AIR CONDITION & REFRIGERATION

INSTALLATION & REPAIR

SERVICE CAPACITY (Value) : Rs. 15,40,000/-

MONTH AND YEAR : July, 2014

OF PREPARATION

PREPARED BY : Sh. Sunil Arora

Investigator (Mechanical)

1. INTRODUCTION
Refrigeration stands for the Production of a cool confinement with respect
to surroundings. Air conditioning is defined as the simultaneous control of
temperature, humidity cleanliness & air motion. Refrigeration may be defined as
the process of achieving and maintaining a temperature below that of the
surroundings, the aim being to cool some product or space to the required
temperature. Refrigeration systems are also used extensively for providing
thermal comfort to human beings by means of air conditioning. Air Conditioning
refers to the treatment of air so as to simultaneously control its temperature,
moisture content, cleanliness, odour and circulation, as required by occupants, a
process, or products in the space.

2. WORKING PRINCIPLE OF REFRIGERATION

Based on the working principle, refrigeration systems can be classified as
vapour compression systems, vapour absorption systems, gas cycle systems etc. The
basic components of a vapour compression refrigeration system consist of an
evaporator, compressor, condenser and an expansion valve. The refrigeration effect
is obtained in the cold region as heat is extracted by the vaporization of refrigerant in
the evaporator. The refrigerant vapour from the evaporator is compressed in the
compressor to a high pressure at which its saturation temperature is greater than the
ambient or any other heat sink. Hence when the high pressure, high temperature
refrigerant flows through the condenser, condensation of the vapour into liquid
takes place by heat rejection to the heat sink. To complete the cycle, the high
pressure liquid is made to flow through an expansion valve. In the expansion valve
the pressure and temperature of the refrigerant decrease. This low pressure and low
temperature refrigerant vapour evaporates in the evaporator taking heat from the
cold region. It should be observed that the system operates on a closed cycle. The
system requires input in the form of mechanical work. It extracts heat from a cold
space and rejects heat to a high temperature heat sink.

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The standard unit of refrigeration is ton refrigeration or simply ton denoted

by TR. It is equivalent to the rate of heat transfer needed to produce 1 ton (2000 lbs)
of ice at 320F from water at 320F in one day, i.e., 24 hours. The enthalpy of
solidification of water from and at 32 0F in British thermal unit is 144 Btu/lb. Thus

2000 lb x 144 Btu/lb

1TR = = 12000 Btu/hr = 200 Btu/min
24 hr
If Btu ton unit is expressed into SI system, it is found to be 210 kJ/min or 3.5 kW.
Refrigeration effect is an important term in refrigeration that defines the
amount of cooling produced by a system. This cooling is obtained at the expense of
some form of energy. Therefore, it is customary to define a term called coefficient of
performance (COP) as the ratio of the refrigeration effect to energy input.

Refrigeration effect
COP =
Energy input

3. MARKET POTENTIAL
In today’s time the use of A.C & fridge has become a essential part of the
routine life. The new technology in this sector makes use of air conditioner not only
in summer season but in winter also. Day by day sale of these items are growing the
Indian AC market accounted for sales of 3.6 million units in 2013. AC’s had a 13.0
per cent share (2013) in the consumer appliances market. High income growth and
rising demand for split ACs are the key growth drivers in this sector. The sale of
Refrigerator was approximately 14.0 million units in 2013. This segment makes up
18.0 per cent of the consumer appliances market. Lower prices and rising demand
for frost-free refrigerators are the key growth drivers in this sector. Fridges with a
capacity range of 142-340 litres dominated fridge sales over the last few years.

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Some applications of refrigeration and air conditioning are as follows:-

 Air Conditioning of Residential and Official Buildings
 Industrial Air Conditioning
 Food Storage and Distribution
 Environmental Laboratories

4. BASIS AND PRESUMPTIONS

This project is made on the basis of the following presumptions:
i. It is assumed that the unit will be viable at 75% efficiency on single shift basis
considering 6 working days per week.
ii. The rate of interest in the scheme is taken at 14% for both fixed and working
capital. Due to liberalization and competition among banks, lower rate of
interest is possible in future.
iii. The prices of machinery and equipments are approximate which are ruling
locally at the time of preparation of the project. When a tailor-cut project is
prepared the necessary changes are to be made at the local level.
iv. The cost of staff and labor is approximate which is ruling locally at the time
of preparation of the profile. When a tailor-cut project is prepared the
necessary changes are to be made.
v. BEP in the scheme has been calculated on the basis of full capacity utilization.

5. Motive Power
Total Power Requirement is about 2 KW.

6. FINANCIAL ASPECT
6.1. Fixed Capital
Land & Building: Covered area of 180 Sq. Ft. on rent.

6.1.1. Machinery and Equipments

S. N. Description of Machine Quantity Amount (Rs)
1 Oxygen Gas Cylinder 10 Kg 02 10,000
2 LPG Gas Cylinder 05 Kg Capacity 02 2,000
3 Welding torch & Hose Pipe (10’Long) 02 5,000
4 Pipe cutter, pliers & other Hand tools etc. L.S 5,000
5 Portable drill Machine (Max drill size 1/2”) 02 5,000
6. Office equipment, furniture, etc. L.S. 10,000
7. Preoperative expenses L.S. 10,000
TOTAL 47,000

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6.2. Working Capital (per month)

6.2.1. Personnel
S. No. Designation No Salary (Rs.) Total (Rs.)
1 Skilled worker 2 9,500 19,000
2 Helper 2 6,500 13,000
3 Sweeper (Part time) 1 500 500
Perquisites @ 20% of salary 6,500
Total 39,000

6.2.2. Raw Materials including Packaging Materials

Items Qty Rate (Rs.) Amount (Rs.)
Oxygen Gas 20 kg 20/kg 400
LPG 10 kg 80/kg 800
Copper Pipe ½” dia 30’ 75/foot 2,250
Copper Pipe ¼” dia 30’ 40/foot 1,200
Refrigerant R-12 02 kg 1100/kg 2,200
Refrigerant R-134a 03 kg 1200/kg 3,600
Refrigerant R-22 20 kg 1000/kg 20,000
3 core wire 2.5mm, Capacitor, relay L.S 10,000
thermostat & other Misc parts
Total 40,450

6.2.3. Utilities
1. Power: 400 units @ Rs. 6/unit Rs. 2,400
2. Water: LS Rs. 500
Total Rs. 2,900

6.2.4. Other Contingent Expenses

S. No. Description Value (Rs.)
1 Rent 6,000
2 Conveyance & Transport Expenses 8,000
3 Telephone 1,000
4 Advertisement/publicity 500
5 Miscellaneous Expenses 1,500
Total 17,000

6.2.5. Total Recurring Expenditure (per month) Rs. 99,350/-

6.3. Total Capital Investment

Fixed Capital Rs. 47,000
Working Capital (for 3 months) Rs. 2,98,050
Total Rs. 3,45,050/-

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7. FINANCIAL ANALYSIS
7.1. Cost of Operation (per annum)
S.No. Description Amount (Rs.)
1 Total Recurring Cost per year 11,92,200
2 Depreciation on Machinery & Equipment @ 10% 2,700
3 Depreciation on Office Equipment & Furniture @ 20% 2,000
4 Interest on Total Investment @ 14% 48,307
Total 12,45,207

7.2. Turnover (per annum)

S.N. Item Quantity Rate (Rs.) Value (Rs.)
1. Installation & Fitting of New A.C 300 1,500 4,50,000
2 Gas filling of Air Conditioner 200 2,000 4,00,000
3. AC Servicing 600 400 2,40,000
4. Gas filling in Refrigerator 100 1,500 1,50,000
5. Misc. Repair like Thermostat, L.S 3,00,000
Start coil motor, etc.
Total 15,40,000

7.3. Net Profit (per annum)

= Turnover – Cost of Operation
= Rs. 2,94,793/-

7.4. Net Profit Ratio

Net profit per year
= X 100
Turnover per year

= 19.1 %

7.5. Rate of Return

Net profit per year
= X 100
Total Capital Investment

= 85.4 %

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7.6. Break-even Point

Fixed Cost (Per Annum) (Rs.)
Rent 72,000
Total Depreciation 4,700
Total Interest 48,307
40% of salary and wages 1,87,200
40% of other Contingent expenses
52,800
(Excluding rent)
Total 3,65,007

B.E.P
Fixed Cost
= X 100
Fixed Cost + Net Profit

= 55.3 %

Raw Material & other tools, equipments will be procured from open market.

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