PROJECT REPORT

Of

ALUMINIUM CASTINGS

PURPOSE OF THE DOCUMENT

This particular pre-feasibility is regarding Aluminium Castings.

The objective of the pre-feasibility report is primarily to facilitate potential entrepreneurs in project
identification for investment and in order to serve his objective; the document covers various aspects
of the project concept development, start-up, marketing, finance and management.

[We can modify the project capacity and project cost as per your requirement. We can also prepare
project report on any subject as per your requirement.]

Lucknow Office: Sidhivinayak Building ,

27/1/B, Gokhlley Marg, Lucknow-226001

Delhi Office : Multi Disciplinary Training

Centre, Gandhi Darshan Rajghat,
New Delhi 110002

Email : info@udyami.org.in
Contact : +91 7526000333, 444, 555
 PROJECT AT A GLANCE

1 Name of the Entreprenuer xxxxxxxxxx

2 Constitution (legal Status) : xxxxxxxxxx

3 Father / Spouse Name xxxxxxxxxxxx

4 Unit Address : xxxxxxxxxxxxxxxxxxxxxxx

District : xxxxxxx
Pin: xxxxxxx State: xxxxxxxxxx
Mobile xxxxxxx

5 Product and By Product : Aluminium Castings

6 Name of the project / business activity proposed : Aluminium Castings Manufacturing Unit

7 Cost of Project : Rs.17.87 Lakhs

8 Means of Finance
Term Loan Rs.10.39 Lakhs
Own Capital Rs.1.79 Lakhs
Working Capital Rs.5.7 Lakhs
9 Debt Service Coverage Ratio : 2.36

10 Pay Back Period : 5 Years

11 Project Implementation Period : 5-6 Months

12 Break Even Point : 52%

13 Employment : 13 Persons

14 Power Requirement : 15 HP

2 tones of commercial aluminium and Aluminium alloy in-gots

15 Major Raw materials
: conforming to LM-6, LM-5, LM-24 specificaions

Estimated Annual Sales Turnover (Max Utilized

16 Capacity) : 175.03 Lakhs

17 Detailed Cost of Project & Means of Finance

COST OF PROJECT (Rs. In Lakhs)

Particulars Amount
Land Own/Rented
Building /Shed 2000 Sq ft Own/Rented
Plant & Machinery 10.54
Furniture & Fixtures 1.00
Working Capital 6.33
Total 17.87

MEANS OF FINANCE
Particulars Amount
Own Contribution 1.79
Term Loan 10.39
Working Capital 5.70
Total 17.87
 PROJECT REPORT ON
ALUMINIUM CASTINGS

PRODUCT AND ITS USES:

Aluminium plays a major role in the modern world through its innumerable applications,
because of its intrinsic and versatile properties of lightness, strength to weight ratio,
corrosion resistance, electrical and thermal conductivity, non- toxicity etc. In the form of
castings, either as cast or heat treated, aluminium is gradually replacing Gunmetal,
bronze, stainless steel and many grey iron and malleable iron castings. The typical
products and fields of use are mentioned below.
Engine components like automobile and diesel pistons, automotive timing gear, gear
boxes, crank cases, clutch housing, pump bodies, bracket, arms and hangers for different
industries, components, fittings for chemical and marine uses, railways, storage tanks,
flywheel housing and propellers, artificial limbs, omamental hardwares, ashtrays, water
jugs, art metal work, moulding flasks, core drying plates and pattern castings, rotor of
ceiling fans and many other components in different fields are made of A1-castings.
MARKET POTENTIAL:
It is difficult to assess the exact market for each and every item of Aluminium castings
mentioned. However, there is a good demand for the following items in the country:-
1. Moulding flasks
2. Core drying plates
3. Pattern castings.
These items are very much required by the ferrous and non-ferrous foundries whose
number is increasing day by day. Similarly, the rotor of ceiling fans, which is normally
made of grey iron, is now gradually being replaced by Aluminium rotor. Besides, there are
many components and fittings made out of Aluminium castings which are very much
needed by chemical, marine industries, railways, breweries, electrical industries, pump
manufacturers etc. In view of the above the market potential for Aluminium castings is
good and also expected to be bright in near future.
PRODUCTION TARGETS (PER ANNUM):

Production targets is fixed at 120 tones of finished sand mould and permanent mould and
permanent mould (gravity die casting) castings of different Aluminium alloys
corresponding mostly to LM-5, LM-6, LM-24 etc. per annum.

BASIS AND PRESUMPTION:

The production target fixed is on the basis of single shift of 8 hours and 300 working days
in a year. In this scheme, only sand mould castings and gravity die
casting methods (permanent mould casting methods) are included. The pressure die
casting method is excluded since this is covered under reserved item. The process is
economical only if the items are mass produced in thousands per day. In the initial phase,
the production will be restricted to only such items like- Aluminium patterns, moulding
flasks, various components and fittings for chemical; marine and electrical industries,
railways, pump housing and rotor of ceiling fans for which there is a good demand. In the
2nd phase, the production of more sophisticated items like automobile and diesel pistons,
gear box, crank cases, flywheel housing and propeller etc. will be taken up.

IMPLEMENTATION SCHEDULE:
Project implementation will take a period of 8 months the date of approval of the project.
Break-up of activities with time-period for each activity is shown below:
Sr. Nature of activities Time period in moths
No. (Estimated)
1. Scheme preparation and approval 0-1
2. SSI Provisional registration 1-2
3. Sanction of loan 2-5
4. Clearance from Pollution Control 3-4
Board
5. Placement of order for delivery of 4-5
machinery
6. Installation of machines 6-7
7. Power connection 6-7
8. Trial run 7-8
9. Commencement of production 9 months

TECHNICAL ASPECTS:
PRODUCTION DETAILS & PROCESS OF MANUFACTURING:
1. The Aluminum alloy ingots along with other additions are melted in oil fired crucible
furnace.
2. The molten metal at specified temperature is transferred by
crucibles/ladles into the prepared sand mould or permanent mould.
3. The casting are taken out from the moulds when cold and fettled.
4. The fettled castings are inspected and sent for dispatch.
5. The fettlings and rejected castings constitute the foundry returns (generated scrap)
and are returned to melting furnace for re-use.

QUALITY CONTROL AND STANDARDS:

In the present scheme, ingots of required specification are selected as raw
material.Accordingly, composition adjustment is normally not necessary. But in using the
scrap, composition adjustment will be necessary since during each melting the loss of
alloying elements or the bags metal Aluminium has to be compensated by suitable
addition of Virgin Aluminium or master alloys. The correct amount of addition can be
arrived at only if the bath composition is ascertained by chemical analysis which may take
some time. However, control of composition is important and is to be resorted to
particularly when the customer’s specification is quite rigid. Melting of Aluminium and its
alloys must be controlled as per the norms for a sound casting to be produced. Similarly,
quality control of moulding sand with respect to sand grain size, moisture, permeability
and green compression strength is equally important. A proper surface either in the sand
mould or in the permanent mould for gravity die csting must be ensured for soundness
and good surface finish of the casting.
Casting alloys selected are those conforming to B.S. 1490, LM-5, LM-6, and LM-24
since these do not require any heat treatment and can be disposed of as cast condition
duly fettled.

PROCESS FLOW CHART:

Preparation of moulds

Melting of Metal

Pouring the metal into mould cavities

Knocking of the moulds after solidification

Fettling

Testing for Mechanical & Chemical properties

Turning on Automatic Lathe

Inspection for Dimensions

PROJECTED BALANCE SHEET

PARTICULARS I II III IV V

SOURCES OF FUND
Capital Account
Opening Balance - 2.17 2.91 4.91 9.39
Add: Additions 1.79 - - - -
Add: Net Profit 1.38 2.49 4.50 5.98 8.40
Less: Drawings 1.00 1.75 2.50 1.50 5.50
Closing Balance 2.17 2.91 4.91 9.39 12.28
CC Limit 5.70 5.70 5.70 5.70 5.70
Term Loan 9.23 6.92 4.62 2.31 -
Sundry Creditors 1.31 1.49 1.68 1.89 2.12

TOTAL : 18.41 17.02 16.90 19.29 20.10

APPLICATION OF FUND

Fixed Assets ( Gross) 11.54 11.54 11.54 11.54 11.54

Gross Dep. 1.68 3.11 4.34 5.38 6.27
Net Fixed Assets 9.86 8.43 7.20 6.16 5.27

Current Assets
Sundry Debtors 2.45 2.87 3.24 3.57 4.08
Stock in Hand 5.21 5.61 6.11 9.53 10.13

Cash and Bank 0.89 0.12 0.35 0.04 0.62

TOTAL : 18.41 17.02 16.90 19.29 20.10

- - - - -
PROJECTED PROFITABILITY STATEMENT

PARTICULARS I II III IV V

A) SALES
Gross Sale 105.00 122.85 138.92 152.81 175.03

Total (A) 105.00 122.85 138.92 152.81 175.03

B) COST OF SALES

Raw Mateiral Consumed 78.54 89.34 101.02 113.65 127.29

Electricity Expenses 1.75 1.89 2.04 2.18 2.33
Repair & Maintenance 0.53 0.61 0.69 0.76 0.88
Labour & Wages 10.76 11.83 13.02 14.32 15.75

Depreciation 1.68 1.43 1.22 1.04 0.89

Cost of Production 93.25 105.11 117.99 131.96 147.13

Add: Opening Stock /WIP - 2.59 2.63 2.74 5.74

Less: Closing Stock /WIP 2.59 2.63 2.74 5.74 5.89

Cost of Sales (B) 90.66 105.08 117.88 128.97 146.99

C) GROSS PROFIT (A-B) 14.34 17.77 21.04 23.84 28.05

13.66% 14.47% 15.14% 15.60% 16.02%
D) Bank Interest (Term Loan ) 1.13 0.92 0.67 0.41 0.16
ii) Interest On Working Capital 0.63 0.63 0.63 0.63 0.63
E) Salary to Staff 8.58 9.44 10.38 11.42 12.56

F) Selling & Adm Expenses Exp. 2.63 4.30 4.86 5.35 6.13

TOTAL (D+E) 12.96 15.28 16.54 17.81 19.47

H) NET PROFIT 1.38 2.49 4.50 6.03 8.57

1.3% 2.0% 3.2% 3.9% 4.9%
I) Taxation - - - 0.05 0.18

J) PROFIT (After Tax) 1.38 2.49 4.50 5.98 8.40

PROJECTED CASH FLOW STATEMENT

PARTICULARS I II III IV V

SOURCES OF FUND

Own Contribution 1.79 -

Net Profit 1.38 2.49 4.50 6.03 8.57
Depreciation & Exp. W/off 1.68 1.43 1.22 1.04 0.89
Increase In Cash Credit 5.70
Increase In Term Loan 10.39 - - - -
Increase in Creditors 1.31 0.18 0.19 0.21 0.23
TOTAL : 22.24 4.10 5.92 7.29 9.69

APPLICATION OF FUND

Increase in Fixed Assets 11.54 - - - -

Increase in Stock 5.21 0.40 0.51 3.41 0.60
Increase in Debtors 2.45 0.42 0.37 0.32 0.52
Repayment of Term Loan 1.15 2.31 2.31 2.31 2.31
Taxation - - - 0.05 0.18
Drawings 1.00 1.75 2.50 1.50 5.50
TOTAL : 21.35 4.87 5.69 7.60 9.11

Opening Cash & Bank Balance - 0.89 0.12 0.35 0.04

Add : Surplus 0.89 - 0.77 0.23 - 0.31 0.58

Closing Cash & Bank Balance 0.89 0.12 0.35 0.04 0.62
COMPUTATION OF ALUMINIUM CASTINGS MANUFACTURING UNIT

Items to be Manufactured Aluminium Castings

Manufacturing Capacity per Day 0.20 MT

No. of Working Hour 8

No of Working Days per month 25

No. of Working Day per annum 300

Total Production per Annum 60 MT

Year Capacity Aluminium

Castings
Utilisation

I 60% 36
II 65% 39
III 70% 42
IV 75% 45
V 80% 48

COMPUTATION OF RAW MATERIAL

Quantity of
Total CostPer
Item Name Raw Unit Unit Rate of
Annum (100%)
Material
2 tones of commercial aluminium and Aluminium
alloy in-gots conforming to LM-6, LM-5, LM-24
specificaions, at an average rate of Rs. 1,80,000/- 72.00 MT 180,000.00 12,960,000.00
Foundry sand, bentonite, die coats,
degreaser,refractories etc. 130,000.00
Total 72.00 13,090,000.00

Total Raw material in Rs lacs at 100% Capacity 130.90

Cost per MT (In Rs) 218,166.70
Raw Material Consumed Capacity Rate Amount (Rs.)
Utilisation

I 60% 218,166.70 78.54

II 65% 229,075.00 89.34
III 70% 240,528.80 101.02
IV 75% 252,555.20 113.65
V 80% 265,183.00 127.29
COMPUTATION OF CLOSING STOCK & WORKING CAPITAL

PARTICULARS I II III IV V

Finished Goods
(10 Days requirement) 2.59 2.63 2.74 5.74 5.89
Raw Material
(10 Days requirement) 2.62 2.98 3.37 3.79 4.24

Closing Stock 5.21 5.61 6.11 9.53 10.13

COMPUTATION OF WORKING CAPITAL REQUIREMENT

Particulars Amount Margin(10%) Net

Amount
Stock in Hand 5.21
Less:
Sundry Creditors 1.31
Paid Stock 3.90 0.39 3.51

Sundry Debtors 2.45 0.25 2.21

Working Capital Requirement 5.71

Margin 0.63

MPBF 5.71

Working Capital Demand 5.70

BREAK UP OF LABOUR

Particulars Wages No of Total

Per Month Employees Salary
Supervisor 20,000.00 1 20,000.00
Plant Operator 15,000.00 1 15,000.00
Unskilled Worker 8,500.00 4 34,000.00
Helper 5,000.00 1 5,000.00
Security Guard 7,500.00 1 7,500.00

81,500.00
Add: 10% Fringe Benefit 8,150.00
Total Labour Cost Per Month 89,650.00
Total Labour Cost for the year ( In Rs. Lakhs) 8 10.76

BREAK UP OF SALARY

Particulars Salary No of Total

Per Month Employees Salary

Accountant cum store keeper 15,000.00 1 15,000.00

Administrative Staffs 12,500.00 4 50,000.00
Total Salary Per Month 65,000.00

Add: 10% Fringe Benefit 6,500.00

Total Salary for the month 71,500.00

Total Salary for the year ( In Rs. Lakhs) 5 8.58

COMPUTATION OF DEPRECIATION
Year

Plant &
Description Land Building/shed Machinery Furniture TOTAL

Rate of Depreciation 15.00% 10.00%

Opening Balance Own/Rented - - -
Addition - 10.54 1.00 11.54
- 10.54 1.00 11.54

TOTAL - 10.54 1.00 11.54

Less : Depreciation - - 1.58 0.10 1.68
WDV at end of Ist year - - 8.96 0.90 9.86
Additions During The Year - - - - -
- - 8.96 0.90 9.86

Less : Depreciation - - 1.34 0.09 1.43

WDV at end of IInd Year - - 7.62 0.81 8.43
Additions During The Year - - - - -
- - 7.62 0.81 8.43
Less : Depreciation - - 1.14 0.08 1.22
WDV at end of IIIrd year - - 6.47 0.73 7.20
Additions During The Year - - - - -
- - 6.47 0.73 7.20
Less : Depreciation - - 0.97 0.07 1.04
WDV at end of IV year - - 5.50 0.66 6.16
Additions During The Year - - - - -
- - 5.50 0.66 6.16
Less : Depreciation - - 0.83 0.07 0.89

WDV at end of Vth year - - 4.68 0.59 5.27

 REPAYMENT SCHEDULE OF TERM LOAN 11.0%

Year Particulars Amount Addition Total Interest Repayment Cl Balance

I Opening Balance
Ist Quarter - 10.39 10.39 0.29 - 10.39
Iind Quarter 10.39 - 10.39 0.29 - 10.39
IIIrd Quarter 10.39 - 10.39 0.29 0.58 9.81
Ivth Quarter 9.81 - 9.81 0.27 0.58 9.23
1.13 1.15
II Opening Balance
Ist Quarter 9.23 - 9.23 0.25 0.58 8.66
Iind Quarter 8.66 - 8.66 0.24 0.58 8.08
IIIrd Quarter 8.08 - 8.08 0.22 0.58 7.50
Ivth Quarter 7.50 7.50 0.21 0.58 6.92
0.92 2.31
III Opening Balance

Ist Quarter 6.92 - 6.92 0.19 0.58 6.35

Iind Quarter 6.35 - 6.35 0.17 0.58 5.77
IIIrd Quarter 5.77 - 5.77 0.16 0.58 5.19
Ivth Quarter 5.19 5.19 0.14 0.58 4.62
0.67 2.31
IV Opening Balance
Ist Quarter 4.62 - 4.62 0.13 0.58 4.04
Iind Quarter 4.04 - 4.04 0.11 0.58 3.46
IIIrd Quarter 3.46 - 3.46 0.10 0.58 2.89
Ivth Quarter 2.89 2.89 0.08 0.58 2.31
0.41 2.31
V Opening Balance
Ist Quarter 2.31 - 2.31 0.06 0.58 1.73

Iind Quarter 1.73 - 1.73 0.05 0.58 1.15

IIIrd Quarter 1.15 - 1.15 0.03 0.58 0.58

Ivth Quarter 0.58 0.58 0.02 0.58 -

0.16 2.31

Door to Door Period 60 Months

Moratorium Period 6 Months
Repayment Period 54 Months
CALCULATION OF D.S.C.R

PARTICULARS I II III IV V

CASH ACCRUALS 3.06 3.92 5.72 7.02 9.29

Interest on Term Loan 1.13 0.92 0.67 0.41 0.16

Total 4.19 4.84 6.39 7.44 9.44

REPAYMENT
Repayment of Term Loan 1.15 2.31 2.31 2.31 2.31

Interest on Term Loan 1.13 0.92 0.67 0.41 0.16

Total 2.28 3.23 2.97 2.72 2.47

DEBT SERVICE COVERAGE RATIO 1.84 1.50 2.15 2.73 3.83

AVERAGE D.S.C.R. 2.36

COMPUTATION OF SALE

Particulars I II III IV V

Op Stock - 1.00 1.00 1.00 2.00

Production 36.00 39.00 42.00 45.00 48.00

36.00 40.00 43.00 46.00 50.00

Less : Closing Stock(10 Days) 1.00 1.00 1.00 2.00 2.00

Net Sale 35.00 39.00 42.00 44.00 48.00

Sale Price per MT 300,000.00 315,000.00 330,750.00 347,288.00 364,652.00

Sale (in Lacs) 105.00 122.85 138.92 152.81 175.03

COMPUTATION OF ELECTRICITY
(A) POWER CONNECTION

Total Working Hour per day Hours 8

Electric Load Required HP 15
Load Factor 0.7460
Electricity Charges per unit 7.50
Total Working Days 300
Electricity Charges 2.01

Add : Minimim Charges (@ 10%)

(B) DG set
No. of Working Days 300 days
Hour per
No of Working Hours 0.5
day
Total no of Hour 150
Diesel Consumption per Hour 8
Total Consumption of Diesel 1,200
Cost of Diesel 65.00 Rs. /Ltr
Total cost of Diesel 0.78
Add : Lube Cost @15% 0.12
Total 0.90

Total cost of Power & Fuel at 100% 2.91

Year Capacity Amount

(in Lacs)

I 60% 1.75
II 65% 1.89
III 70% 2.04
IV 75% 2.18
V 80% 2.33
 DISCLAIMER

The views expressed in this Project Report are advisory in nature. SAMADHAN
assume no financial liability to anyone using the content for any purpose. All the
materials and content contained in Project report is for educational purpose and
reflect the views of the industry which are drawn from various research material
sources from internet, experts, suppliers and various other sources. The actual
cost of the project or industry will have to be taken on case to case basis
considering specific requirement of the project, capacity and type of plant and
other specific factors/cost directly related to the implementation of project. It is
intended for general guidance only and must not be considered a substitute for a
competent legal advice provided by a licensed industry professional. SAMADHAN
hereby disclaims any and all liability to any party for any direct, indirect, implied,
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