PROJECT PROFILE

ON
STEEL FORGING
PRODUCT : STREEL FORGING

PRODUCT CODE : --

ASIC CODE: --

PRODUCTION CAPACITY : Quantity: 684 MT

Value: Rs. 684 MT

QUALITY & STANDARDS : AS PER ISI Standards

MONTH & YEAR OF June-2021

PREPARATION :
PREPARED BY : MSME-Development Institute,
Ministry of MSME, Govt. of India,
65/1, GST Road, Guindy,
Chennai -600032
044-22501011/12/13
Email: [email protected]
www.msmedi-chennai.gov.in
 STEEL FORGING
INTRODUCTION
Forging is a cost-effective way to produce net shape components. Iron forging is the
process of heating iron block in the form of rod, round, [small ingot/billets] and then
hammering or pressing them into the desired shapes.
MARKET POTENTIAL
Forged parts vary in size, shape and sophistication. There are many small forged
steel components of close tolerance and precision used in commercial airplanes, space
shuttle, automotive and automotive machines. The Industries that tend to be the largest
buyers of forgings include: aerospace, defence and automotive. Throughout the 1980s and
1990s, the forging industry underwent a declining trend due to over capacity and
competition from world markets. Between 1995 and 2000, this industry had a fairly good
time, some units showing increasing trends in production and sales.
The forging components and parts are superior to those manufactured by any other
metal process. That is why forgings are used when reliability, light weight, high strength and
human safety are prime considering factors. The steel forgings become indispensable in
many applications. Therefore, there is a good scope for steel forging units.
BASIS AND PRESUMPTIONS
1. The scheme has been prepared on the basis of 75% efficiency on single shift
considering 25 working days in a month.
2. The rate of interest in the scheme has been worked out on the basis of 14% on an
average, however this figure is likely to vary depending on the financial outlay of the
project as well as location of the unit.
3. The cost of machinery and equipment as indicated is approximate ruling locally at
the time of preparation of the scheme.
4. The rates quoted in respect of salaries and wages for workers and others are the
minimum rates in the state/neighbouring states.
5. Margin money required is minimum 25% of the projected investment.
IMPLEMENTATION SCHEDULE
Project implementation will take a period of 5 ½ months from the date of approval
of the scheme. Break-up of time required in each activity is shown below

Sl.No Activity Period

1. Preparation of the Project Report:
(a) Calling quotations 1 month
(b) Preparation of report 2 weeks
2. Provisional registrations 2 weeks
3. Financial arrangement 3 months
4. Purchase and Procurement of machinery and equipment 3 months
5. Electrification 1 month
 6. Recruitment of Staff and Workers 1 month
7. N.O.C. from Pollution Control Board 2 months

TECHNICAL ASPECTS
Process of Manufacture As per the customers specifications, steel rods of different
sizes are cut to the required length for forging in power shearing machine/hacksaw
machine. The cut pieces are heated in the heating furnace to forging temperature. The hot
pieces removed from the furnaces are forged in the power hammers/presses using forging
dies. The forged components are then trimmed in the trimming press/ trimming hammer to
get the exact size of the component. After inspection, the components are shot blasted and
cleaned/fettled in the fettling shop. The good components without any defects are
despatched as per customer requirements.
QUALITY CONTROL AND STANDARDS
It has become essential these days that the energy conservation efforts are
strengthened substantially to reduce the cost of production. The potential for conservation
however, is much large in the forging industry and hence all efforts need to be made to
realise it to the extent possible.
The energy efficiency can be achieved by considering the following:
1) Reduction in heating cycles.
2) Energy efficient gas fuelled burners for furnaces.
3) Fuel/combustion system optimization.
4) Advanced cogeneration/waste heat utilization system.
5) Induction heating system with reshapable coil.
6) Electrification with energy saving motors and lights
7) Periodic energy conservation audits
The energy audit is an integral part of energy conservation project and is the key to a
systematic approach for achieving greater conservation of energy.
Various factors which affect fuel economy in industrial furnaces in the forging
industry are explained below:
Complete combustion with minimum leakage and proper distribution of the flame.
Further operating at the desired temperature, reducing heat losses from openings,
minimising wall losses and waste heat recovery from fuel gases will increase furnace
efficiency.
So the efficiency of a furnace will depend on how efficient the combustion system is
and secondly, how best the generated heat is utilised. Burner is very important and it has a
main role. So standard and good quality burners should be used for better conservation of
oil fuel.
POLLUTION CONTROL
Forging industry has a share in the present environmental degradation. So it requires
NOC from Pollution Control Board of the State. The pollution control machinery and
equipment costs are too exorbitant for the small units. Forging industry depending on the
character of the production, is a great source of heat, noxious gases, dust and noise. It also
produces a large quantity of wastes such as irreclaimable ashes and scales. All these
elements have individual contributory effect on the environment degradation and causes
unhealthy and unsafe conditions within the unit. These aspects play a significant role in
reducing the proportions of pollutants and thereby reduce the magnitude of environmental
degradation.
In order to control pollution, various legislation and acts have been passed but as per
information available, no minimum national standards have been devised for the Forging
Units. There are mainly two methods for control of pollution in a small industrial unit:

1. By exploiting the meteorological and topographical conditions.

2. By using various equipment for cleaning and dispersion of forging emissions.
For a small unit, the exploitation of natural draughts and climatic conditions are the
best and cheapest methods for dispersion of chimney emissions. Use of equipment like gas
scrubbers, ventilation fans, washers, etc. require considerable capital investment and also
running expenses. On the other hand, use of high stack chimney and operating the unit at a
time of favourable natural draught through chimney, helps to successfully disperse the dust
and gases emitted from the unit at zero or negligible cost. Proper treatment and handling of
the raw material also reduces the emission contents, particularly dust. Use of simple
measures like removal of dust from the furnace charge, use of oil of proper strength with
appropriate air blast will also help to a great extent.
Again use of simple devices like increased chimney height for the furnace, allowing
proper space beyond the furnace stack and the pollution of the neighbourhood can be
reduced by providing a fall-out area for the dust, ash etc. within the factory premises itself.
Use of sophisticated pollution control measures are neither feasible nor viable for
small units.
FINANCIAL ASPECTS
A. Fixed Capital
(i) Land and Building

Sl.No. Description Amount in INR

1. Land and Builtup area including workshop, office, stores 30,000
etc. Total covered area 300sq.mt @ Rs. 100/- per Sq. Mtr
on rent with sufficient open space for storing of raw
materials and creating greeneries for pollution abatement
Total 30,000
(ii) Machinery and Equipment

Sl. Description Qty Rate in INR Amount in

No INR
1 Centre lathe heavy duty with 3 HP motor 1 2,00,000 2,00,000
and accessories 12" centre height and 6 feet
length
2 Double ended pedestal Grinder 2 HP motor 1 30,000 30,000
capacity 8" dia
3 High speed shaping machine stock 630 mm 3 1 1,50,000 1,50,000
HP motor
4 Normalising furnace electrically operated 1 5,00,000 5,00,000
1500 mm×600mm
5 Oil fired pre-heating furnace with oil burners 1 5,00,000 5,00,000
and matching capacity blowers, oil
preheaters, oil service tank valves, strainers
and pipe lines alongwith other accessories
etc.
6 Pillar type drill machine 1" cap, 1 HP motor 1 80,000 80,000
7 Platform type weighing machine 500 kg cap. 1 20,000 20,000
8 Pneumatic power hammer capacity 500 kg 1 10,00,000 10,00,000
with 33 HP motor and accessories
9 Power hacksaw with 1 HP motor 1 50,000 50,000
10 Rockwell hardness tester 1 90,000 90,000
11 Self-contained friction drop hammer cap. 1 10,00,000 10,00,000
500 kgs with 25 HP motor and accessories
12 Shot blasting chambers with 7.5 HP motor 1 7,00,000 7,00,000
13 Tools, Dies and Equipment LS 5,00,000 5,00,000
14 Trimming power press 60 ton cap with 5 HP 3,00,000 3,00,000
motor and accessories
15 Office furniture and equipment Ls 2,00,000 2,00,000
Pre-operative expenses LS 2,00,000 2,00,000
Installation and Electrification LS 2,00,000 2,00,000
Total 57,20,000 57,20,000

B. Working Capital (per month)

(i) Raw Material (per month)

Sl. Description Qty Rate in INR Amount in INR

No
1 Forging quality steel ingots/ rod 60 MT 40,000 24,00,000
conforming to customers specifications
2 Lubricating oil, cotton waste, packing LS 20,000
material
Total 24,20,000
(ii) Salaries and Wages (per month)

Sl.No Designation No. Salary Amount in INR

1 Works Manager/ Metallurgist 1 20,000 20,000
2 Accountant/Stores In charge 1 15,000 15,000
3 Supervisor 1 15,000 15,000
4 Clerk–cum–Typist 1 12,000 12,000
5 Skilled Workers 10 15,000 1,50,000
6 Lab Technician 2 12,000 24,000
7 Unskilled Workers 10 10,000 1,00,000
8 Helper/Watchmen 4 8,000 32,000
Total 2,78,000
Perquisites @ 15% 41,700
Total 3,19,700
~ 3,20,000

(iii) Utilities (per month)

Sl.No Description Amount in INR

1 Electric Power(4500 KWH) @ Rs 6.5 29,250
2 Water 5,000
Total 34250
~35,000

(iv) Other Contingent Expenses (per month)

Sl.No Description Amount in INR

1 Rent 30,000
2 Cartage/Freight 10,000
3 Die steels, MS plates, etc. 90,000
4 Other consumables 20,000
5 Publicity/advertisement 10,000
6 Repair and Maintenance 15,000
7 Telephone & internet 2000
Total 1,77,000

(v) Working Capital (per month)

Rs. 24,20,000+3,20,000+35,000+1,77,000 = Rs. 29,52,000
(vi) Working Capital for 3 Months = Rs. 29,52,000× 3 = Rs. 88,56,000
C. Total Capital Investment
Fixed Capital Rs. 57,20,000
Working capital for 3 months Rs. 88,56,000
Total Rs. 1,45,76,000
FINANCIAL ANALYSIS
(1) Cost of Production (per annum)

Sl.No Description Amount in INR

1 Recurring Expenditure 3,54,24,000
2 Depreciation on Furnace @25% 2,50,000
3 Depreciation on Machinery and Equipment @ 10% 3,62,000
4 Depreciation on Office furniture @ 20% 40,000
5 Depreciation on Tools @ 25% 1,25,000
6 Interest on capital investment @ 15% 21,86,400
Total 3,83,87,400

(2) Sales (per annum) (Rs.)

By sale of steel forgings 684 MT per annum @ Rs. 75,000/MT 5,13,00,000
By sale of scrap 10 tonnes @ Rs. 20,000/ tonne 2,00,000
Total 684 MT
(3) Profit (per annum) (Rs.)
Sales 5,15,00,000
Cost of Production 3,83,87,400
Total 1,31,12,600

ADDRESSES OF MACHINERY AND EQUIPMENT SUPPLIERS

Forging and H.T. Furnaces
(i) M/s. WesmanEngg. Co. P. Ltd. 7 - Ganesh Chandra Avenue, Kolkata - 700 013.
(ii) M/s. Wester Works Engg. Ltd. 5-D, Valcan Insurance Building, Veer Nariman
Point, Mumbai - 400 020.
Testing Machinery and Equipments
(i) M/s. Fuel Instrument and Engg. P. Ltd. Ichalkaranji, Maharashtra.
(ii) M/s. Inspection Instruments Corporation 7 - Sheriff Dovji Street, Zakaria Building,
Mumbai - 400 003.
Name of Oil Supplier
(i) M/s. Indian Oil Corporation Indian Oil Bhawan, New Delhi - 110 001.
(ii) M/s. Hindustan Petroleum Ltd. UCO Bank Building, Parliament Street, New Delhi
- 110 001.