ALUMINIUM CIRCLES FROM SCRAP (ALUMINIUM CASTING AND ROLLING)

A.

INTRODUCTION

Aluminium is a versatile metal which finds major applications in almost all areas such as building construction, household utensils, industrial products, general engineering, electrical engineering etc. It has light weight, high strength to weight ratio, corrosion resistance, electrical and thermal conductivity and no toxicity. The aluminium circles manufactured out of aluminium scrap by way of casting and rolling has good demand from aluminum vessel manufacturers and other aluminium can manufacturers and other users. Vessels are widely used by common population in India. With the growth of population in the country the usage of Aluminium vessels is increasing. Aluminium is fast replacing stainless steel, bronze, brass, etc. It is strong, elegant, durable and nonrustic in nature.

The Aluminium vessels are cheaper compared to stainless steel

vessels and in country where people with low and middle income are more, the consumption of aluminium vessels are increasing. The aluminium vessels are also replaced frequently at cheaper cost.

B.

PRODUCT USES AND SPECIFICATIONS

The products proposed to be manufactured are Aluminum circles of size Dia 5” to 18’ with thicknesses ranging from 0.9 mm to 2mm which are most popular sizes. Aluminium circles are used to manufacture aluminium vessels, utensils, packing cans, and other industrial products.

C. MARKET POTENTIAL The number of lower-middle income groups to high income groups in the country has been increasing over a period of time. By 2006-07 it is estimated that the lower income group who are having a present income of Rs.22550 and below per annum will come down to 20% of the total households in India.

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The metal has a long working life due to its propensity for recycling. Recycled metal requires significantly less amounts of energy for manufacturing of primary aluminium. Just to put things in perspective, the recycling of aluminium scrap requires 5% of the energy required for primary smelting, which is astoundingly lower, considering that power is such a high cost component. After a 3% growth production growth witnessed globally, growth has continued in the range of 3%-4% in 2003. In 2002, global aluminium consumption showed a sharp growth rate of over 5%, which was primarily a factor of the Chinese demand for the metal. On the domestic front, a fall of about 1% was registered in production in FY02. However, the consumption improved by 4%-5%.

With the Government focusing

towards attaining GDP growth rates above 8%, the key consuming industries are likely to lead the way, which could positively impact aluminium consumption. Domestic demand is estimated to grow by 6% - 8% YoY. The improvement in the economy in FY03 had its positive impact on the aluminium industry, which can be gauged from the fact that production increased by 7% in FY03, while the consumption registered a growth of 5%. During FY03, the Index of Industrial Production (IIP) grew by 5.8%, which was a strong improvement over FY02' s 2.6% growth. Coming into FY04, IIP registered a growth of 5.3% in 1QFY04 as compared to 4.3% in the corresponding period last year. The domestic demand in the current fiscal is expected to be remain firm.

D.

TECHNICAL ASPECTS

1.

Installed Capacity

The installed capacity of the unit is 300 Tonnes of aluminium circles per annum on single shift basis,8 hours per day, for 300 days.

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2.

Plant and Machinery

The following items of equipment are required. Machine name

Quantity Value (Nos.) (Rs.lakhs) Oil fired aluminum melting Furnace for batch capacity of 1 0.80 170 kgs suitable for 26” dia C.I Pan Pumping ,Heating and Filtering unit consisting of Oil pre1 0.45 heater, Gear pump, Electric motor with valves fittings Centrifugal air blower 1 0.60 Aluminum cold rolling machine complete unit of 14x 36 with 1 7.50 steel housing high carbon rolls, clutch system, Closed pinion box, Double reduction gears, Gunmetal bearing Fly wheel base plate etc Oil fired aluminum sheet annealing furnace with refractory 1 2.60 materials plates channels, air and oil pipelines Miscellaneous items like Hand operated circle cutting 2.60 machine, Power circle cutting machine, Shearing machine, C.I moulding plate, C.I.Pan spoons, Holding bars, Chain Block 3 Tonne capacity Miscellaneous Tools etc 0.45 Total 15.00 3.

Manufacturing Process

The process of manufacturing aluminium from the scrap involves the following sequence of operations Melting of aluminium scrap along with additives in oil fired furnace and removal of slag I Pouring into slab moulds I Taking into Rolling Machines I Annealing I Rolling to required thickness I Circle cutting (circles of desired sizes) 4. Raw Material The main raw material required is Aluminium Scrap which is available from aluminium scrap dealers. The consumables such as alloys and additives for casting are also available from dealers.

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5.

Land & Building

A rented place with 5000 sqft. area is required.

The monthly rent is estimated at

Rs.25,000 and also an advance of Rs.250000. 6.

Utilities

Power: The total power requirement of the unit will be 70 HP Water: Water is required only for human consumption. Man power: Category

Monthly Total salary Salary Manager 1 7000 7000 Supervisors 2 5000 10000 Skilled 8 3000 24000 Unskilled 8 2000 16000 Assistant 3 3000 9000 Security 2 2000 4000 Total 70000 Add 20%benefits 14000 Total 84000 Annually Rs10.08 lakhs 7.

Nos

Implementation Schedule

If financing arrangement is made available the project can be implemented with in one month’s period. 8.

ASSUMPTIONS

Installed capacity per annum Capacity utilization-Year -1 Year-2 Year-3 Selling price per unit

Aluminium Circles-300 MT 60% 70% 80% Aluminium Circles-Rs.115 000/MT

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Material cost at 100% Aluminium Scrap Alloys & other additives

Qty(incldg. wastage) 330 Mt Total

Rate/MT Rs.76000 Rs.10000

Consumables per annum-at 100% (Rs. Lakhs) Power and Fuel-100% (Rs.lakhs) Wages & salaries -100% (Rs.lakhs) Repairs & Maintenance- p.m. Depreciation General & administration Expenses per month Selling expenses Interest on term loan and Working capital finance Income tax provision

LIST OF MACHINERY SUPPLIERS 1.

T.K.Industries 26, Hoodwharf (Walltax Road) Chennai-600 079.

2.

P.Gopal Chettiar Rolling Works No.1033 T.H.Road Chennai-600 019

LIST OF RAW MATERIAL SUPPLIERS General Scrap Merchants, available in all towns 1.

Badusha Enterprises 10/10 Chakrapani Road Chennai-600 032

2.

KOP Enterprises 10/10 A Chakrapani Street Chennai-600 032

3.

Mangal Metals-Kapoor metals 9.Ponnapan Lane Chennai-600 003

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Value (Rs.lakhs) 250.80 30.00 280.80 Rs.1.20 lakhs Rs.12.78 lakhs Rs.10.08 lakhs Rs.2000/Straight Line Method Rs.50000/3% on Sales 14% p.a. 36% on profit

1. COST OF PROJECT [Rs.lakhs] Land & Building (Advance) Plant & Machinery Other Misc. assets Pre-Operative expenses Margin for WC

2.50 15.00 1.00 1.00 5.00 24.50

2. MEANS OF FINANCE Capital Term Loan

13.50 11.00 24.50

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3. COST OF PRODUCTION & PROFITABILITY STATEMENTS [Rs.lakhs] Years 1 2 3 Installed Capacity p.a.(MT) Utilisation Production/Sales (MT) Selling Price/MT (in Rupee)

300 60% 180

300 70% 210

300 80% 240

115,000 per MT

Sales Value

207.00

241.50

276.00

Raw Materials Consumables Power Wages & Salaries Repairs & Maintenance Depreciation Cost of Production

168.48 0.72 7.67 10.08 0.24 1.70 188.89

196.56 0.84 8.95 10.58 0.25 1.70 218.88

224.64 0.96 10.23 11.11 0.26 1.70 248.90

Admin, & General expenses Selling expenses Interest on Term Loan Interest on Working Capital Total

6.00 6.21 1.54 2.61 205.25

6.30 7.25 1.35 2.61 236.39

6.62 8.28 0.96 2.61 267.37

Profit Before Tax Provision for tax Profit After Tax

1.75 0.62 1.13

5.11 1.82 3.29

8.63 3.08 5.55

Add: Depreciation Cash Accruals

1.70 2.83

1.70 4.99

1.70 7.25

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4. WORKING CAPITAL: Months Consumption

Values

%

0.75 1.00 0.25 0.50 1.00

10.53 0.06 3.94 8.63 0.50 23.66

25% 25% 25% 10% 100%

Raw Materials Consumables Finished goods Debtors Expenses

[Rs.lakhs] Margin Bank Amount Finance 2.63 0.02 0.99 0.86 0.50 5.00

7.90 0.04 2.95 7.77 0.00 18.66

5. PROFITABILITY RATIOS BASED ON 80% UTILISATION Profit after Tax Sales

5.55 276.00

2%

Profit before Interest and Tax Total Investment

12.20 43.16

28%

Profit after Tax Promoters'Capital

5.55 13.50

41%

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6. BREAK EVEN LEVEL Fixed Cost (FC): [Rs.lakhs] 11.11 0.26 1.70 6.62 0.96 20.65

Wages & Salaries Repairs & Maintenance Depreciation Admin. & General expenses Interest on TL

Profit Before Tax (P) BEL =

8.63

FC x 100 FC +P

20.65 29.28

x

80 100

x 100

56% of installed capacity

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