Digit) Total Other Fixed Assets Excise, sales tax and electrification charges @ 40% of the cost of machinery and equipment. Office equipments, furniture and working table etc. Tools, jigs and fixtures, soldering iron/station etc. Total plant and m/c Pre operative expenses Total Fixed Capital

Ind./ Imp. Ind. Ind.

Qty. 3 4

Value (Rs.) 1,50,000 30,000 1,80,000 72,000 2,00,000 50,000 5,02,000 1,00,000 50,52,000

B. Working Capital (per month) (i) Staff and Labour Designation Manager Sales and Service Assistance Purchase and commercial staff Peon/ Watchman Skilled Workers Semi-Skilled Workers Total Add perquisites @ 22% of salary Total No. of persons 1 1 4 3 6 2 Salary (Rs.) 30,000 15,000 Total (Rs.) 30,000 15,000 20,000 9,000 24,000 6,000 1,04,000 23000 1,27,000

(ii) Raw Material Requirement (per month) Particulars Qty. Cost/unit (Rs.) 40 50 Total 15000 unit (Rs.) 6,00,000 7,50,000 13,50,000

Quartz Movement (Complete) Case (Cabinet) with Dial and Hands (Appear-ance Parts) with packaging Total

1 1

Note: The quantity and quality of raw material vary with design requirements and features of the Clock. Utility expenses for water and power = Rs. 8,000

(iv) Other Contingent Expenses (per month) Particulars Postage and stationery Telephone and communication expenses Repair and maintenance Transport and conveyance charges Advt. and publicity Insurance and taxes Consumable Stores Miscellaneous expenditure Total Total Recurring Expenditure Rs (per month) (i + ii + iii + iv) Rs. 1,04,000 + Rs. 13,50,000 + Rs. 8,000, Rs. 56,000 Value (Rs.) 5000 5000 5000 10000 20000 4000 2000 5000 56000 Rs. 15,18,000

C. Total Capital Investment Fixed capital Working Capital on 3 months basis Total Rs. 50,52,000 Rs. 45,54,000 Rs. 96,06,000

Financial Analysis Cost of Production (per annum) Total recurring expenditure Depreciation on Pl. & m/c @ 10 % Depreciation on tools, jigs & fixtures and office equipment @ 20% Depreciation on civil construction @ 5% Interest on total capital investment @ 12% Total (Rs.) 1,82,16,000 25,000 50,000 1,70,000 11,53,000 1,96,14,000

Turnover (per annum) Item Electronic quartz analogy clocks Profit (per annum) (Before Taxes) Sales Cost of production Qty.(Nos.) 180000 Rate/Unit Total Sales (Rs.) (Rs.) 122.22 2,20,00,000 (Rs.) Rs. 2,20,00,000 1,96,14,000 Rs. 23,86,000

Net Profit Ratio

Profit (per annum) 100 ------------------Sales (per annum) 23,86,000 100 2,20,00,000 10.80%

Rate of Return Profit (per annum) 100 ------------------Total capital investment 23,86,000 x 100 96,06,000 24.8%

Break-even Point Fixed Cost (per annum) Total Depreciation Interest on total capital investment @ 12% 40% Salaries and wages 40% other contingent expenses Total B.E.P (Rs.) 2,45,000 11,53,000 6,09,000 2,69,000 22,76,000 Fixed cost 100 ---------------------------Fixed cost + Profit 22,76,000 100 22,76,000+ 23,86,000 48.8%

Additional Information

The Project Profile may be modified/tailored to suit the individual entrepreneurship qualities/capacity, production programme and also to suit the locational characteristics, wherever applicable. The Electronics Technology is undergoing rapid strides of change and there is need for regular monitoring of the national and international technology scenario. The unit may, therefore, keep abreast with the new technologies in order to keep them in pace with the developments for global competition. Quality today is not only confined to the product or service alone. It also extends to the process and environment in which they are generated. The ISO 9000 defines standards for Quality Management Systems and ISO 14001 defines standards for

Environmental Management System for acceptability at international level. The unit may therefore adopt these standards for global competition. The margin money recommended is 25% of the working capital requirement at an average. However, the percentage of margin money may vary as per bank's discretion.

Addresses of Machinery and Equipment Suppliers

M/s. Toshniwal Bros. (Delhi) Pvt. Ltd. 3-E/8, Jhandewalan Extn., New Delhi-110055. M/s. Ruttonsha Simpson Pvt.Ltd. 14, Jhandewalan Link Road, New Delhi-110055. M/s. Motwane Pvt. Ltd. 68, Janpath, Post Box No. 47, New Delhi. M/s. British Physical Laboratories 93, Nehru Place, New Delhi-110019 M/s. EM Electronics Pvt. Ltd. 158, III Main Industrial Town, Rajaji Nagar, Bangalore560 004.

Raw Material / Component Suppliers

M/s. H.B. Chugh and Co. 14 A/31, W.E. Area, Karol Bagh, New Delhi. M/s. Semiconductor Complex (A Govt. of India Enterprises), (Marketing Division), C5/18, Safdarjung Dev./Area, New Delhi110028. M/s. Sargodha Radio Co. C-134, Naraina Industrial Area, New Delhi-110028. M/s. Chawla Plastics Works Pvt. Ltd. A-4, Mayapuri, Phase-I, New Delhi. M/s. Bhola Plastic Industries B-34/5, G.T. Karnal Road, Industrial Area, Delhi-110033. M/s. Kanwar S.M. Co. Naraina Inds.Area, Phase-I, Delhi-110028. M/s. CINA Electronics 1A/218, Ashok Vihar,

Phase-I, Delhi-110052. M/s. Copwud Arts 118-120, Satguru Nanak Inds.Estate, Western Express Highway, Goregaon (East), Mumbai-400063. M/s. Boble Electronics 354, Lajpat Rai Market, Delhi-110006.

Watch Manufacturing Unit


Quality and Standards Production Capacity Qty.: 60000 Nos. (per annum) Value : Rs. 4776000 Buyers'/Manufacturers' own specifications

Introduction There are many types of Watch, made of Stainless Steel and Brass etc. Watch are made in various designs including ornamental one, being used by the public now a days. In this Project Profile, it is intended to manufacture stainless steel watch out of stainless steel sheet scrap and wire. Since the scrap of required gauge is easily available from the manufacturers of stainless steel utensils, it is comparatively more profitable than manufacturing these items out of virgin stainless steel sheets or coil. Market Potential Wrist watch has become necessity for the present day life of human beings. It is being used by people from all walks of life, male, female, educated, uneducated, young and old etc. Watch strap being an integral part of wrist watch, it has a good market for supply to meet original demand and in the replacement market. Apart from the large scale wrist watch manufacturers, such as Titan, HMT, Maxima, Allwyn, Timex etc., a good number of small scale units in many States have also come up with their phased production programme for wrist watches. The demand for the production of the item is therefore likely to increase

rapidly in near future. Further, due to durability of the product it is preferred over all other types of straps. Moreover, due to fast changes in the design and liking of people, there is good replacement prospects for the product as well. Therefore, there is a good and assured future for the product.

Basis and Presumptions

This report is worked out on 75% capacity utilization, on double shift and 300 working days per year.

The machinery and equipment are of standard make. The cost of raw materials and other expenditure is approximate and based on current market rates.

The period for achieving envisaged capacity utilization estimated to be one year after commencement of trial production.

Interest rate for fixed and working capital has been calculated at 12% per annum. Pay back period would commence after a period of 12 months and the repayment period is estimated as 3 years.

Implementation Schedule

The entrepreneur has to arrive at a decision in order to select this product. The guiding factor in this regard would be the market potential, demand and supply gap and availability of resources. It may take 2 to 3 weeks.

After selecting the product, the entrepreneur has to get provisional registration from DIC, so that he can apply for allotment of land, power, etc.

In order to obtain financial assistance from the financial Institutions like Commercial Banks or State Financial Corporations, a detailed project report is required to be prepared. On the basis of the report financial Institutions may take 8 to 10 weeks' time for sanctioning and disbursing the loan. Accordingly, orders for plant and machinery may be finalized and placed. Simultaneously, orders for purchase of raw materials are

also to be finalized and recruitment of key staff is to be done. This would require 3 to 4 weeks.

The plant and machinery received may be installed and commissioned within 4 to 6 weeks time and the Workshop staff should also be recruited. The production may be commenced after trial run of the installed plant and machinery.

Technical Aspects Process of Manufacture The Metallic Watch Straps consist of 7 to 8 components according to its design. These components are made by balaking, piercing, and binding as per the requirements, and then these components are sent for assembly to form a chain. These chain pieces are grounded to size on a surface grinder. Mat finish on the straps can also be given by using surface grinder. After mating, straps may be polished on a buffing lathe. Links, locks and barrels are fitted to these pieces with the help of spring loaded pins. Then these assembled straps are cleaned in kerosene oil to remove the luster particles. Finally, the final buffing is done to give polishing touch on straps. These straps are packed suitably and marketed.

Quality Control and Standards Most of the watch manufacturers like Titan, HMT, Alwyn, Maxima, Timex etc., have formulated their own specifications and design for this product, and these may be obtained from them for supply to them. However, in view of sophistication and individual liking the appearance of the straps must be good and have free link movement and reliable locking system along with appropriate polish.

Production Capacity (per annum) Quantity 60000 nos.

Value Motive Power

Rs 4776000 15 HP.

Pollution Control The activity does not create any pollution. However, proper ventilation is provided for safe working conditions.

Energy Conservation General awareness is required for energy conservation.

Financial Aspects Fixed Capital (i) Land and Building (i) Land 400 sq. mtr. @ Rs. 6000 per sq. mtr including registration (ii) Cost of land development, fencing, approach road, inside roads, land scaping, drainage etc. @ Rs. 1000 per sq. mtr. (iii) Total built-up area 300 sq. mtrs.@ Rs 5000/- sq Mtr Water System (including Bore Well + over head tank etc) Total civil cost= cost of land + building 1500000 100000 4400000 2400000 400000

(ii) Machinery and Equipments Description Ind./ Qty. Imp. Nos. Inclinable Power Press 10 Tonnes with 5 HP Motor Power Press with 2 HP Motor Ind. -do1 2 Rate (Rs.) 80000 40000 Total (In Rs.) 80000 80000

Bench Drill 12 mm cap. With 0.5 HP motor. Buffing lathe with 1 HP Motor. Disc and Belt sand grinding Machine, 1200 mm x 150 mm with endless belt, titling type table and with 0.5 HP motor. Pedestal grinder 200 mm wheel dia. with 0.5 HP motor. Surface grinder, table size 550 mm x 200 mm with 1 HP motor. Work bench, Vice, Hand tools, Dies, Punches, Measuring tools etc. Installation and Electrification @ 10% of the cost of Machines Office furniture and equipments. Total (iii) Pre-operative Expenses Total Fixed Capital (i+ii+iii)

-do-do-do-

1 1 1

8000 20000 20000

8000 20000 20000

-do-

10000

10000

-do-

65000

65000

-do-

L.S.

50000

33300

80000 446300 40000 4886300

B. Working Capital (per month) (i) Personnel Designation No. Salary (Rs.) Manager Supervisor-Cum-Inspector Skilled Workers Un-Skilled Workers Clerk-cum-Accountant Peon Chowkidar/Watchman Total Additional perquisites @ 22% 1 1 4 4 1 1 1 15000 8000 6000 4000 8000 3000 3000 15000 8000 24000 16000 8000 3000 3000 77000 16940 Amount (In Rs.)

Total

93940

(ii) Raw Material Description Stainless Steel/Scrap 16/20/26/28/30 MT SWG Spring Bars and Link Bars Packaging Material Total 36,000 Total Qty. 1.8 216 L.S. Rate (Rs.) 60000 55 Amount (Rs.) 108000 11880 5000 124880

(iii) Utilities (In Rs.) Electric Power @ 5 per unit Total 7000 7000

(iv) Other Contingent Expenses (In Rs.) Transport and Cartage Charges Postage and Stationery Telephone Publicity Insurance/Taxes Repair and Maintenance Miscellaneous Expenses Total 5000 3000 3000 10000 1000 2000 5000 29000

(v) Total Recurring Expenditure (per month)

(In Rs.) [(i) + (ii) + (iii) + (iv)] 254820

(vi) Total Working Capital for 2 Months 2 254820 509640

C. Total Capital Investment (i) Fixed Capital (ii) Working Capital (for 2 months) Total 4886300 509640 5395940

Financial Analysis Cost of Production (per year) Recurring Expenditure Depreciation on Building @ 5 % Depreciation on Machinery and Equipments @ 10% Depreciation on Office Furniture @ 20% Interest on total capital investment @12% Total (In Rs.) 3057840 220000 33300 16000 647513 3974653

Turn-over (per annum) Items Qty. Rate (Rs.) Total (In Rs.) Stainless Steel Watch Straps Nos. each Sale of Scrap Total 60000 4 MT 78 24000 4680000 96000 4776000

Net Profit (per year) (Before Taxation) Profit Turnover - Cost of Production = 4776000 - 3974653 = 801347

Net Profit Ratio Net Profit per year 100 Turnover per year 801347 100 4776000 = 16.78

Rate of Return Net Profit per year 100 Total Capital Investment 801347 100 5395940 = 14.85

Break-even Point Fixed Cost Depreciation on Building @ 5 % Depreciation on Machinery and Equipments @ 10% Depreciation on Office Furniture @ 20% Interest on total capital investment @12% (In Rs.) 220000 33300 16000 647513

40% of Salary and Wages 40% of other contingent expenses Total

450912 139200 1506925

B.E.P

Fixed Cost 100 Fixed Cost + Profit = 1506925 100 1506925 + 801347 = 65.28

Addresses of Manufacturers and Machinery /Equipment Suppliers

M/s. SARB Presses Pvt. Ltd. P. No. 52, Sector24, Faridabad-121001 (Haryana)

M/s. Gurusharan Industries 920, New Colony, Opp. Railway Station (Old), Faridabad121001 (Haryana).

M/s. Lefoot Machines Pvt. Ltd. 110 (N.P.), SIDCO Industrial Estate, Ambattur, Chennai - 98.

M/s. Imperial Products of India 414A, Industrial Area - II, Chandigarh - 160002.

M/s. Atlas Works Pvt. Ltd. S. No. 119, Ribbon Street, Kolkata.

M/s. International Machine Tools Corporation 5 Bank Street, P.O. Box No. 799, Behind State Bank, Fort, Mumbai - 400023.

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