Heat Treatment Servicing Unit

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Product Code 344020002
Quality and Standards IS EN and I.S. (as per the metal Specification)
Uploaded on February 2007


Heat Treatment is a term used for hardening and tempering of Metal components/Mechanical products of Ferrous and Non-Ferrous origin to increase the life or mechanical properties. Steel in general, supplied in annealed conditions having hardness between 140 to 280 BHN depending on the percentage of alloying elements which facilitate further mechanical operations. 15%–20% of the steel produced is tool steel which will be the raw material for manufacturing of gears, fixtures, shafts, cutting tools, blades and many more products. If these products are used in soft conditions, it will be worn out in a short period. Hence such products are to be hardened and tempered. Heat Treatment is a general term which consists of processes like Hardening, Tempering, Annealing and Case Hardening etc.

Market Potential

Demand in the market mainly arises from

  • Defence
  • Railways
  • Automobile
  • Ball & Roller Bearings
  • General Engineering
  • Fasteners and Hardware
  • Machine Tools.

The demand in the above areas again depends upon the primary market, i.e., replacement market and substitution market. Most of the general engineering units in SSI Sector offload the Heat Treatment jobs to servicing units because they may not have enough capital for an independent Heat Treatment section.

Basis and Presumptions

The profile is worked out on the basis of following presumptions

Working hours/shift 8 hrs/day
No. of shift/day Single
No. of working days/annum 300 days
Efficiency of the plant 75%
Time for achieving max. capacity Two years from the date of commencement of production
Labour charges As per the Minimum Wages Act of the State Govt.
Margin Money 25%
Rate of Interest 14% per annum
Pay back period 5 years
Land and Building On Rent
The cost of machinery and equipment is on the basis of prevailing market rates  
The selling rates are calculated 1% lower than the present market rates to facilitate competition and credit period.  

Implementation Schedule

The major activities and their implementation schedule are furnished below. The assessment of the time required for implementation of the project has been considered and counted from the date of sanction of the loan.


Period in Days

Preparation of scheme and SSI Provisional Registration 15 days
Financial arrangements 60 days
Procurement of M/c & Installation 60 days
Power and water connection 30 days
Infrastructure and communication 30 days

All these activities are to be carried out simultaneously. The commencement of production should be within 3 months.

Technical Aspects

Process of Manufacture

The Heat Treatment processes involve a series of operations, mainly

  • Hardening (which follows Tempering)
  • Annealing/Normalizing/Stress relieving
  • Carburising/Case Hardening

All Direct hardening materials are heated in the muffle furnace. The material is heated to the pre-determined temperature and the required soaking time is given. Then it is rapidly cooled in water, oil or air. Then it should be tempered at low temperature to remove the stresses developed inside.

Direct hardening and case hardening process can be carried out in salt bath furnace also which is more productive and with 100% prevention of oxidation. In this process, jobs are to be preheated compulsorily, as the jobs are put into the furnace at higher temperature. The hardening and tempering procedures are the same as mentioned earlier. The salt bath should have cynide salt of 18% to 20% concentration.

Quality Control and Standards

  • NDT Test for crack/flaw defects.
  • Microscopic test for structure.
  • Hardness Testing in RA, RB, RC and

BHN which are faster and sure for metal condition. Quality Standards conform to IS and EN Standards.

Production Capacity (per annum)


Value (In Rs.)

65 M.T. Rs.12,30,000
Motive Power 30 H.P. 22.5 kW

Pollution Control

The work shed should be well ventilated with exhaust fans. Disposable waste salt, acids etc. should be treated before disposed off. Smoke from the chimney can be controlled effectively by monitoring furnace oil flow by using LDO.

Energy Conservation

Waste gases from the salt bath can be routed to pre-heating chamber which is an option.

Financial Aspects

Fixed Capital

(i) Land and Building


(In Rs.)

Covered Area (for office, store, work place) @ Rs.25/sq. ft. 400sq.ft. 10,000
Total 10,000

(ii) Machinery and Equipment


Indigenous/ Imported


Rate(In Rs.)

Amount (In Rs.)

Electrical muffle furnace, 600×300×300 mm with automatic Temp. Control, panel board, max. temp. 1000O 24 KW Indigenous 1 No. 56,500 56,500
Air circulating Tempering furnace with temp control, panel board, Max.temp. 18 KW - do - 1 No. 1,11,000 1,11,000
Oil fired salt bath furnace 2 HP Motorised blower, 2800 RPM, Pot size 450 ×600 mm LAP-1 Burner, Temp. indicator, Max. temp. 1000ºC - do - 1 No. 2,08,000 2,08,000
Hardness testing m/c 150 kg. Load, reading of RA, RB and RC with 120Oiron ball and 2 & 5 mm dia steel ball indentors - do - 1 No. 21,000 21,000
Pre-heating chamber for salt bath furnace - do - 1 No. 65,000 65,000
Quenching tanks 1Mx0.75 Mx1 M - do - 4 Nos. 6,000 24,000
1 MT capacity chain pulley block with tripoy - do - 1 No. 8,000 8,000
Platform type trolleys - do - 2 Nos. 1,500 3,000
Hand tools - do - L.S. - 5,000
Power tools - do - L.S. - 10,000
Handling tools - do - L.S. - 5,000
Weighing M/c platform type 200 kg - do - 1 No. 8,000 8,000
Fire fighting equipment -do - L.S. - 6,000
Total       5,30,500
Office and workshop furniture and equipment       18,000
Erection and Electrification       30,000
Pre-operative cost, deposits, statutory formalities       25,000
Grand Total       6,03,500

Working Capital (per month)

(i) Raw Materials (per month)

One time raw materials such as Neutral salt, cyanide and quenching oils are required for initial filling.

Description of stores



Rate(In Rs.)

Amount(In Rs.)

Natural Salt Indigenous 100 kg 15/kg 1,500
Cyanide Salt -do- 150 kg 65/kg 9,750
Barium carbonate -do- 50 kg 12/kg 600
Quenching oil -do- 4 Barrel 8000 32,000
(one time investment) 43,850

(ii) Personnel

Administrative and Workshop


Manager 1 5,000 5,000
Supervisor 1 4,000 4,000
Clerk 2 2,000 4,000
Skilled Workers 2 2,500 5,000
Unskilled Workers 6 1,000 6,000
Watch & Ward 2 800 1,600
Total     25,600
Perquisites @ 15%     3,840
Total     29,440

(iii) Other Contingent Expenses (per month)


(In Rs.)

Rent 10,000
Stationery, Postage, Telephone 1,000
Electricity and Water 3,500
Transport and Conveyance 1,000
Maintenance and Repairs 500
Consumable Stores 1,000
Tax 250
Miscellaneous 1,000
Total 18,250

(iv) Working Capital (per month)


Amt.(In Rs.)

Raw materials (one time investment) 43,850
Salaries and Wages 29,440
Other Contingent Expenditure 18,250
Total 91,540

(v) Working Capital for 3 months)


Working Capital for 3 months = (91,540–43,850)×3+43,850
Other Contingent Expenditure = 1,86,920

Total Capital Investment

(i) Fixed Capital Rs. 6,03,500
(ii) Working capital (3 months) Rs. 1,86,920
Total Rs. 7,90,420
Say Rs. 8,00,000

Financial Analysis

Cost of Production (per year)

(In Rs.)

Recurring Expenses (91,540–43,850)×12+43,850 6,16,130
Depreciation on Machinery @ 10% 53,050
Depreciation on Office Equipment @20% 3,600
Interest on Capital @ 14% 1,12,000
Total 7,84,780
Say 7,85,000

Turnover (per year)

Activity Job

Qty./ Kg.

Rate (In Rs.)

Amount (In Rs.)

By executing direct hardening 15 MT 15 2,25,000
Case Hardening jobs 30 MT 22 6,60,000
Annealing/ Normalising 5 MT 15 75,000
Special Steels 15 MT 18 2,70,000
Total 12,30,000

Profitability (per annum)

  Rs. 12,30,000 – 7,85,000
  = Rs. 4,45,000

Net Profit Ratio

  Net Profit per year×100
  Sales per annum
  = 36.18%

Rate of Return

  Net Profit per year×100
  Total Capital Investment
  = 56%

Break-even Point

Fixed Cost (per annum)

(In Rs.)

Rent 1,20,000
Interest on Investment 1,12,000
Depreciation on machinery and Office Equipment 53,050
40% of Salaries/Wages 1,41,312
40% of other expenses excluding rent 39,600
Total 4,65,962
Say 4,66,000

B.E.P Fixed cost ×100
  Fixed cost + Net Profit
  = 51%

Addresses of Machinery Suppliers

  • M/s. Hindustan Furnaces Pvt. Ltd.
    Viyur, Thrissur-680 010
  • M/s. Amur Instrumentation
    Amala Nagar P.O.,
    Thrissur-680 550
  • M/s. High Temp. Furnaces Pvt. Ltd.
    1-C II Phase, Peenya I.A.,
    P. B. No. 5809
    Bangalore-560 058
  • M/s. Metatherm Furnaces Pvt. Ltd.
    W-91, MIDC, I.A., Belapur Road,
    Thana-400 701.
    For Testing M/C
  • M/s. Inspection Instruments Corpn.
    7, Sherif Douj Street,
    Zakaria Bldg.,
    Mumbai-400 003
  • M/s. Fuel Instrument and Engineers Pvt. Ltd.
  • M/s. Blue Steel Engineers Pvt.Ltd.
    Blue Steel House, D-12 MIDC,
    Marol Ambhri (East),
    Mumbai-400 073
  • M/s. Indian Oil Corporation
    For Quenching Oil, LDO and Furnace Oil
    9. Local Chemical Dealers
    For Sodium Cyanide Salt

For further information please contact

Information Manager
TIMEIS Project
E-mail: timeis@ficci.com