1 Pre-Feasibility Study OfBar/merchant profiles Hot Rolling Mills April 24, 2011
21. INTRODUCTION TO DOCUMENT PRESENTERFAROOQ AMIRUsed to visit his father’ s Rolling mills Named” MUSLIMROLLING MILLS ,” observed how the Mill was running in 1966,FAROOQ AMIR than experienced to see the Rolling of steel;Plain Bars, Deform bars, Tee, Zee, and Channels etc.In 1972 when he was studying in Engineering Collage heexperienced to design the Reduction Gear and theStraightening Machine in his Family Rolling Mills, After passinghis engineering in Mechanical Technology he design the RailwayFish Plate, and started to take interest in making parts of theRolling Mills, He took part in launching of a Light Beam Mill in1975, and many more steel related projects.In 1977 he joined the Jordan Iron and Steel Industries locatedin Awajan Jordan.. There he learned Automation of RollingTechnology.Since that he is continuously doing his utmost efforts toprovide his consultant services just to transfer his experiencedtechnology, with pay or without pay but with sincerity topromote the Rolling technology to enhance the capacity ofindividual to exploit the viable business opportunities in betterway.Promoter
3DISCLAIMERThe Purpose and scope of this Information memorandum is tointroduce the subject matter and provide a general idea andInformation on the side area. All the material includes in thisdocument is based on data/ Information gathered from varioussources and is based on certain assumptions. Although, due care anddiligence has been taken to compile this document, the containInformation may vary due any change in any of the concerned factors,and actual results may differ substantially from presented Information.The presenting source does not assume any liability for any financial orother loss resulting from this memorandum in consequence of undertaking this activity. Therefore, contents of this memorandum shouldnot be relied upon for making any decision, Investment or otherwise.The prospective user of this encouraged to carryout his/her own duediligence and other gather information he/she consider necessary formaking an informed decision.The contents of the information memorandum do not bind thepresenting source of this in any legal or other form.DOCUMENT CONTROLDocument No. PREF- 1Revision 0Prepared by Farooq AmirApproved byIssue Date April 2011
42 PURPOSE OF THE DOCUMENTThe objective of the pre-feasibility study is primarily to facilitatepotential entrepreneurships in project identification for investment.The project pre-feasibility may from the basis of an importantinvestment decision and in order to serve this objective; thedocument/study covers various aspects of project conceptdevelopment, start-up, production, marketing, and finance andbusiness management.The document also provides sectoral information, which has somebearing on the project itself.This particular pre-feasibility is regarding production of ROUND BARsand other light section on commercial basis, which comes underIndustrial /Residential construction sector. Before studying the wholedocument one must consider following critical aspects, which forms thebasis of any investment decision.3 CRUCIAL FACTORS & STEPS IN DECISION MAKING FORINVESTMENT IN THE PROJECTBefore making any investment decision, it is advisable to evaluate theassociated risk factors by taking into consideration certain keyelements. to Establish Hot Rolling Mills.Rolling Industries critical factors that should be considered beforelaunching are described below:l The market for Bars and others light sections is a growing market,but offers tough competition.b Perception / positioning of the New arrival. Usually the top targetmarket for steel bars follows the perception. If the perception ispositive, the results will be higher sales. The positive perception forCommercial market for final customers may result from directconsumer experience, awareness, direct Promotional activities, printmedia and TV advertising.m Distribution is very important for the success of new brand. Thestronger the distribution the more successful will be the newIndustries. The distribution strategy should be designed after a carefulstudy of the market for going for Regional distribution or for intercitywide distribution.w Pre-launch advertising is vital for positive perception of the product,which will result in higher product acceptance.w Compliance of the Steel quality standards of International Standards& QualityControl Authority and license from the authority.C Availability of product at A class, B class or C class shops should bedecided before launching the product and availability should bepersistent.
53.1 Project Time LinesS. No Activity Time (months)1 Civil Works 22 Plant order and lay out 3The construction of civil works has been estimated to be completed inTwo monthsAnd placing mill order lay out and installation is estimated to have atime period of Three months. The time required for pre-operations istwo month. It also includes pre-launchAdvertisements, on TV and in print media. The project time line mayextend and cut back depending upon the start of activities on parallelbasis or one after an other.4 PROJECT PROFILE4.1 Rolling of Round Bar & light sectionsThe process of Rolling consists of collecting Raw material (Billet orBloom) from a suitable source which we have. Pre-heating, Roughing,Finishing, cut to Length, Lab Test for standards conformation,Bundling.A process for the production of Steel bars in south Punjab, was theThought the CHAIRMAN OF SHIEKHO SUGAR MR. SHIEKH ANIS. inAnwer abad Sanawan. It is very simple process consisting of 250 mmDiameter Rolls Three Hi, Six stands Mill This Mill will produce Deform,Bar/light section from R.B 10mm to R,B. 25mm.The Thought of honorable Chairman Mr. Anis considered being theright decision in right time as steel rolling ground of south Punjab isfree to play long short but with brilliant business strategy.
6List of Renowned Steel merchants and traders in Multan are as follows; 4.2 Opportunity RationaleThe market for the Rolling mills has been showing a mushroom growth trendover the last few years. The south Punjab market is very small on comparingto upper Punjab and was estimated at 135000 Tons per year (Mixed sales ofdifferent sizes) of Round bars only and estimated 81000 Ton, per year sale ofmostly were of round bar 10,12,and 16 sizes. in 2009-2010Though the international slump affects the Pakistan market and the marketof Multan too, even that the consumption of the steel is a need as no one ismanufacturing locally. Last years shown more growth and the market hasbeen estimated to grow by 8000 ton more the per capita consumption isassumed 0.0000066 ton. The annual growth rate of the steel assumed0.17% according to the market survey on Internet in South Punjab. Whereas there are the chances of expand the marketing circle to North of Sind andwest Baluchistan.4.3 Project BriefThis proposed project presents an investment opportunity for establishing asteel Re-Rolling Millsfor providing as per demand products. The proposed product line will consistRound Bars Deformed/ Plain Low and Hi carbon 1. Dia 8, mm 2. Dia 10mm 3. Dia 12mm 4. Dia 14mm 5. Dia 16mm 6. Dia 20mm 7. Dia 25mmMerchant Steel 1. Angles 2. Squares 3. Tee 4. Flat
74.4 Project InvestmentThe total cost of the project has been worked out to be Pak Rs; 26580000(2.16 milions)Period of construction is 2 months for civil works and 3 months forMachinery, Equipment layout and installation.4.5 Process Buy scrap Sorting of scrap Melt it in melting furnace Mold the required billet Transfer to rolling mills Re-heat the Billet in Re-heating furnace Roll the required shape on Rolling mills4.6 Project Capacity RationaleThis study has been made with the focus of Multan, South Punjabespecially Multan market has been facing the Problem of availability ofrequired sizes and quantity in the market, for example the customerdesigned requirement of round bar diameter 25 grade 60,25 ton thecustomer could not get that from one single trader. unless thecustomer go to Lahore and buy the product by paying extra carriagecharges. When the manufacturers enter in the market than it will be inposition of providing the customers on as per their designedrequirement. And quantity without heavy carriage charges.4.7 Proposed Product MixThis feasibility has been developed for Rolling Mill with a capacity of24960Tons per year. The product mix consists of Round Bars andmerchant steel of different sizes 80% and 20% respectively.Table: Recommended project ParametersCapacity Human Technology / Location Resource Machinery24960 Tons 05 Office Staff Local + Imported If Anwerabdper year Production on required Sanawan contract @Rs 700/ ton
84.8 Proposed Business Legal StatusThere are three main forms of business: SoleProprietorship, Partnership andCompany. An enterprise can be aproprietorship or a partnership and even it canbeRegistered under company law with corporatelaw authority. Although selectiontotally depends upon the choices of anentrepreneur, but this feasibility study hasbeen based on a private limited company.
95. MACHINERY & EQUIPMENT REQUIREMENTSMost of the Steel Rolling Mills being installed in the country are producingSteel round bars and light sections. This pre-feasibility study is for Steel Re-rolling mills based on Six operational section. The details of the machinery& equipment is as following.Table: Machinery DetailsS,No Machinery Name Quantity Weight1 Billet Cutting Shear 01 No Need2 Furnace Pusher 013 Re-Heating furnace 01 8ton / hour4 Ejector 015 Roller Tables 126 Y. Tables 037 Section Transfer plate 02 form8 Rolling Mills Roll 06 dia.250mm three Hi stands9 Pinion gear box 3 hi 01 center 250 mm10 Fly Wheel 8 ton 0111 Fly wheel shaft 0112 Fly Wheel Plumber 02 blocks13 Reduction Gear 1:3 0114 Complete Set of Rolls 0115 Wobblers couplings 4016 Wobblers Spindles 2017 Foundation bolts 4518 Conveyor Rolls 3019 Electric Motors 10 kw 06 900 RPM20 Main Motors 700 01 kilowatt 1000 RPM
105.1 MACHINERY COSTS.No Name of the Equipments Cost in Pak Rs1 Mills 165000002 Mill Conveyor and plate form 5000003 Cooling Bed Optional4 Over Head cranes 10Ton, 01 No 13000005 Electric main motors,kw.700,RPM 1000 1500000 01 Nos.6 Electric cables , light motors and panels 1800000Total cost; 21600000 (A)
116 LAND & BUILDING REQUIREMENTSFor the proposed set up of Steel Rolling Mills, a total area of 5000, sq meters isRequire. This land requirement includes space for the installation of plant, Machinery,management office, stores, Residence for workers, and for Raw / Finish products.Table: Covered Are RequirementS.No Space Requirement Required Area (Sq. Cost in Rs Meter1 Mills Hangers expansion 60 ton 4980000 (B)Total cost with total of A+B = Pak Rs; 265800008 PROFIT AND LOSS Table of profit and loss on the basses of 24960Tons per year.S.No Heads Expenses in Per Ton Sale Price Difference Rs / Year Cost, In Pk.Rs In Pk.Rs. Pk.Rs1 Raw material 1297920000 520002 Burning loss 51916800 20803 Fuel cost 93600000 37504 Electric 21840000 8755 Salaries 17472000 7006 Other 7800000 313 Expenses7 Taxes 0000000000 0000008 Total; 1490548800 59718 70000* 10283 *Rate is rising, this rate is for steel bar 40 grade diameter 25mm For Bar 12.and 10 mm the rate is 71000 per ton
129 KEY ASSUMPTIONSTable: Project AssumptionsPeriod of construction & machinery 5 MonthsTotal Covered Area 5000 Square MeterProjected life of the project 10 YearsTable: Operating AssumptionsNo of working days in one year 330No of working hours in one day 8Table: Revenue AssumptionMill Capacity Ton per Day 4-5Production per year 24960Ratio of round Bars and merchant steel 80 % , 20 %,Production of round bar 29952 Ton per yearProduction Merchant steel On requestTotal annual Production 24960Sale price of Round bar grade 40 (deformed) Rs70000-71000 per tonSale Price of Merchant steel Rs. 76000-78000Capacity utilization in First year 55 %Sale price growth rate 15 %Production capacity utilization growth rate 15 %Maximum Capacity utilization 85%Table: Financial AssumptionDebit 60%Equity 40%Interest Rate ? ( in Pakistan) 12%Interest rate on short term debit ? ( in Pakistan ) 16 %Interest on cash in bank ?Corporate tax rate ?Turnover tax rate ?Dividend rate ?Required rate of return on equity 25%Down payment on machinery & Equipment leased ?Interest rate on machinery ?