Start a Assembly of Diesel Generator Set Unit

 

(272). Start a Assembly of Diesel Generator Set Unit

Diesel Generator set is used to generate electricity for meeting the electricity requirement of small establishments such as commercial buildings, Hotels, Railway Stations, Telephone Exchange, Shops etc. when there is a power supply failure from the State Electricity Board or other power supply undertakings.The prime mover of the Generator set will be a diesel engine and the prime mover will be coupled to an alternator (single phase for small units). There will be a control panel to control the on/off operation/change over from mains supply to Generator set supply etc. Generator sets of higher rating has to be started with battery starters. Diesel Generator sets of smaller rating can be started by cranking.

Market Potential

Since power failure is very common in India, this equipment has got good demand. Diesel Generator set of 5 kVA rating is having very good market as it suits to most of the commercial establishments.

Basis and Presumptions

i) The basis for calculation of production capacity has been taken on single shift basis on 75% efficiency.

ii) The maximum capacity utilization on single shift basis for 300 days a year. During first year and second year of operations the capacity utilization is 60% and 80% respectively. The unit is expected to achieve full capacity utilization from the third year onwards.

iii) The salaries and wages, cost of raw materials, utilities, rents, etc. are based on the prevailing rates in and around Coimbatore. These cost factors are likely to vary with time and location.

iv) Interest on term loan and working capital loan has been taken at the rate of 12.5% on an average and amount of loan seek from the financial institution is 75 % of total working capital. This rate may vary depending upon the policy of the financial institutions/agencies from time to time.

v) The cost of machinery and equipments refer to a particular make/model and prices are approximate.

vi) The break-even point percentage indicated is of full capacity utilization.

vii) The project preparation cost etc. whenever required could be considered under pre-operative expenses.

viii) The essential production machinery and test equipment required for the project have been indicated. The unit may also utilize common test facilities available at Electronics Test and Development Centres (ETDCs) and Electronic Regional Test Laboratories (ERTLs) and Regional Testing Centres (RTCs).

  

   

Implementation Schedule

The major activities in the implementation of the project has been listed and the average time for implementation of the project is estimated at 12 months:

Sl. No.	Activity	Period (in Months)
1.	Preparation of project report	1
2.	Registration and other formalities	1
3.	Sanction of loan by financial institutions	3
4.	Plant and Machinery: a) Placement of orders	1
	b) Procurement	2
	c) Power connection/Electrification	2
	d) Installation/Erection of machinery/Test Equipment	2
5.	Procurement of raw materials	2
6.	Recruitment of Technical Personnel etc.	2
7.	Trial production	11
8.	Commercial production	12

Notes
1. Many of the above activities shall be initiated concurrently.
2. Procurement of raw materials commences from the 8th month onwards.
3. When imported plant and machinery are required, the implementation period of project may vary from 12 months to 15 months.

Technical Aspects

Process of Manufacture

The proposed unit is doing the assembly of diesel generator sets with necessary control panel as per the requirement of the customer.

The load requirement of the customer is studied in consultation with the customer. Any special requirements such as minimum start up period, fluctuations of load etc. are noted. A suitable alternator to meet the load requirement is procured from an alternator manufacturer. A diesel engine suitable for the alternator is also selected and procured from the diesel engine manufacturer. The diesel engine and alternator are coupled and fixed on a frame. A control panel for starting the engine using battery bank, isolating the mains while the alternator is running, disconnecting the alternator when the mains supply is available etc. is designed and assembled as stipulated by the customer. The assembly is tested for fuel efficiency, load capacity of the alternator, operational sequences etc.

The Diesel Generator set is then despatched to the premises of the customer in dismantled condition on in assembled condition depending upon the size of the Diesel Generator set.

Quality Control and Standards

The alternator has to meet the requirements of the customer with regard to voltage, frequency, power etc. and the diesel engine has to conform to IS 10001.

The performance of alternator and diesel engine may be tested at the manufacturers' works before taking delivery. The control panel requires contactors and relays. The contractors and relays shall conform to relevant IS Specification and shall be from a reputed manufacturer.

Production Capacity (per annum)

The actual manufacturing depends up on the orders received and the marketing efforts taken by the unit. The proposed unit will have a capacity to assemble 24 diesel generator sets in a year. For the purpose of financial projections a standard rating of 5 kVA diesel generator set is taken.

Motive Power:

10 KW.

Pollution Control

The Government accords utmost importance to control environmental pollution. The small-scale entrepreneurs should have an environmental friendly attitude and adopt pollution control measures by process modification and technology substitution.

India having acceded to the Montreal Protocol in September 1992, the production and use of Ozone Depleting Substances (ODS) like Chlorofluore Carbon (CFCs), Carbon Tetrachloride, Halons and methyl Chloroform etc. need to be phased out immediately with alternative chemicals/solvents. A notification for detailed Rules to regulate ODS phase out under the Environment Protection Act, 1986 have been put in place with effect from 19th July 2000.

Energy Conservation

With the growing energy needs and shortage coupled with rising energy cost, a greater thrust in energy efficiency in industrial sector has been given by the Govt. of India since 1980s. The Energy Conservation Act, 2001 has been enacted on 18th August 2001, which provides for efficient use of energy, its conservation and capacity building of Bureau of Energy Efficiency created under the Act.

The following steps may help for conservation of electrical energy:

i) Adoption of energy conserving technologies, production aids and testing facilities.

ii) Efficient management of process/manufacturing machineries and systems, QC and testing equipments for yielding maximum Energy Conservation.

iii) Optimum use of electrical energy for heating during soldering process can be obtained by using efficient temperature controlled soldering and de-soldering stations.

iv) Periodical maintenance of motors compressors etc.

v) Use of power factor correction capacitors. Proper selection and layout of lighting system; timely switching on-off of the lights; use of compact fluorescent lamps wherever possible etc.

Financial Aspects
A. Fixed Capital

(i) Land and Building	(Rs.)
Built up area	2000 sq/ft.
Rent payable (per month)	6000

(ii) Machinery and Equipments

Sl. No.	Description	Qty.	Rate (Rs.)	Amount (Rs.)
1.	Pendent operated Electric Hoist 5Ts capacity with supporting frame	1 No.	24200	24200
2.	Welding Transformer 2 kVA	1 No.	7000	7000
3.	Gas cutting equipment	1 No.	8000	8000
4.	Flexible shaft grinder	1 No.	8000	8000
5.	Bench Drilling Machine ½" Cap.	1 No.	14000	14000
6.	Set of tools such as spanners, Screw drivers, crimping tools etc.	1 No.	16000	16000
7.	Resistance load bank for loading the Alternator (10 kW capacity)	1 No.	13000	13000
8.	Testing panel for testing the Performance of the Diesel Generator set (Fitted with ammeters, voltmeter, watt meter, Indication lamp etc.)	1 No.	22,000	22,000
Total				112200
9.	Electrification and Installation charges (a) 10% of Cost of machinery and equipments			11220
10.	Office equipments and furniture			40,000
11.	Tools/Jigs/ fixture			20,000
(iii) Pre-operatine expenses				10,000
Total				193420

B. Working Capital (per month)

(i) Salaries and Wages (per month)

Sl. No.	Description	Qty.	Rate (Rs.)	Amount (Rs.)
1.	Electrical Fitters	1	3500	3500
2.	Helper	1	2000	2000
3.	Production Supervisor	1	5000	5000
4.	Marketing Executive	1	4000	4000
Total				14500
Add 15% Testing Perquisites				2175
Total				16675
Say				16700

(ii) Raw Material Required (per month)

Sl. No.	Description	Qty.	Rate (Rs.)	Amount (Rs.)
1.	Diesel Engine 7.5 HP	2 Nos.	9600	19200
2.	Alternator 5 kVA single phase, 230 V, 50 Hz	2 Nos.	7000	14000
3.	Relays and Contractors	2 sets	3000	6000
4.	PVC insulated cable for Control Panel wiring	1 Coil	850	850
5.	M.S. channels, bolts, nuts and M.S. Plates	LS	-	4000
6.	Sheet metal enclosure for Control Panel	2 Nos.	1200	2400
7.	Other misc. items such as crimping lugs, hardware etc.	LS	-	600
Total				47050

(iii) Utilities (per month)

Sl. No.	Description	Amount (Rs.)
1.	Power	4500
2.	Water	350
Total		4850

(iv) Other Contingent Expenses (per month)

Sl. No.	Description	Amount (Rs.)
1	Sales expenditure	3000
2	Consumable Stores	3500
3	Postage and Stationery	2000
4	Telephone	2000
5	Rent	6000
6	Misc. Expenditure	1500
Total		18000
(v) Recurring Expenditure (per month) (i+ii+iii+iv)		86600
(vi) Working Capital Requirement		(Rs.)
The approximate amount of working capital requirement is taken as 3 months recurring expenditure (i.e. 3 × 86600)		259800

C. Total Capital Investment

(i) Fixed Capital	Rs. 193420
(ii) Working Capital on 3 months basis	Rs. 259800
Total	Rs. 453220

Financial Analysis

(1) Cost of Production (per annum)	(Rs.)
(a) Total recurring expenditure	1039200
(b) Depreciation on machinery and equipment @ 10%	11220
(c) Depreciation on tools, jigs and fixtures @ 25%	5000
(d) Depreciation of office equipment, furniture @ 20%	8000
(e) Interest on 75 % total capital investment @ 12.5%	42490
Total	1105910
Say	1105910

(2) Turn over (per annum)

Item	Qty. (Nos.)	Rate/Unit (Rs.)	Total Sales (Rs.)
Diesel Generator Set 5 kVA with control Panel	24	53000	1272000

(3) Profit (per annum) (Before Taxes)

Rs. 166090

(4) Net Profit Ratio
=	Profit per annum × 100 -------------------------
	Sales per annum
=	166090 × 100 --------------------
	1272000
=	13.06%
(5) Rate of Return
=	Profit per annum × 100 ----------------------------
	Total capital investment
=	1,66,090 × 100 ----------------------
	4,53,220
=	36.65%

(6) Break-even Point

Fixed Cost (per annum)	(Rs.)
Rent	72000
Depreciation on machinery and equipment @ 10%	11220
Depreciation on tools, jigs and fixtures @ 25%	5000
Depreciation on office equipment, furniture @ 20%	8000
Interest on total capital investment @ 16%	42490
40% Salaries and wages	80160
40% other contingent expenses and utilities (excluding rent)	80880
Total	299750
Say	2,99,750

B.E.P.	=	Fixed cost × 100 --------------------
		Fixed cost + Profit
	=	2,99,750 × 100 ---------------------
		2,99,750 + 1,66090
	=	64.35%

Additional Information

a. The Project Profile may be modified/tailored to suit the individual entrepreneurship qualities/ capacity, production Programme and also to suit the locational characteristics, wherever applicable.

b. The Electrical Technology is undergoing rapid strides of change and there is need for regular monitoring of the national and international technology scenario. The unit may, therefore, keep abreast with the new technologies in order to keep them in pace with the developments for global competition.

c. Quality today is not only confined to the product or service alone. It also extends to the process and environment in which they are generated. The ISO 9000 defines standards for Quality Management Systems and ISO 14001 defines standards for Environmental Management System for acceptability at international level. The unit may therefore adopt these standards for global competition.

d. The margin money recommended is 25% of the working capital requirement at an average. However, the percentage of margin money may vary as per bank's discretion.

Addresses of Machinery and Equipment Suppliers

1. M/s. Automation Props Test Equipment (Elec.) Pvt. Limited
Dr. Annie Besant Road,
Worli, Mumbai - 400 018.
(For Test Panel)

2. M/s. Meco Instrument Pvt. Ltd.
301, Bharat Industrial Estate,
T.J. Road, Sewree, Mumbai- 400 015
(For Measuring Instruments)

3. Local dealers
(For Tool kits)

Addresses of Components and Parts Suppliers

1. M/s. Jyothi Limited
Alternative Division,
P.O. Chemical Industries, Vadodara
(For alternates)

2. M/s. Crompton Greaves Ltd.
Marketing Office: 1,
Dr. V.B. Gandhi Nagar, Fort,
Mumbai - 400 023.
(For alternates)

3. M/s. J.P. Engineering Works
A-70, G.T. Karnal Road,
Industrial Area,
Delhi - 110033.
(For Alternates)

4. M/s. Kirloskar Cummus Ltd. Pune
(For Diesel Engine)

5. M/s. Mono tex Agency
165, Dr. Nanjappa Road,
Coimbatore - 12.
(For Diesel Engine)

6. M/s. Asia Electric Company Katara Mansion,
Dr. A.B. Road, Worli,
Mumbai- 400 018.
(For Control Panel Assembly)