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STAINLESS STEEL CUTLERY

A.

INTRODUCTION

Stainless steel Spoons, Forks and Stainless steel knives are very commonly used items
in households and restaurants. The usage of these items were restricted to a few hotels
in the past. But, now a days these items are used in almost all hotels. With the growth
of standard of living the consumption of these are increasing day by day.

B.

PRODUCT USES AND SPECIFICATIONS

Bureau of Indian Standards has prescribed the following standards for the following
items of Stainless steel spoons, Forks and Knives
IS-990-Spoons Stainless Steel
IS-992-Forks (Table, Fish and serving) Stainless steel
IS-994-Butter knives and fish knives
IS-995-Table Knives, Dessert knives, and Fruit knives
IS-3546-Vegetable knives

C.

MARKET POTENTIAL

The number of households in the country is increasing with the increase in population of
the country and there is a heavy backlog housing shortages to be fulfilled. This will
boost up the demand for stainless steel spoons used in households. Besides this there
is separate demand for spoons, forks and knives from hotel and restaurant sector. The
number of hotels and eating houses in the country has been increasing with the
increase in hotels tourist activities and general standard of living.

D.

TECHNICAL ASPECTS

1.

Installed Capacity

The installed capacity of the unit is


Tea spoons-9000 dozens per annum
Table Spoons-9000 dozens per annum
Table Forks -9000 dozens per annum

Table Knives-9000 dozens per annum


Butter Spreaders-9000 dozens per annum
Bread Cutters-9000 dozens per annum
2.

Plant and Machinery

The following items of equipment are required.


Machine name

Quantity
Value
(Nos.) (Rs.lakhs)
1
2.10
1
3.10
1
1.30
1
0.40
1
0.05
1
0.12
4
0.20
1
0.04
1
0.15
1
0.50
1
0.80
1
0.30
1
0.40
1
0.54
10.00

Power press 50 Tonnes


Friction Screw press
Guilliotine Shearing Machine 1000-16 swg
Forge with blower & motor
Hand shearing machine
Double body Press no.
Double ended polishing
Double ended grinder
Bench drilling machine 12 mm
Hardening Furnace
Tempering Furnace
Quenching Tank& accessories
Work benches Hand tools & vices
Dies& press Tools
Total
3.

Manufacturing Process

The unit will be purchasing stainless steel sheets .The process involves the following
sequence of operations.
Cutting SS sheets to required sizes
I
Shaping in power press
I
Hot pressing and trimming of forks
I
Surface finishing by hand tools and buffing
I
Polishing and packing

4.

Raw Material

The main raw material required for production of Stainless steel Spoons, forks and
knives are SS sheets which are available from Salem stainless steel. The material can
also be imported.SS-304 and 305 Grades are normally used for this purpose.
5.

Land & Building

A rented place with 1500 sqft. area is required.

The monthly rent is estimated at

Rs.5000 and also an advance of Rs.50,000.


6.

Utilities

Power:
The total power requirement of the unit will be 50 HP
Water:
Water is required only for human consumption.
Man power:
Category
Manager
Supervisor
Skilled
Helpers
Accountant
Assistants
Security

Nos
1
1
5
5
1
1
2
Total

Monthly
salary
7000
5000
3000
2000
3000
3000
2000

Add 20%benefits
Total
Annually
Rs.6.77 lakhs
7.

Total
Salary
7000
5000
15000
10000
3000
3000
4000
47000
9400
56400

Implementation Schedule

If financing arrangement is made available the project can be implemented with in three
months period.

8.

ASSUMPTIONS

Installed capacity per annum

Capacity utilization-Year -1
Year-2
Year-3

Selling price per unit

Material cost at 100%


Stainless Sheets

S.S.Tea Spoons-9000 dozens


S.S.Table Spoons-9000 dozens
S.S.Table Forks-9000 dozens
S.S.Table Knives-9000 dozens
S.S.Bread Spreaders-4500 dozens
S.S.Bread Cutters-4500 dozens
60%
70%
80%
S.S.Tea Spoons-Rs.80/Dozen
S.S.Table Spoons-Rs.150/Dozen
S.S.Table Forks-Rs.150/Dozen
S.S.Table Knives-Rs.150/Dozen
S.S.Bread Spreaders-Rs.150/Dozen
S.S.Bread Cutters-Rs.150/Dozen

Qty(including. Rate/MT Value


(Rs.lakhs)
wastage)
18 Mt
Rs.97000 17.46

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

Rs.1.20 lakhs
Rs.4.02lakhs
Rs.6.77lakhs
Rs.5000/Written Down Value Method
Rs.10000/3% on Sales
14% p.a.
36% on profit

LIST OF MACHINERY SUPPLIERS


1.

Orient Machine Tools


New No.269 (old No.130) Linghi Chetty Street
Chennai-600 001

2.

Quality Machine Tools


New No.238, Linghi Chetty Strret
Chennai 600 001

3.

Gujrat Machine Tools


New No.279, Linghi Chetty Street
Chennai 600 001

4.

Premier Machine Tools


New No.103, Armenian Street
Chennai 600 001

5.

Machine Centre
New No.214, Linghi chetty Street
Chennai 600 001

LIST OF RAW MATERIAL SUPPLIERS


1.

Salem Steel
Old No.177 (New No.392) Walltax Road,
Chennai 600 003.

2.

S.C.Shah Enterprises
No.315, Mint Street,
Chennai 600 003.

3.

Anil Metals
New No.215, Linghi Chetty Street,
Chennai 600 001.

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

0.75
10.00
0.50
1.00
0.97
13.22

2. MEANS OF FINANCE
Capital
Term Loan

5.72
7.50
13.22

3. COST OF PRODUCTION & PROFITABILITY STATEMENTS


[Rs.lakhs]
Years
1
2
3
Installed Capacity (Dozen)
Tea Spoons
9000
9000
9000
Table Spoons
9000
9000
9000
Table Forks
9000
9000
9000
Table Knives
9000
9000
9000
Butter Spreader
4500
4500
4500
Bread cutter
4500
4500
4500
Utilisation
60%
70%
80%
Production/Sales (Dozen)
Tea Spoons
5400
6300
7200
Table Spoons
5400
6300
7200
Table Forks
5400
6300
7200
Table Knives
5400
6300
7200
Butter Spreader
2700
3150
3600
Bread cutter
2700
3150
3600
Selling Price/Dozen (in Rupee)
Tea Spoons
80.00
Table Spoons
150.00
Table Forks
150.00
Table Knives
150.00
Butter Spreader
150.00
Bread cutter
150.00
Sales Value

36.72

42.84

48.96

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

10.48
0.72
2.41
6.77
0.60
2.88
23.86

12.22
0.84
2.81
7.11
0.63
2.16
25.77

13.97
0.96
3.22
7.47
0.66
1.24
27.52

Admin, & General expenses


Selling expenses
Interest on Term Loan
Interest on Working Capital
Total

1.20
1.84
1.05
0.32
28.27

1.26
2.14
0.92
0.32
30.41

1.32
2.45
0.66
0.32
32.27

Profit Before Tax


Provision for tax
Profit After Tax

8.45
3.04
5.41

12.43
4.47
7.96

16.69
6.01
10.68

Add: Depreciation
Cash Accruals

2.88
8.29

2.16
10.12

1.24
11.92

4. WORKING CAPITAL:
Months
Consumption

Values

0.75
1.00
0.25
0.50
1.00

0.66
0.06
0.50
1.53
0.50
3.25

Raw Materials
Consumables
Finished goods
Debtors
Expenses

25%
25%
25%
10%
100%

[Rs.lakhs]
Margin
Bank
Amount Finance
0.17
0.02
0.13
0.15
0.50
0.97

0.49
0.04
0.37
1.38
0.00
2.28

5. PROFITABILITY RATIOS BASED ON 80% UTILISATION


Profit after Tax
Sales

10.68
48.96

22%

Profit before Interest and Tax


Total Investment

17.67
15.50

114%

Profit after Tax


Promoters' Capital

10.68
5.72

187%

6. BREAK EVEN LEVEL


Fixed Cost (FC):
[Rs.lakhs]
7.47
0.66
1.24
1.32
0.66
11.35

Wages & Salaries


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

Profit Before Tax (P)


BEL =

16.69
11.35
28.04

FC x 100
FC +P

80
100

x 100

32% of installed capacity