PROJECT REPORT

OF

WELDING & FABRICATION

Prepared by:

THE NATIONAL INSTITUTE FOR ENTREPRENEURSHIP AND SMALL

BUSINESS DEVELOPMENT (NIESBUD)
Head Office : A- 23, sector 62 , Noida -201309 (U.P)
Telefax: 0120-4017039 , www.niesbud.nic.in
Regional Office: NSTI Campus, Green Park Colony, Niranjanpur
PO: Majra, Dehradun (Uttarakhand)-248171
Telefax: 0120-4017039
www.niesbud.nic.in
 PROJECT HIGHLIGHTS

NAME OF PROPRIETOR : XXX

ADDRESS OF PROPRIETOR : XXX

CONSTITUTION : PROPRIETORSHIP

CATEGORY OF UNIT : SMALL SCALE

FATHER/HUSBAND NAME : XXX

DATE OF BIRTH : XXX
CATEGORY OF THE PROPRIETOR : XXX
QUALIFICATION : XXX
LOCATION OF UNIT : XXX

(A) TOTAL COST OF PROJECT : Rs.22,00,000.00

(1) Fixed Capital Rs.16,00,000.00
(2) Working Capital Limit Rs. 6,00,000.00

(B) MEANS OF FINANCE : Rs. 22,00,000.00

(1) Term Loan for Machinery Rs. 14,90,000.00

(2) Working Capital Limit Rs. 6,00,000.00
(3) Promoter’s Contribution Rs. 1,10,000.00
SUBSIDY UNDER PMEGP : Rs. 7,70,000.00
EMPLOYMENT POTENTIAL : 16

NORMAL WORKING HOUR : 8 HOUR

INTRODUCTION:-
The unit is a proposed micro enterprise propose to manufacture steel fabricated
furniture which are required both for domestic and commercial establishments. With
the growth of industrial, commercial and household activities the demand of office
automation, equipments and steel furniture has increased considerably. Wooden
furniture after some period is worn out due to defects in wood quality and normal
wear and tear. Due to elegant appearance, durability and innovative designs, steel
furniture is becoming popular in modern society. Steel furniture is preferred over
other kinds of furniture due to its durability, fold ability (in many cases) and easy
transportability. These items find their extensive use in industrial, commercial and
household activities. 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. Fabrications of steel related items are well established business and no
sophisticated know-how is required. though a number of units are carrying out the
above activities, still there exists a gap in the demand supply curve.

PROMOTER & MANAGEMENT:-

The promoter is reported to have good financial standing presently. The Promoters is
actively associated with the implementation of the project. Promoter is over all in
charge of the working of the unit.
MARKET AND DEMAND:-
The main Raw materials & consumables required for the unit are stainless steel
square and round Pipes of various sizes, stainless steel sheets, welding electrodes,
cutting blades, screws; cutting ,Fluid, cotton waste etc. Are available in the market
and the demand of the fabricated items are much in the market.

MAJOR BENEFITS OF THE PROJECT:-

I. Easy availability of material.
II. Job opportunity to local people.
FURNITURE, FIXTURES ETC.: -
The total estimated cost of required Furniture & Fixtures include Electricity Fittings
would be Rs.- 20,000/-.
PREOPERATIVE EXPENSES: -
The total estimated cost of required Preoperative Expenses would be Rs.- 45,000/-.
PLANT, MACHINERY AND EQUIPMENTS: -
Plant, Machinery, Tools, Shed and other equipment’s required by the proposed unit
are available indigenously. The various items required for installation of Rs.
15,45,000/- details as per quotation attached herewith.
QUALITY CONTROL: -
The concern proposed to set up above unit for which provision testing equipment
have been proposed in the project report.
TECHNICAL KNOW- HOW:-
The process for sale of products is simple and no sophisticated technology is involved.
There is no requirement of any type of technical knowhow.

TRANSPORTATION: -
The proposed location is connected by road and near to the city. Thus the unit is not
likely to face difficulty on account of transportation.

UTILITIES: -

a) Power:
The total connected load for the smooth operations of the unit has been
estimated and Electricity connection will be obtained as per required load
including lighting load if required.

b) Water:
The water will be available. Necessary provision for storage of water and water
supply has been made in the project cost.

MANPOWER:-
The unit would require total manpower of 16 person of different category. The details
of salary/wages proposed to be paid together with annual Salary/wages bill is given in
separate annexure.
DEPRECIATION:-
The depreciation on fixed assets has been computed in annexure of this project
report in accordance with the admissibility of the same under the Income Tax Act,
1961.

TRAINING:-
Applicant has to complete two week EDP training specially designed for the purpose,
which will be organized by KVIC/KVIB/DIC or the institution organized by or under the
administration control of Minister of MSME or any other training centre of repute
before disbursement of loan by the bank. After the successfully completion of EDP
training arranged by the KVIC/KVIB/DIC, the beneficiary will deposit with the bank
finance to the beneficiary.
CAPITAL SUBSIDY UNDER PMEGP:-
Unit is eligible to get capital subsidy under Prime Minister Employment Generation
Programme 35% of the total cost of the project (expect cost of land). Total subsidy to
be received Rs. 7,70,000/-

TERM LOAN AND WORKING CAPITAL LOAN UNDER PRADHAN MANTRI ROJGAR
YOJNA (PMEGP)
The unit proposed to have Term loan UNDER PMEGP of Rs. 14,90,000/- & working
capital limit of Rs. 6,00,000/- Own contribution of unit will be Rs. 1,10,000/-, which is
five percent of total cost of project. The total project cost will be Rs.22,00,000/-.

LOAN REPAYMENT SCHDULE

TERM LOAN UNDER PMEGP:-

Total Term Loan : Rs. 14,90,000/-

Total Duration : 5 Years
From the next year
Each yearly instalment : Rs.2,98,000/-

Total instalments : Rs.2,98,000*5 = Rs. 14,90,000/-

Total Rs. 14,90,000/--

INTEREST COMPUTATION
Interest computation is given in Annexure 6.

PROJECTED INCOME/PROFITABILITY:

The projected Income & profitability statement has been shown in the attached profit
& loss account. Projected Balance sheet for the next five years is also enclosed as
here for the reference.

ECONOMIC VIABILITY:-

Based on the projections attached it is observed that sufficient revenue shall be

generated through operations served & it indicates the economic viability of the
proposal. Hence the project can be considered as economically favourable.

CONCLUSION:-

Based on the grounds discussed aforesaid it is concluded that project is economically

& feasibly viable and should be considered favourably.

GENERAL NOTE:-

All Thing Depicted Are Proposed Based On The Information Provided By The Applicant
We Shall Not Be Responsible For Any Financial MIS- Statements Or Non Proper Use Of
Funds By The Borrower.
 M/S Naresh Welding and Fabrication
Address: XXX
FINANCIAL ASPECTS OF THE PROJECT

A. FIXED CAPI TAL

I-Plant & Machineries:

S.No Particulars No. Rate (Rs.) Amount(Rs.)

1 Press Machine Shutter Patti 1 950000 950000
2 Steel Almira Press Machine 1 350000 350000
3 Welding Machine 1 45000 45000
4 Steel Rolling Machine 1 150000 150000
5 Accessories 100 40000 40000
TOTAL 1535000

II-Other Fixed Assets:

S.No Particulars Amount (Rs.)

1 Furniture for unit like racks, chair etc. 5000
Other equipment's like fan, racks for raw material & partition, electrification etc. 15000
TOTAL 20000

III-Preliminary & Pre-operative expenses:

S.No Particulars Amount (Rs.)

1 Transportation of Machinery / Equipments 40000
2 Miss. Expenses ( Electric fitting , Board etc) 5000
TOTAL 45000

TOTAL FIXED CAPI TAL

S.No Particulars Amount (Rs.)

1 Machinery and Equipments 1535000
2 Other Fixed Assets 20000
3 Preliminary and Pre Operative Expenses 45000
TOTAL 1600000
 B. WORKING CAPI TAL
I- Raw Material (Per Month):

S.No Particulars Qty. k g/ltr Rate (Rs.) Amount

1 Steel Rolled (50 Nos.) 5 7000 35000
2 Steel Rolled (60 Nos.) 5 7000 35000
3 Steel Rolled (80 Nos.) 10 6500 65000
4 MS Pipe Round 10 5500 55000
5 MS Pipe Square 10 5500 55000
6 Angle (40"X5") 2 2500 5000
7 Angle (40"X10") 2 2500 5000
8 Lock 100 200 20000
9 Main Lock 100 250 25000
10 Repeat Lock 100 500 50000
11 Shutter Lock 100 500 50000
TOTAL 400000

II- Man power (Per Month):

S.No Particulars Nos Rate Amount

1 Skill Manpower 5 15000 75000
2 Semi Skilled Manpower 6 10000 60000
3 Helper 5 5000 25000
TOTAL 160000

III- Utilities (Per Month):

S.No Particulars Amount (Rs.)

1 Elecricity (LS) 20000
2 Water (LS) 1000
TOTAL 21000

IV- Misc. or other expenses: (Per Month)

S.No Particulars Amount (Rs.)

1 Repair and Maintenance of Machines & Tools 10000
2 Misc. Expenses- Transport charges, Advertisement, Sales expenses and Insurance 9000
TOTAL 19000
 TOTAL WORKI NG CAPI TAL (Per Month)

Particulars Amount (Rs.)

S.No
1 Raw Material 400000
2 Manpower 160000
3 Utilities 21000
4 Misc. expenses 19000
TOTAL 600000

C-ANNUAL SALES REALISATION

S.No Particulars Amount (Rs.)

1 Amount per year may be realized 9000000

D-BREAK EVEN POI NT

(BASED ON FIRST YEAR OF OPERATION)

Amount (Rs.)
S.No FIXED COST
1 Interest on loan 159026
2 Depreciation 232000
3 Man power expenses (30%) 576000
4 Operating expenses (30%) 1584000
Total 2551026
BEP = Fixed Cost * 100 255102646
75.58
Fixed Cost + Net Profit 3375100
 M/S XXX
Address: XXX
Annexture-1
PROJECTED BALANCE SHEET
(Rs. In '000)
Operating Years
PAR TICU L AR S st nd
1 2 3rd 4th 5th
A-S O URC E S:-

I ) CAPITAL / OWN CONTRI BUTION 110 934 1888 2945 4102

ADD:- P ROFIT 824 953 1058 1156 1247
TOTAL 934 1888 2945 4102 5349

II) LOAN FUNDS

SECURED LOANS
Term Loan from Bank 1192 894 596 298 0
C/C Limit from Bank 600 600 600 600 600

T O T A L (I+II) 2726 3382 4141 5000 5949

B- APPLI CATI ON:-

I) FIXED ASS ETS

GROSS BLOCK 1555 1555 1555 1555 1555
LESS: ACC.DEPRICIA TION 232 430 598 740 861
T OTA L 1323 1125 957 815 694

II) CURRENT ASS ETS LOANS & ADVANCES

PRELIMINE RY E XPENSES 45 45 45 45 45
INVE NTORIES 400 420 440 460 480
SUNDERY RECE IVABLES 750 788 825 863 900
CASH & BANK BALANCES 705 1560 2489 3493 4570
LOANS & ADVANCES 200 200 200 200 200
T OTA L 2100 3012 3999 5061 6195

III) CURRENT LI ABILITI ES & PROVISIONS

SUNDERY CRE DITOR 400 420 440 460 480
PROV ISION FOR TA XA TAION 60 86 114 143 175
E XPENSES PAYABLE 238 249 261 273 285
T OTA L 697 756 815 876 940

IV) NET CUREENT ASS ETS (II-III) 1403 2257 3184 4185 5255

T OTA L 2726 3382 4141 5000 5949

Margin Money under PMEGP 770 770 770 - -

Note :-Above statement prepared & compiled by us as per the information provided by proprietor
 M/S XXX
Annexture-2
Address : XXX
PROJECTED COST OF PRODCUTION AND PROFITABILITY
(Rs. In '000)
Operating Years
Particulars
1st 2nd 3rd 4th 5th
Capacity Utilization 50% 55% 60% 65% 70%

A- INCOMES :

GROSS RECEIPTS 9000 9450 9900 10350 10800

CLSOING STOCK 400 420 440 460 480

TO TA L (A ) 9400 9870 10340 10810 11280

B- EXPENSES

OPENING STCOK 0 400 420 440 460

PURCHASES AND CONSUMPTION 5200 5040 5280 5520 5760

SAL ARY & WAGES 1920 2016 2112 2208 2304

UTILITIES EXPENSES 252 265 277 290 302

Total (B) 7372 7721 8089 8458 8826

C- GROSS PROFIT ( A-B ) 2028 2149 2251 2352 2454

AD MINISTR ATIVE COST 228 239 251 262 274

SELLING & DISTRIBUTION EXPENSES 450 473 495 518 540

DEPRICIATION 232 198 168 142 121

FINANCIAL CHARGES
Interest on Term Loan @11.75% 159 124 89 54 19
Interest on CC Limit @10% 60 60 60 60 60
Bank Charges 15 16 17 17 18
D-TOTAL 1144 1110 1079 1053 1032

E- PROFIT BEFORE TAX ( C - D ) 884 1040 1172 1299 1422

F- PROVISION FOR TAXATION 60 86 114 143 175

G- NET PROFIT AFTER TAX 824 953 1058 1156 1247

Note :-Above statement prepared & compiled by us as per the information provided by proprietor
 M/S XXX
Address: XXX
Annexture-3
PROJECTED CASH FLOW STATEMENT
(Rs. In '000)
Operating Years
PARTICULA RS
1st 2nd 3rd 4th 5th
A-SOURCE OF FUND

1. Increase in Capital 110 - - - -

2. Increase in Term Loan 1490 - - - -
3. Increase in C/C Limit 600 - - - -
4. Profit / (Loss) 824 953 1058 1156 1247
5. Depreciation added back 232 198 168 142 121
6. Increase in Creditors 697 - - - -

TOTAL ( A ) 3953 1151 1226 1298 1368

B-DISPOSAL OF FUND

I) FIXED ASSETS PURCHASED

1. Furniture & Fixtures 20 - - - -
2. Plant & Machinery 1535 - - - -

II) CURRENT ASS ET S

3. Increase in Stock 400 20 20 20 20
4. Increase in Debtors 750 38 38 38 38
5. Increase in Preliminary Exp. 45
6. Increase in Loans & Advances 200 - - - -

III) O THERS
7. Payment of Term Loan 298 298 298 298 298
8. Decrease in Creditors 0 -58 -59 (61) (64)

TOTAL ( B ) 3248 297 296 294 292

Opening Cash & Bank Balance 0 705 1560 2489 3493

Surplus/(Deficit) ( A - B ) 705 854 930 1004 1077
Closing Cash & Bank Balance 705 1560 2489 3493 4570

Note :-Above statement prepared & compiled by us as per the information provided by proprietor
 M/S XXX
Address : XXX
Annexture-4
COMPUTATION OF DEPRECIATION

Depreciation under WDV Method: (Rs. in '000')

Furniture & Plant &
Particulars Total
Fixture Machinery
Rate as per I.Tax Act 10% 15%
Value of Assets at beginning 20 1535 1555
1st year Dep. 2 230 232
Balance at the end of1st year 18 1305 1323
2nd year Dep. 2 196 198
Balance at the end of2nd year 16 1109 1125
3rd year Dep. 2 166 168
balance at the end of 3rd year 14 943 957
4th year Dep. 1 141 142
balance at the end of 4th year 13 802 815
5th year Dep. 1 120 121
 M/S XXX
Address : XXX
Annexture-5
PROJECT ED FINANCIAL RATIOS
(Rs. In '000)
Operating Years
P AR TIC UL A RS
1st 2nd 3rd 4th 5th

1. CURRENT RATIO
CURRENT ASSETS 2100 3012 3999 5061 6195
CURRENT LIABILITIES 1297 1356 1415 1476 1540

= 1.62 2.22 2.83 3.43 4.02

TIME S TIME S TIME S TIME S TIME S

GROSS PROFIT 2028 2149 2251 2352 2454

2. GROSS PROFIT RATIO
SALES 9000 9450 9900 10350 10800

= 22.53 % 22.74 % 22.74 % 22.73 % 22.72 %

NET PROFIT 884 1040 1172 1299 1422

3. NET PROFIT RATIO
SALES 9000 9450 9900 10350 10800

= 9.82% 11.00 % 11.83 % 12.55 % 13.17 %

PAT+DEP.+INTT. ON TERM LOAN 1275 1362 1429 1495 1562

4. DSCR
INTEREST+LOAN INSTAL MEN T 457 422 387 352 163

= 2.79 3.23 3.69 4.25 9.59

TIME S TIME S TIME S TIME S TIME S

PAT+DEP.+INTT. 1335 1422 1489 1555 1622

5. INTT. COVERAGE R ATIO
INTEREST 219 184 149 114 79

= 6.10 7.73 9.99 13.64 20.54

TIME S TIME S TIME S TIME S TIME S
 M/S XXX
Address : XXX
Loan Amount Rs. 1490000 Annexture-6
Rate of Interest 11.75%
Tenure 5 Years (60 Months) (Rs. In '000)
Sl.No. Intalment Interst Principal Balance Loan

1st Year 457 159 298 1192

2nd Year 422 124 298 894

3rd Year 387 89 298 596

4th Year 352 54 298 298

5th Year 317 19 298 0

 DISCLAIMER

This project report will give an idea and guidance to budding and existing
entrepreneurs on how to prepare the project Report. They will come to know about
the essential elements of project report which must be kept in mind while formulating
business plan. Every earnest-effort has been made in collecting the data and
information available on the subject from different offline and online sources. This
report (including any enclosures and attachments) has been prepared solely for the
purpose for which it is provided.

NIESBUD suggest entrepreneurs to survey the market properly to find the actual
cost of fixed assets and working capital. The actual cost of the project or industry will
vary according to different elements like location, local regulation, financial
requirements of industry, capacity, type of industry, cost of resources and other
direct and indirect cost related to the project.

NIESBUD hereby disclaims any and all liability to any party for any direct, indirect,
implied, punitive, special, incidental or other consequential damages arising directly
or indirectly from any use of the Project Report Content which is provided “as is” and
“as available” basis without any warranties of any kind.

In no event shall NIESBUD be liable for any damages whatsoever resulting from the
use or inability to use the project report content.