PROJECT PROFILE

ON
ELECTRIC HORN (AUTO)

PRODUCT CODE : 37486800X

QUALITY AND STANDARDS : IS :1884

PRODUCTION CAPACITY : 18000 Nos. for Small/medium vehicles.

18000 Nos. for two wheelers/three
wheelers.

MONTH AND YEAR OF : 2003-04

PREPARATION

PREPARED BY : MSME-Development Institute

Udyog Vihar,
Chorhata, Rewa - 486001 (M.P.)

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1. INTRODUCTION:

Horns are mostly required electrical equipment to warn the passer by for Automobiles. As
the utilization/Registration of automobiles are increasing day by day due to increase in population
and living standards of countrymen, the use of this product also increases.

Transportation/Roads are the basic infrastructural facilities to divide a place as developed

and undeveloped class.

There are largest concentration of traffic in highways and state highways in the state of
Madhya Pradesh, Intensity of vehicles passing is very high. It becomes difficult for drivers to
proceed further especially in crowed places metropolitans, school zones.

Hence Electric Horn (Auto) is a safety electrical equipment required in Automobiles for
accident free driving, saving of costly human life.

With reference to Vindhya region of M.P. where mode of transportation safety depends
on Automotives such units manufacturing this products are very much essential.

So far as known no entrepreneur have ventured in the field of manufacturing this particular
product. However, repairing assembly works are going on in large scale.

This project profile envisages for manufacturing of 18,000 No. of Electric Horns for small/
medium vehicles and 18,000 for use on two/three wheelers.

II. MARKET POTENTIAL

Demand of this product has enormous scope besides units manufacturing. This product
can be ancillary to major automobile manufacturer’s of the country. Automobile manufactured
association itself will provide a tremendous market potential for this product. Main aspect of
market for this product in new installation as well as replacement. Entrepreneur’s are advised to
look on both aspects. Some of the potential customer’s are -

(i) Automobile manufacturers.

(ii) Servicing Agencies.

(iii) Repairing Agencies.

Quality concept are the main factor to popularize in market. Contact points, castings,
Diaphrm are to be of proven quality.

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III. BASIS & PRESUMPTIONS:
1. All the components except contact points to be manufactured in the units itself.
2. Land & shed is proposed on rental basis.
3. Total capital investment has been calculated by taking 3 months working capital in to
account.
4. Margin money requirement may differ on type of financial institution/Entrepreneur .
5. Labour wages mentioned are prevailing in the state of M.P.
6. Cast of machinery, Raw Material, Testing Equipment may differ from place to place and
it may vary.
7. Rate of interest has been taken is 20% which may differ on the type of financial institution.
8. Break Even Point is calculated on full capacity utilization.
9. Minimum 3 years are required for full capacity utilization.

IMPLEMENTATION SCHEDULE:

The major activities in the implementation of the project have been tested and the average
time for implementation of the project is estimated at 12 months.

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 & 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 2

7. Trial production 11

8. Commercial production 12

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TECHNICAL ASPECTS:

1. PROCESS OF MANUFACTURE

1. Diaphram is made of special steel sheets. It is to be cut to size, then shape is to given on
hydraulic press.
2. Fixed not of turns of coils are to be wound on stamping for vibrator coil.
3. Contact points castings are to be locally purchased.
4. After receiving the cast body.
5. Milling machine works to be done on subcontracting.
6. Testing to be done for
(i) Air Gap.
(ii) Sound.

It should confirm quality specifications.

2. QUALITY STANDARDS :

Product must confirm specification.

IS: 1884 Part I & II

3. PRODUCTION CAPACITY PER ANNUM :

Qty. : (I) 18000 Nos. for four wheelers.

(II) 18000 Nos. for two/three wheelers.

Value : Rs. 10.80,000/- & Rs. 18,00,000/-

4. MOTIVE POWER:

30 Kilowatts.

5. POLLUTION CONTROL:

The Govt. 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 Sept.1992, the production and use of
Ozone Depleting Substances(ODS) like Chlorofluoro Carbon(CFC), Carbon Tetrachloride, Halons
and Methyl Chloroform etc. need to be phased out immediately with alternative chemicals/solvents.

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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.

The following steps are suggested which may help to control pollution in electronics industry
wherever applicable:

i) In electronic industry fumes and gases are released during hand soldering/wave soldering/
Dip soldering, which are harmful to people as well as environment and the end products.
Alternate technologies may be used to phase out the existing polluting technologies.
Numerous new fluxes have been developed containing 2-10% solids as opposed to the
traditional 15-35% solids.

ii) Electronic industry uses CFC, Carbon Tetrachloride and Methyl Chloroform for cleaning
of printed circuit boards after assembly to remove flux residues left after soldering and
various kinds of foams for packaging.

Many alternative solvents could replace CFC-113 and Methyl Chloroform in electronics
cleaning. Other Chlorinated solvents such as Trichloroethylene, Perchloroethylene and Methylene
Chloride have been used as effective cleaners in electronics industry for many years. Other organic
solvents such as Ketones and Alcohols are effective in removing both solder fluxes and many polar
contaminants.

6. ENERGY CONSERVATION REQUIREMENTS:

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 Aug., 01, 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.

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

FINANCIAL ASPECTS:

I. FIXED CAPITAL

(a) Land & Building

It is proposed to have rental shed casting Rs. 5000/- per month.

(b) Machinery:

1. Hydraulic press 20 tons 1 50,000

2. Power press 30 tons 1 40,000

3. Shearing machine 1 20,000

4. Drill Machine ½ 1 3,000

5. Spot welding transformer 1 5,000

6. Riveting machine 1 7,000

7. Electric Oven 1 10,000

8. Drill machine 1 10,000

9. Centre lathe 6' 1 50,000

10. Double ended grinder 1 5,000

11. Coil winding machine 1 5,000

12. Arbor press No.3 1 5,000

2,10,000

(c) Testing Equipments :

(1) Air Gap Testing Equipment 1 20,000

(2) Sound Testing Equipment 1 15,000

35,000

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 Other Fixed Assets

(i) Electrification & Installation 24,500

(ii) Furniture & Office Equipments 30,000

(iii) Tools & Dies. 15,000

69,500

(e) Total Fixed Capital

(b + c + d)

2,10,000 + 35,000 + 69,000 = 3,14,000

Working Capital per month

(i) Staff & Labour

(1) Manager 1 5,000

(2) Skilled worker 10 15,000
(3) Unskilled worker 10 10,000
(4) Clerk/Accountant 01 10,000
(5) Watchman/Peon 2 2,000
33,000

(ii) Raw Material requirement per month

Description Qty. Rate Value

1. Die Cast Horn Body 2000 Kg. 20 40,000
2. Diaphram Steel Sheet 300 Kg. 100 30,000
3. Silicon Steel Sheet 600 Kg. 50 30,000
(22 SWG)
4. Annealed Steel Sheet 300 Kg. 30 9,000
5. MS Sheet 12 SWG 600 Kg. 30 18,000
6. Enameled Cu Wire LS - 20,000
7. Contact Points LS - 15,000
1,62,000

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(iii) UTILITIES (Per month) :
(1) Electricity 3,000
(2) Water 500
(3) Advertisement/Packing 5,000
(4) Miscellaneous 5,000
13,500

Total Recurring Expenditure per month

(i + ii + iii)
33,000 + 1,62,000 + 13,500 = 2,08,500

TOTAL CAPITAL INVESTMENT:

Fixed Capital 3,14,000
Working Capital for 3 months 6,25,500
9,39,500

COST OF PRODUCTION (per Annum) :

Rent 60,000
Staff & Labour 3,96,000
Raw Material 19,44,00
Depreciation on plant & machinery @ 10% 31,400
Interest on total capital investment @ 20% 1,87,900
26,19,300
Say Rs. 26,19,000

TURN OVER (Per Annum) :

Description Sales Value (Rs.)

By sales of 18000 of Horns for small/Medium 18,00,000

vehicles @100/- per horn.
By sales of 18000 of Horns for two 10,80,000
wheelers @ Rs. 60/- per horn.
28,80,000

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PROFITABILITY (Per Annum):

28,80,800 - 26,19,000 = 2,61,000

NET PROFIT RATIO:

261000 x 100 = 9.06%

2880000

RATE OF RETURN :

261000 x 100 = 27.79%

939000

BREAK EVEN ANALYSIS:

a. FIXED COST:

Rent 60,000

Interest on total capital investment. 1,87,900

Depreciation on plant & machineries 31,400

40% of salary & wages 1,58,400

40% of contingent utilities 5,400

4,43,100

b. BREAK EVEN POINT:

FC x 100 = 443100 x 100

FC + P 443100 + 261000

44310000 = 63%
704100

ADDITIONAL INFORMATION:

(a) Project Profile may be modified/tailored to suit the individual entrepreneurship qualities/
capacities, 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 national and international scenario. The unit may therefore keep

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 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 environments 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.

NAME & ADDRESSES OF MACHINERY & EQUIPMENT SUPPLIERS:

(1) M/s. Batliboy & Co. Pvt. Ltd.

Jeevan Vihar Building, Parliament Street,
New Delhi- 110001.

(2) M/s. Francies Klain & Co. Pvt. Ltd.

B-65, NDSE, Part II, New Delhi

(3) M/s. William Jack & Co. Ltd.

Jeevan Vihar Building, Parliament Street,
New Delhi-110001

(4) M/s. Jeet Machine Tools Corpn.

48, GB Road, Delhi-6.

ADDRESSES OF RAW MATERIAL SUPPLIERS:

All raw materials are available in local markets.

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