ELECTRONIC WEIGHING SCALES MANUFACURING UNIT

Weighing function finds application in almost all industries besides retail outlets, laboratories, jewellers, dairies, couriers companies, etc. Electronic type weighing machines have an advantage over mechanical balances due to the following reasons;

INTRODUCTION

Compactness Ruggedness and reliability Good accuracy Ease of operations Facility for digital print-out, remote indication and parallel display An electronic weighing scale consists of a basic load cell and a weighing platform or a pan. The associated electronics mainly comprises of such as signal conditioner and display/indicator and optionally a dot-matrix printer. Electronic weighing scales come in different types depending on their application and weighing capacity. Some of the important types of electronic weighing scales are:

Sr. No.

Type Application Capacity Least count

1. Table top/ Retail scales

Weighing scales with platforms / pans for retail stores 30 kg. 5 gm.

2. Bench scales Weighing scales for chemical industries, wholesalers, grain merchants, all types of industries

1 ton 10 gm.

3. Jewellery scales High precision / low capacity weighing scales for weighing precious metals

500 gm. 0.01 gm.

4. Analytical scales High precision / low capacity weighing scales for laboratory application

200 gm. 0.01 gm.

5. Industrial Platform scales

High capacity weighing scales for high volume weighing such as metals, industrial raw materials,

industrial output

5 ton 100 gm.

6. Hanging scales Heavy duty weighing scales for field weighing 1 ton 10 gm. 7. Weighbridges Heavy duty weighing and rugged electronic weighing

scales for truck weighing at industries, warehouses and transportation depots

60 ton 10 kg.

The heavy-duty electronic weighing scales such as industrial platform scales and weighbridges use a 4 load cell bridge technique. The proposed project envisages manufacture of electronic weighing scales of capacity upto 1 ton, i.e. table top (retail) and bench scales. As the basic manufacturing technology for heavy duty electronic weighing systems remains the same, the unit could, at a later stage, also explore the possibility of diversifying into heavy duty electronic weighing systems (such as weighbridges, etc.).

Electronic type weighing scales are fast replacing their mechanical counterparts in retails establishments (groceries, bakeries, sweetmeat shops, fruit and vegetable vendors, supermarkets, hardware stores, etc.). Electronic scales are also being widely used by post offices, couriers, poultries, dairies and small scale industries for weighing applications.

MARKET POTENTIAL

The total electronic weighing scales market in India is estimated at 100,000 units corresponding to Rs. 120 Cr. There are about 30 – 40 units manufacturing electronic weighing scales in the SSI sector besides 10 large units in the organised sector. The total annual market for electronic weighing scales in the eastern region of the country (including West Bengal, Bihar, Jharkhand and Orissa) is estimated to be 9,000 units. The North

East market for electronic weighing scales is estimated to be close 2,000 units corresponding to Rs. 2.4 Cr. Given the growth in organised retail industry in the country and the increase in penetration of electronic weighing scales, industry sources estimate the demand for electronic weighing machines in the North East to grow at a rate of 15% over the next 10 years. Thus the market is expected to reach a size of Rs. 8.4 Cr. by 2013. Overall, the national market for electronic weighing scales is estimated to reach a size of Rs. 280 Cr. by 2013.

Plant capacity and production targets for the proposed unit have been arrived at based on the following factors:

PLANT CAPACITY AND PRODUCTION TARGETS

Product Mix (of retail scales and bench scales) Demand : Supply Gap (in the North East and adjoining region) Minimum economic plant size (based on discussions with few existing manufacturers) Rated capacity of the key equipment The proposed electronic weighing scales unit would have a rated capacity to produce 1800 nos. on a 3-shift basis. At the rated capacity the total revenue would be close to Rs. 2.16 Cr. Although this is approximately 90% of the current total North East demand, it is just 1.8% of the total national demand. Given the expected market growth, at the end of 10 years (i.e by 2013), the rated plant capacity would be just over 25% of the then total North East demand. With the proposed capacity, there is scope for setting up only one unit for manufacturing electronic weighing scales in the North East. It is assumed that the proposed manufacturing unit would not undertake the marketing of the products initially and would supply its entire production to an existing manufacturer/s which in turn would sell it under their brandname. However, at a later stage the manufacturing unit will have to explore the possibility of marketing the product under its own brandname. Since total manufactured volumes of the proposed unit are relatively low, it is not justifiable to set up a unit exclusively for manufacturing electronic weighing scales. Hence it is proposed that the production facility for electronic weighing scales should be setup at the existing units manufacturing electronic items. Some of facilities at the existing units could be used for manufacturing the proposed products. In the first year, the manufacturing unit would operate only in 2-shifts. However, from the second year the proposed unit should target to operate at the rated capacity. Summing up; Rated Plant Capacity – 1800 nos. on three shift basis Average Gross Realisation – Rs. 12000/unit Revenue at Rated Capacity – Rs. 2,16,00,000 Production Target (Year 1) - 1200 MT (2 shifts) Revenue (Year 1) - Rs. 1,44,00,000

The basic raw materials used for manufacturing of electronic weighing scales are: MAJOR INPUTS (RAW MATERIALS)

Load Cells Printed Circuit Boards (PCBs) Integrated Circuits (ICs) Components (diodes, transistors, resistors,

capacitors, rectifiers, potentiometers, transformers, switches, filters, etc.)

LED 7-segment display panels Wires and connectors Housing material (metal) Consumables (solder)

Stainless Steel Platforms / pans Packing material

The electronic weighing system comprises of a load cell, suitable signal conditioners and an output indicator. The signals from the load cell are amplified and fed to an analog to digital converter, which provides an output in a digital format for display. Occasionally, the output is also provide to a printing / processing unit. Exhibit 1 provides a schematic representation of the manufacturing process for electronic weighing scales.

PRODUCTION DETAILS & PROCESS TECHNIQUES

Exhibit 1

The manufacturing of electronic weighing scales is an assembly process involving the load cell, electronic circuits and electro-mechanical hardware. In the electronic assembly, the ICs, transistors, diodes, resistors, capacitors, transformers, coils, relays, potentiometers are laid on a PCB and soldered. The soldering is done either manually or using wave soldering machines.

Schematic – Electronic Weighing scales

The assembled PCBs are tested for performance. Subsequently the electronics assembly alongwith electro-mechanical assembly, hardware such as connectors, switches, terminals, display, are assembled and housed in a metallic case. An attractive front panel (or fascia) is fitted on to the metallic casing. The testing process is the most critical in the entire manufacturing process. The electronic weighing scale is tested and calibrated to the desired specification on a testing assembly using standard weights. After testing and calibration, the equipment is packaged and ready for dispatch.

There is statutory requirement of obtaining approval from the Department of Weights & Measures for manufacture of Electronic weighing scales. It is mandatory to get the testing and calibrating equipment certified from the department on a regular basis.

QUALITY AND STANDARDS

The International Organisation of Legal Metrology (OIML) standards R 60 and R 76 are the most widely followed by the manufacturers of load cells. The certification ensures that their products meet international specifications for metrological performance and testing.

The key success factor for this project would be the after-sales service network. Given the density of retail outlets in Guwahati, a large share of the total sales would be in Guwahati. From the point of view of ease in operation, it is proposed that the unit be located in Guwahati.

LOCATION OF THE UNIT

The unit will work for 300 days on 2-shift basis in the first year after which it with work in three shifts.

BASIS AND ASSUMPTIONS

Inflation is assumed to affect both revenues and cost by the same amount, hence ignored for

PCB assembly

PCB testing

Electro-mechanical assembly

Testing and calibration

Painting / coating

Fitting of fascia

Electronic Circuit

Casing Packaging &

dispatch

financial workings. Selling and distribution expenses have been ignored as the proposed unit would sell its entire production to an existing manufacturer, which in turn would sell it under his brandname.

Sr. No. Item Value Basis 1. Net realizations Rs. 12000 / unit Average net price realization for a table top (retail)

electronic weighing scale 2. Plant and building ~ 60% of land ndustry norm 3. Machinery and Equipment -- Current cost inclusive of installation expenses 4. Miscellaneous Fixed assets -- ndustry norm 5. Provision for contingency 10% of Total capital

expenditure Assumption

6. Raw material prices -- Landed cost (including transportation) 7. Labour -- Prevalent rate in North East 8. Power and Fuel -- Prevalent tariff in Assam 9. Repair and maintenance 2% of fixed capital

investment p.a. ndustry norm

10. Raw Material (RM) 0.5 months 11. Work in Progress (WIP) 0.1 months 12. Finished Goods (FG) 0.5 months 13. Bills receivable 1 month 14. Creditors 1 month 15. nterest on Working Capital 9% 3% subsidy on Working Capital Loan under the

Central Interest Subsidy Scheme, 1997 16. Subsidy on Plant and

Machinery 15% Under the Central Capital Investment Subsidy

Scheme, 1997 17. Subsidy on Insurance

Premium 100% Under the Central Comprehensive Insurance Scheme,

1997 18. Subsidy on Income Tax 100% 19. Debt : Equity 60 : 40 20. nterest on Term Loan 12% 21. Margin money for Working

Capital 25%

22. RM cost Landed cost at the factory gate (inclusive of transportation cost and excise duty)

FIXED CAPITAL

A. LAND AND SITE DEVELOPMENT

Particular Units Unit rate Total 1. Land & Site Development 1500 sq.m. Rs. 200 / sq.m. Rs. 3,00,000 Total Rs. 3,00,000

B. PLANT AND BUILDING

Particular Units Unit rate Total 1. Buildings & Civil works

Office, Store, etc Work shed Warehouse

200 sq.m. 500 sq.m. 100 sq.m.

Rs. 3000 sq.m. Rs. 1500 sq.m. Rs. 1500 sq.m.

Rs. 6,00,000 Rs. 7,50,000 Rs. 1,50,000

Total Rs. 15,00,000

Sr. C. MACHINERY AND EQUIPMENT

Item Quantity Unit Cost Total 1. Load cell simulator 1 nos. Rs. 40,000 Rs. 40,000 2. General purpose oscilloscope DC – 10 MHz 1 nos. Rs. 20,000 Rs. 20,000 3. Power Supply (0 – 30 V, 2 A) 2 nos. Rs. 5,000 Rs. 10,000 4. Digital Multimeters 3 nos. Rs. 3,000 Rs. 9,000

Sr. Item Quantity Unit Cost Total 5. Standard Weights 1 set Rs. 10,000 Rs. 10,000 6. True RMS Multimeter 1 nos. Rs. 5,000 Rs. 5,000 7. Digital LCR Meter 1 nos. Rs. 15,000 Rs. 15,000 8. IC Tester / EPROM Programmer 1 nos. Rs. 20,000 Rs. 20,000 9. Transistor Tester 1 nos. Rs. 4,000 Rs. 4,000 10. UV Eraser 1 nos. Rs. 4,000 Rs. 4,000 11. Variacs (4 A) 2 nos. Rs. 1500 Rs. 3,000 12. Bench Drilling Machine 1 nos. Rs. 5,000 Rs. 5,000 13. Portable grinder 1 nos. Rs. 3,000 Rs. 3,000 14. Tools / jigs / fixtures Rs. 20,000 15. Assembly line (conveyorised) Rs. 30,000

Total Rs. 1,98,000

Sr. D. MISCELLANEOUS FIXED ASSETS

Item Total 1. Office Equipment & Furniture Rs. 25,000 2. Electric fittings and fixtures Rs. 20,000 3. Fire fighting equipment Rs. 10,000 Total Rs. 55,000

Sr. E. PRE-OPERATIVE EXPENSES

Item Total 1. Detailed Techno-commercial Feasibility Study Rs. 1,00,000 2. Loan application processing expenses Rs. 5,000 3. Establishment expenses Rs. 20,000 Total Rs. 1,25,000

Provision for contingency - @10% of the Total Capital Investment F. PROVISION FOR CONTINGENCY

OPERATING EXPENSES

Sr. A. RAW MATERIAL

Raw Materials (Monthly) Qty (nos.) Unit Value (Rs./unit)

Value (Rs)

1. Load Cells (Strain gauge) 100 Rs. 3500 Rs. 3,50,000 2. Ics 1200 Rs. 6,000 3. Transistors / Resistors / Diodes /

Capacitors / Rectifiers / Potentiometers Rs. 5,000

4. Crystal 100 Rs. 40 Rs. 4,000 5. Transformers 100 Rs. 10 Rs. 1,000 6. Terminals / Connectors Rs. 1,000 7. Switches Rs. 2,000 8. PCB 100 Rs. 50 Rs. 5,000 9. Fluorescent Display 100 Rs. 500 Rs. 50,000 10. Other mechanical hardware Rs. 20,000 11. Cabinet / Housing (Metal) 100 Rs. 500 Rs. 50,000 12. Packing material Rs. 2,000 13. Consumables Rs. 2,000

Total Rs. 4,98,000 Annual Raw Material cost - Rs. 59,76,000 (for 1200 units i.e. 2 shifts) Rs. 89,64,000 (for 1800 units i.e. 3 shifts)

Sr. B(1). DIRECT LABOUR

Labour (Monthly) Qualifications Nos. Unit salary Cost (Rs.) 2 -shift 3-shift 2-shift 3-shift

1. Production Supervisor B.E./ B. Tech. (Electronics)

2 3 Rs. 10000 Rs. 20,000 RS. 30,000

2. Skilled Workers Diploma (Electronics)

24 36 Rs. 6000 Rs. 1,44,000 RS. 2,16,000

3. Semi Skilled Workers TI Certificate 4 6 Rs. 3000 Rs. 12,000 RS. 18,000 Rs. 1,76,000 RS. 2,64,000 Add: 15% perks Rs. 26,400 RS. 39,600 Total Wage Bill (Monthly) 30 45 Rs. 2,02,400 RS. 3,03,600

Annual Direct Labour cost - Rs. 24,28,800 (for 1200 units i.e. 2 shifts) Rs. 36,43,200 (for 1800 units i.e. 3 shifts)

Sr. B(2). LABOUR INDIRECT

Staff (Monthly) Qualifications Nos. Unit salary Cost (Rs.) 1. Manager B.E/ B.Tech +

MBA 1 Rs. 15000 Rs. 15,000

2. Storekeeper-cum-Clerk B. Com / M. Com

1 Rs. 4000 Rs. 4,000

Rs. 19,000 Add: 15% perks Rs. 2,850 Total Wage Bill (Monthly) 2 Rs. 21,850

Annual Indirect Labour cost - Rs. 2,62,200 (at all production levels)

Sr. C. POWER & FUEL

Utilities (Monthly) Units Unit Cost Value (Rs.) 1. Power 2000 units Rs. 6 Rs. 12,000 Total Rs. 12,000

Annual Power and Fuel cost - Rs. 1,44,000 (for 1200 units i.e. 2 shifts) Rs. 2,16,000 (for 1800 units i.e. 3 shifts)

Sr. D. OTHER EXPENSES

Other Expenses (Monthly) Value (Rs.) 1. Stationery and postage (including

operating manual) Rs. 5,000

2. Repair and maintenance @2% fixed capital investment per year

Rs. 4,000

3. Marketing and distribution Rs. 60,000 4. Advertisement & Publicity Rs. 20,000 5. After Sales Service Rs. 15,000 6. Telephone, Fax and Internet Rs. 3,000 7. Miscellaneous (Electricity) Rs. 3,000 8. nsurance Premium - Total Rs. 1,10,000

Annual Other expenses - Rs. 13,20,000 (at all production levels)

Sr. E. TOTAL WORKING CAPITAL

Fixed Capital Assumption Value (Rs.) 1. Raw Material (RM) 0.5 months Rs. 2,49,000 2. Work in Progress (WIP) 0.1 months Rs. 71,240 3. Finished Goods (FG) 0.5 months Rs. 6,00,000 4. Bills receivable 2 month Rs. 24,00,000 5. Creditors 1 month Rs. 5,10,000 Total Rs. 28,10,240

Margin money (@25% of total Working Capital) – Rs. 7,02,560

Sr. TOTAL COST OF PROJECT

Cost item Value (Rs.) 1. Land & Site development Rs. 3,00,000 2. Building and Civil Works Rs. 15,00,000 3. Machinery and Equipment Rs. 1,98,000 4. Misc. Fixed assets Rs. 55,000 5. Pre-operative expenses Rs. 1,25,000 6. Provision for contingency Rs. 2,17,800 7. Margin money for Working Capital Rs. 7,02,560 Total Rs. 30,98,360

Total Cost of Project Rs. 30.98 lakhs Debt : Equity

Promoters Equity (40%) Rs. 12.39 lakhs Term Loan from financial institution Rs. 18.59 lakhs

FINANCIAL WORKINGS

PROFIT & LOSS STATEMENT FOR 10 YEARS

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Capacity 1800 1800 1800 1800 1800 1800 1800 Capacity Utilisation

67% 100% 100% 100% 100% 100% 100%

Production 1200 1800 1800 1800 1800 1800 1800 Sales

Realisation 14,400,000 21,600,000 21,600,000 21,600,000 21,600,000 21,600,000 21,600,000

Raw Material

5,976,000 8,964,000 8,964,000 8,964,000 8,964,000 8,964,000 8,964,000

Direct Labour

2,428,800 3,643,200 3,643,200 3,643,200 3,643,200 3,643,200 3,643,200

Indirect Labour

262,200 262,200 262,200 262,200 262,200 262,200 262,200

Power and Fuel

144,000 216,000 216,000 216,000 216,000 216,000 216,000

Total operating costs

8,811,000 13,085,400 13,085,400 13,085,400 13,085,400 13,085,400 13,085,400

Gross Profit

5,725,800

8,719,800

8,719,800

8,719,800

8,719,800

8,719,800

8,719,800

Other Operating Expenses (Fixed)

1,320,000

1,320,000

1,320,000

1,320,000

1,320,000

1,320,000

1,320,000

PBDIT 4,405,800

7,399,800

7,399,800

7,399,800

7,399,800

7,399,800

7,399,800

Interest on WC

189,691

284,537

284,537

284,537

284,537

284,537

284,537

Interest on Term Loan

220,944

220,944

196,394

171,845

147,296

122,746

98,197

Depreciation 187,442

166,829

148,569

132,382

118,020

105,268

93,938

PBT 3,807,723

6,727,491

6,770,300

6,811,037

6,849,948

6,887,249

6,923,128

Tax -

-

-

-

-

-

-

PAT 3,807,723

6,727,491

6,770,300

6,811,037

6,849,948

6,887,249

6,923,128

Cash Profit 3,995,165

6,894,320

6,918,869

6,943,418

6,967,968

6,992,517

7,017,066

GP Margin 39.8% 40.4% 40.4% 40.4% 40.4% 40.4% 40.4% NP Margin 26.4% 31.1% 31.3% 31.5% 31.7% 31.9% 32.1%

Return on Investment (ROI) in the first year of operation – 122.9%

BREAKEVEN ANALYSIS

Particulars Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Capacity Utilisation

67% 100% 100% 100% 100% 100% 100%

Gross Realisation

14,400,000 21,600,000 21,600,000 21,600,000 21,600,000 21,600,000 21,600,000

Variable Costs Direct Material 5,976,000 8,964,000 8,964,000 8,964,000 8,964,000 8,964,000 8,964,000

Power & Fuel 144,000 216,000 216,000 216,000 216,000 216,000 216,000 Interest on Working Capital

189,691 284,537 284,537 284,537 284,537 284,537 284,537

Total Variable Costs

6,309,691 9,464,537 9,464,537 9,464,537 9,464,537 9,464,537 9,464,537

Contribution 8,090,309 12,135,463 12,135,463 12,135,463 12,135,463 12,135,463 12,135,463

Fixed Costs Other Expenses (Fixed)

1,320,000 1,320,000 1,320,000 1,320,000 1,320,000 1,320,000 1,320,000

Manpower Cost 2,691,000 3,905,400 3,905,400 3,905,400 3,905,400 3,905,400 3,905,400 Interest on Term Loan

220,944 220,944 196,394 171,845 147,296 122,746 98,197

Total Fixed Cost

4,231,944 5,446,344 5,421,794 5,397,245 5,372,696 5,348,146 5,323,597

Break Even Point

7,532,467 9,693,987 9,650,291 9,606,596 9,562,900 9,519,205 9,475,510

Actual Sales 14,400,000 21,600,000 21,600,000 21,600,000 21,600,000 21,600,000 21,600,000

Break Even Sales at % of Capacity

35% 45% 45% 44% 44% 44% 44%

SOURCES OF RAW MATERIAL

Electronic Components Bharat Electronics, Bangalore 116/2, Trade Centre, Race Course Road Bangalore - 560 001 Tel: 080 226 7322 DID: 080 2260252, 2260253 Fax: 080 225 8410 Electronic Corporation of India Ltd., Hyderabad ECIL Post, Hyderabad - 500 062, Tel: +91-40-7123409

Load Cells AG Measurematics 30, Civil Lines, Roorkee – 247667 Tel: 91-1332-70772 Fax: 91-1332-71172 Sens Tech (P) Ltd, Bangalore #17 , Survey No : 43 / 1, Hesserghatta Road, Bangalore – 560073 Tel - +911-080-8379935 Fax - +911-080-8379935.

Fax: +91-40-7121802 Philips India Ltd., CE Factory, Plot No.80 Bhosari Industrial Estate, P. O. Box No. 12, Pimpri, Pune 411026. Pieco Electronics & Electricals Limited Philips House 7, Justice Chandra Modhab Road Calcutta 700 020 Tel: +91-33-2473621 Kartik Electronics C-34 HSIDC Indl Estate, Sector 31, Faridabad - 121 003, Phone: +91-129-2274255/2276928 Fax: +91-129-2285462 SMEC ELECTRONICS (INDIA) PVT. LTD Plot No. A - 3, GIDC, Electronics Estate, Sector - 25, 382, Gandhinagar, Tel: +91-2712-27352 Fax: +91-2712-27351

Mettler Toledo Amar Hill, Saki Vihar Road, Powai Mumbai, 400072 Tel: +91-22-28570808 Applied Measurements Ltd., 3 Mercury House, Calleva Park Aldermaston, Berkshire RG7 8PN. UK. Tel: +44 (0) 118 981 7339 Fax: +44 (0) 118 981 9121 Novatech Measurements St. Leonards-on-Sea TN38 9NT E Sussex United Kingdom Tel: + 44 1424 852744 Fax: + 44 1424 853002

SOURCES OF MACHINERY

Testing Equipment Mechatronics Test Equipment [I] Pvt. Ltd., B-2, Fountainhead Apartment, Opp.Sangam Press, Kothrud, Pune 411038 Tel: 020-5438091,5464072 Fax: 020-5464046 Seleicon Electronics Systems Pvt. Ltd. 59, Gandhi Nagar, Crawford, Trichy, 620 012 Tel: 91-431-471194,471601 Fax: 91-431-471491 Aplab Aplab House A-5 Wagle Estate Thane - 400 604.

Machine Tools Apoorva Engineering Gurukripa, Near People’s Bank, Canada Corner, Nashik – 422 009 PSG Industrial Institute, Post 8ox No 1609, Coimbatore – 641004 Tel: 422-572265 / 422-572265 Fax: 422-573833 Bajaj Black & Decker 51, Mahatma Gandhi Road Mumbai 400023 Tel: 91-22-22043780 / 22875135 Fax: 91-22-22828250 HMT Ltd., Bangalore

Yokogawa Blue Star Ltd. 40-4 Lavelle Road Bangalore 560 001 Tel: (91)-80-227-1513,(91)-80-224-5773 Fax: (91)-80-227-4270 Meco Instruments 301, Bharat Industrial Estate T.J. Road, Sewree Mumbai 400015 Tel: 022-4137253,4137423,4132435 Fax: 011-4146234

Machine Tool Marketing Division HMT Bhavan, Bellary, Karnataka Tel: 91-80-3330333 Fax: 91-80-3337800

Courtesy:NEDFi