Project management assignment

Group no: 9

DETAILED PROJECT REPORT ON CLOCK AND WATCH UNIT

SUBMITTED TO SUBMITTED TO

Dr. Santhosh P Thampi

SMBS

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 Price Range (Rs.)Ordinary Plastic Case 60 - 80Good finished Plastic case and Anodized Dial 80 -150Ordinary Picture 100 -150Laminated Picture 180 - 250Striking (Ordinary) 200 - 300Striking (Quadraphonic) 280 -380Pendulum (Simple) 250 -350Pendulum Striking 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 pre-

operative 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 Period in Months (Estimated)

Preparation of project report 1Registration and other formalities 1Sanction of loan by financial institutions 3Plant and Machinery(i) Placement of orders 1(ii) Procurement 2(iii) Power connection/ Electrification 2(iv) Installation/Erection of machinery/Test Equipment 2Procurement of Raw materials 2Recruitment of Technical Personnel etc. 2Trial Production 11Commercial Production 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 Value (Rs.)1,80,000 Nos. 2,20,00,000Motive Power 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 Rs. 10,50,000Civil 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

Rs. 4,00,000

30,00,000Total civil cost = 10,50,000 + 4,00,000 + 30,00,000 Rs.44,50,000

Machinery and Equipments

Description Ind./ Imp.

Qty. Value (Rs.)

Quartz Clock Tester Ind. 3 1,50,000Digital Multimeter (3 ½ Digit) Ind. 4 30,000Total 1,80,000Other Fixed AssetsExcise, sales tax and electrification charges @ 40% of the cost of machinery and equipment.

72,000

Office equipments, furniture and working table etc. 2,00,000Tools, jigs and fixtures, soldering iron/station etc. 50,000Total plant and m/c 5,02,000Pre operative expenses 1,00,000Total Fixed Capital 50,52,000

B. Working Capital (per month)

(i) Staff and Labour

Designation No. of persons

Salary (Rs.) Total (Rs.)

Manager 1 30,000 30,000Sales and Service Assistance 1 15,000 15,000Purchase and commercial staff 4 20,000Peon/ Watchman 3 9,000Skilled Workers 6 24,000Semi-Skilled Workers 2 6,000Total 1,04,000Add perquisites @ 22% of salary 23000Total 1,27,000

(ii) Raw Material Requirement (per month)

Particulars Qty. Cost/unit (Rs.)

Total 15000 unit (Rs.)

Quartz Movement (Complete) 1 40 6,00,000Case (Cabinet) with Dial and Hands (Appear-ance Parts) with packaging

1 50 7,50,000

Total 13,50,000

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 Value (Rs.)Postage and stationery 5000Telephone and communication expenses 5000Repair and maintenance 5000Transport and conveyance charges 10000Advt. and publicity 20000Insurance and taxes 4000Consumable Stores 2000Miscellaneous expenditure 5000Total 56000

Total Recurring Expenditure Rs (per month) (i + ii + iii + iv)Rs. 1,04,000 + Rs. 13,50,000 + Rs. 8,000, Rs. 56,000

Rs. 15,18,000

C. Total Capital Investment

Fixed capital Rs. 50,52,000Working Capital on 3 months basis Rs. 45,54,000

Total Rs. 96,06,000

Financial Analysis

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

Turnover (per annum)

Item Qty.(Nos.) Rate/Unit (Rs.)

Total Sales (Rs.)

Electronic quartz analogy clocks 180000 122.22 2,20,00,000Profit (per annum) (Before Taxes) (Rs.)Sales Rs. 2,20,00,000 –

1,96,14,000Cost of production Rs. 23,86,000

Net Profit Ratio

Profit (per annum) ×100-------------------

Sales (per annum)23,86,000 × 1002,20,00,00010.80%

Rate of Return

Profit (per annum) ×100-------------------

Total capital investment23,86,000 x 10096,06,00024.8%

Break-even Point

Fixed Cost (per annum) (Rs.)Total Depreciation 2,45,000Interest on total capital investment @ 12% 11,53,00040% Salaries and wages 6,09,00040% other contingent expenses 2,69,000Total 22,76,000

B.E.P Fixed cost ×100----------------------------Fixed cost + Profit22,76,000 × 10022,76,000+ 23,86,00048.8%

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 Laboratories93, Nehru Place,New Delhi-110019

M/s. EM Electronics Pvt. Ltd.158, III Main Industrial Town,Rajaji Nagar,Bangalore–560 004.

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 Delhi–110028.

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 IndustriesB-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 Electronics1A/218, Ashok Vihar,

Phase-I,Delhi-110052.

M/s. Copwud Arts118-120, Satguru Nanak Inds.Estate,Western Express Highway,Goregaon (East),Mumbai-400063.

M/s. Boble Electronics354, Lajpat Rai Market,Delhi-110006.

Watch Manufacturing Unit

Quality and

Standards

Buyers'/Manufacturers' own specifications

Production Capacity Qty.: 60000 Nos. (per annum)

Value : Rs. 4776000

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 Rs 4776000

Motive Power 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 2400000

(ii) Cost of land development, fencing, approach road, inside roads, land

scaping, drainage etc. @ Rs. 1000 per sq. mtr.

400000

(iii) Total built-up area 300 sq. mtrs.@ Rs 5000/- sq Mtr 1500000

Water System (including Bore Well + over head tank etc) 100000

Total civil cost= cost of land + building 4400000

(ii) Machinery and Equipments

Description Ind./

Imp.

Qty.

Nos.

Rate

(Rs.)

Total

(In Rs.)

Inclinable Power Press 10 Tonnes with 5 HP Motor Ind. 1 80000 80000

Power Press with 2 HP Motor -do- 2 40000 80000

Bench Drill 12 mm cap. With 0.5 HP motor. -do- 1 8000 8000

Buffing lathe with 1 HP Motor. -do- 1 20000 20000

Disc and Belt sand grinding Machine, 1200 mm x 150

mm with endless belt, titling type table and with 0.5

HP motor.

-do- 1 20000 20000

Pedestal grinder 200 mm wheel dia. with 0.5 HP

motor.

-do- 1 10000 10000

Surface grinder, table size 550 mm x 200 mm with 1

HP motor.

-do- 1 65000 65000

Work bench, Vice, Hand tools, Dies, Punches,

Measuring tools etc.

-do- L.S. 50000

Installation and Electrification @ 10% of the cost of

Machines

33300

Office furniture and equipments. 80000

Total 446300

(iii) Pre-operative Expenses 40000

Total Fixed Capital (i+ii+iii) 4886300

B. Working Capital (per month)

(i) Personnel

Designation No. Salary

(Rs.)

Amount (In Rs.)

Manager 1 15000 15000

Supervisor-Cum-Inspector 1 8000 8000

Skilled Workers 4 6000 24000

Un-Skilled Workers 4 4000 16000

Clerk-cum-Accountant 1 8000 8000

Peon 1 3000 3000

Chowkidar/Watchman 1 3000 3000

Total 77000

Additional perquisites @ 22% 16940

Total 93940

(ii) Raw Material

Description Qty. Rate (Rs.) Amount (Rs.)

Stainless Steel/Scrap 16/20/26/28/30 MT SWG 1.8 60000 108000

Spring Bars and Link Bars 216 55 11880

Packaging Material Total 36,000 L.S. 5000

Total 124880

(iii) Utilities

(In Rs.)

Electric Power @ 5 per unit 7000

Total 7000

(iv) Other Contingent Expenses

(In Rs.)

Transport and Cartage Charges 5000

Postage and Stationery 3000

Telephone 3000

Publicity 10000

Insurance/Taxes 1000

Repair and Maintenance 2000

Miscellaneous Expenses 5000

Total 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 4886300

(ii) Working Capital (for 2 months) 509640

Total 5395940

Financial Analysis

Cost of Production (per year) (In Rs.)

Recurring Expenditure 3057840

Depreciation on Building @ 5 % 220000

Depreciation on Machinery and Equipments @ 10% 33300

Depreciation on Office Furniture @ 20% 16000

Interest on total capital investment @12% 647513

Total 3974653

Turn-over (per annum)

Items Qty. Rate (Rs.) Total (In

Rs.)

Stainless Steel Watch Straps Nos. each 60000 78 4680000

Sale of Scrap 4 MT 24000 96000

Total 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 (In Rs.)

Depreciation on Building @ 5 % 220000

Depreciation on Machinery and Equipments @ 10% 33300

Depreciation on Office Furniture @ 20% 16000

Interest on total capital investment @12% 647513

40% of Salary and Wages 450912

40% of other contingent expenses 139200

Total 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, Sector–24,

Faridabad-121001 (Haryana)

M/s. Gurusharan Industries

920, New Colony,

Opp. Railway Station (Old),

Faridabad–121001 (Haryana).

M/s. Lefoot Machines Pvt. Ltd.

110 (N.P.), SIDCO Industrial

Estate, Ambattur, Chennai - 98.

M/s. Imperial Products of India

414–A, 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.