PROJECT PROFILE

PRODUCT: CRUSHED IRON ORE.

QUALITY STANDARD: IS:11348: IRON ORE PELLETS

IS: 11093: -DO- LUMPS FOR
DIRECTION PROCESS
IS: 11896: -DO- SP.GRAVITY
POROSITY
IS:11690: -DO- MOISTURE
CONTENT, ETC.

PRODUCTION
CAPACITY (PER ANNUM):

QUANTITY VALUE
SALEABLE IRON ORE PRODUCT: 10,000 MT RS.1,80,00,000

MONTH AND YEAR

OF PREPARATION: NOVEMBER- 2005

PREPARED BY:

SMALL INDUSTRIES SERVICE INSTITUTE

GOVT.OF INDIA, MINISTRY OF SSI
VIKAS SADAN, COLLEGE SQUARE
CUTTACK-753003, ORISSA

TEL. 2611329, 2611829

WEBSITE: www.sisiorissa.com
INTRODUCTION:

Orissa is rich in Iron Ore deposits. Particularly Keonjhar, Mayurbhanj

and North west districts are endowed with this mineral. After the recession
period of Iron and steel industry in the past several year again it has taken a
U-turn and many of the industries for the production of Sponge Iron unit is
coming up. Main cluster for Iron and Steel industry has come up in the Joda
- Barbil - Keonjhar belt. There is a good opportunity to set up an Iron ore
crushing plant for the sponge Iron plants. Sometimes mine owners are
unable to process the mineral as per the huge quantity need. Thus the
entrepreneur has proposed to set up for iron ore crushing unit at Barbil,
Keonjhar by taking leased land and mineral from the mine owner. The
similar process is already existing in that area in some other unit but rate of
production is quite less as per the quantity requirement.

MARKET POTENTIAL:

It has already been explained that after the good market demand of
Iron and steel industry potential for iron ore processing has grown up. 10-12
more small scale units of sponge iron plant is still to come to this district.
Thus entrepreneur has taken a logical step to the processing. Again the
entrepreneur has a good tie up with mine owner where regular supply of
minerals will be there. Since quality and quantity-wise iron ore is good
source for setting up of industry the unit seem to achieve good potential.

ENTREPRENEUR’S BACKGROUND:

The entrepreneur is having an established metallurgical unit and

activity on processing other minerals. It may be assumed that he will not
face much difficulty in marketing his product since his unit is supplying
other minerals to many mother plants. Entrepreneurs has the experience in
export field also. There is a good opportunity in exporting the product to
middle east and eastern countries also.

BASIS AND PRESUMPTION:

The production has been

calculated on the basis of
three shift of 8 hours each
and 300 working days.
 The full production capacity
presumed to be achieved
after one year of production.
Labour wages has been
considered keeping on
minimum wages Act.
The rate of interest on both
fixed and working capital is
considered @ 12%.
The operative period of the
unit has been considered as
10 years within which full
repayment of loan has to be
made.
The cost of machinery and
equipment can be
considered based on
prevailing market rates.

IMPLEMENTATION SCHEDULE:

1. Survey for collection of data in respect of demand

Raw materials including availability of power and water
Etc. 0-2nd month
2. Arrangement of margin money 2-3rd month
3. Preparation of project document and regn. 2-3rd month
4. Financial assistance 4-6th month
5. Selection of site and development of land 4-5th month
6. Make shift office 7th month
7. Clearance for pollution 3-6th month
8. Electricity, fuel and water tie up for availability 4-6th month
9. Construction of shed 7-8th month
10. Identification and selection of machines 5th month
11. Placement of orders for machine 6th month
12. Transportation and installation of machine and equipt. 6-9th month
13. Selection of raw material and placement of orders 8th month
14. Receipt of raw material 9-11th month
15. Trial production 12th month
TECHNICAL ASPECTS:

1. Process of Manufacture:

The process of manufacture of crushed stone is a very simple one and

does not involve any sophisticated technology. Only care has to be taken to
control dust and handling of huge raw materials.

The Iron ore lumps of different sizes fed into the jaw
crushers/granulators for size reduction. Depending on the desired output
sizes of the crushed stone sizes, the raw materials are processed through a
series of jaw crushers and finally passed through a rotary screen for
gradation. Material is handled through belt conveyor to the different places
of operation i.e. from jaw to rotary screen and rotary to storage yard. The
resulting graded iron ore is stored in different places as per market need.

2. Quality standards:

There is no Indian Standard Specification for the quality of the crushed stone
except the size gradation. Hence the product is sold as per customer’s
specification.

3. Production capacity (Per annum):

Quantity: 10,000 MT

Value: Rs.1,80,00,000/-

4. Power requirement: 90 H.P.

5. Pollution control needs:

During the processing of crushed stone lot of fine dust emerges out for
which necessary dust collection arrangement has to be made and workers
working in nearby have to be provided with dust masks.

6. Energy conservation needs:

Every care has to be taken in best and efficient utilisation of both the
man and machine hours avoiding wastage and held up of works.

FINANCIAL ASPECTS:
Fixed capital:
Land: 1 acre of leased land in Barbil, Keonjhar dist. 3,00,000
Building :
(a) Workers shed 500 sq.ft. 1,00,000
(b) Foundation for jaw crusher, rotary screen,
storage and other civil area 1,00,000
Rs.5,00,000

2. Machinery and equipment:

S.no. Item Qty. Value

1. Jaw crusher (30”x12”) plate with Motor 1 no. 5,00,000
cap. 45 HP
2. Jaw crusher (16”x9”) plate with motor 1 no. 4,00,000
cap. 35 HP
3. Rotary screen 14’ length 6 m/m ~ 12 1 no. 1,00,000
m/m product dust and oversize
4. Conveyors erection commissioning and 5 no. 2,00,000
motor connection etc.
5. Spare jigs, jaws, fixtures, screen frame, 1,00,000
conveyors,etc.
13,00,000

Power connection/Road development, etc.

NESCO deposit 1,00,000

Road/Electricity connection and mines lease deposit 1,00,000
2,00,000
Total Block capital:

i) Land/Building 5,00,000
ii) Machinery & equipment 13,00,000
iii) Power/utility/infrastructure 2,00,000
20,00,000

Recurring expr.
1. Manager/supervisor 1 no. 5,000
2. Mechanic/Fitter 1 no. 3,000
3. Skilled worker 3 nos. @ 2500 7,500
4. Contact labour for material 20 nos. @ 2000 40,000
handling
55,500/-

Raw materials (Per Month):

Iron ore of 50 ~ 100 m/m size lumps Rs.10,00,000/-

@ 50 tons per day 1250 tons per
month.
By purchasing @ 800/ton raw
material costing including
transportation

Utility and other expr.

1. Electricity (0.75x 90x 25x10x3) ≅ 50,000

2. Postage/stationery 1,000
3. Travel and transport 2,000
4. Repair/maintenance 2,000
5. Insurance 1,000
6. Other misc. exp. 4,000
60,000/-

Working capital requirement (P.M.):

Total recurring expr.

i) Staff and labour 55,500

ii) Raw material 10,00,000
iii) Utility and other expr. 60,000
11,15,500

Working capital for two months = 2x 11,15,500 = 22,31,000/-

Total Capital Investment:

Block capital 20,00,000

Working capital for two months 22,31,000
42,31,000
Means of finance:
Promoter’s contribution @ 25% (maximum) 10,00,000
Loan from FI/Bank 32,31,000
42,31,000

Annual Turnover:

By processing 15,000 MT Iron ore

per annum (1250x 12) production
(desired grade) will be 10,000 MT
only.
By selling this product @ Rs.1,80,00,000/-
Rs.1800/MT annual income will be

Cost of production (Per annum):

1. Total recurring exp. 1,33,86,000

2. Depreciation on building @ 10% 20,000
3. Depreciation on plant and machinery @ 15% 1,95,000
4. Interest on capital Invt. @ 12% 5,07,700
1,41,08,700

Add commission/royalty etc. @ 10% 14,00,000

1,55,08,000
Profitability Analysis:

i) Net profit before tax (P)

1,80,00,000 – 1,55,08,700 = Rs.24,91,300

ii) Net Profit ratio (%) = 13.84%

iii) Return on investment (%)

 = Net profit x 100% = 58.88%
total cap. Investment

iv) Pay back period = 6 years (max.)

v) Break Even point = 34.0%

Average fixed cost (AFC):

1. Depreciation total 2,15,000
2. Interest total 5,07,700
3. Insurance total 12,000
4. 40% of salary and wages 2,66,400
5. 40% of utility and other exp.excluding insurance 2,83,200
12,84,300

Net Profit (P):

B.E.P. = AFC x 100% = 34.0%

AFC + P

SUPPLIERS OF PLANT AND MACHINERY:

1. M/s.Bhagawati Prasad Agarwalla Engg.Works, Branch: 366, Sahid

nagar, Bhubaneswar-751007. Fax: 517568
2. M/s.Orissa Diesel Engines, A-5, Ind.Estate,
Mancheswar,Bhubaneswar. Fax: 582615/621.
3. M/s.Keshab Machineries Pvt.Ltd., Bose Park, PO-Sukchar, 24
Parganas.
4. M/s.Mechanico, 54/1/7 (I) Road, Belgachia, Howrah-711105.
5. M/s.Premur Casting and Engg.Works, Regd.Office: 44/45, Kings
Road, Howrah-1, W.B. Works: 66/1, C.Road, Bamangachi, Salkia,
Howrah-6, W.B.
6. M/s.Marshall Sons & Co.Mfg.Pvt.Ltd., Chatterjee International
Centre, 33A, Jawaharlal Nehru Road, Calcutta-71.
7. M/s.Sayaji Iron & Engg.Co., Turnkey Range, Chatterjee International
Centre, 4th floor, 53A, Chowringhee Road, Calcutta-71.

RAW MATERIAL SUPPLIERS:

Local mines at Barbil, Joda, Keonjhar district.