Heat Treatment Servicing Unit
| Product Code |
344020002 |
| Quality and Standards |
IS EN and I.S. (as per the metal Specification) |
| Uploaded on |
February 2007 |
Introduction
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.
Activity |
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)
Quantity |
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 |
Rent |
(In Rs.) |
| Covered Area (for office, store, work place) @ Rs.25/sq. ft. |
400sq.ft. |
10,000 |
| Total |
10,000 |
(ii) Machinery and Equipment
Description |
Indigenous/ Imported |
Quantity |
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 |
Indigenous |
Qty. |
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 |
Rs |
| 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) |
(Rs.) |
| 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 |
| |
4,45,000×100 |
| |
12,30,000 |
| |
= 36.18% |
Rate of Return
| |
Net Profit per year×100 |
| |
Total Capital Investment |
| |
4,45,000×100 |
| |
7,90,420 |
| |
= 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 |
| |
4,66,000×100 |
| |
4,66,000+4,45,000 |
| |
= 51% |
Addresses of Machinery Suppliers
- M/s. Hindustan Furnaces Pvt. Ltd.
Viyur, Thrissur-680 010
Kerala.
- M/s. Amur Instrumentation
Amala Nagar P.O.,
Thrissur-680 550
Kerala.
- 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.
Ichalkaranchi,
(Maharashtra)
- 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
