This Project Report has been prepared to seek a commercial bank facility for the establishment of a light engineering and metal fabrication unit under the trade name Patnaik Fabrication & Welding Works, promoted by Mr. Tarun Patnaik in Rayagada, Odisha. The unit will manufacture custom steel gates, window grills, structural roof trusses, agricultural equipment frames, and offer industrial repair welding services.
The promoter, Mr. Tarun Patnaik, is an ITI-certified welder with practical technical expertise. The project cost is optimized at ₹4,00,000, adhering to standard credit appraisal norms for micro-enterprises under the MSME sector (eligible under Pradhan Mantri MUDRA Yojana - Kishore category or CGTMSE cover).
| Project Parameter | Details |
|---|---|
| Name of the Unit | Patnaik Fabrication & Welding Works |
| Promoter Name | Mr. Tarun Patnaik |
| Constitution | Proprietorship |
| Nature of Activity | Manufacturing & Light Engineering Fabrication |
| Location | Rayagada Municipality, District: Rayagada, Odisha - 765001 |
| Total Project Cost | ₹4,00,000 |
| Promoter Contribution (25%) | ₹1,00,000 |
| Bank Loan Requested (75%) | ₹3,00,000 (Term Loan: ₹2,20,000 | Cash Credit/WC: ₹80,000) |
| Debt Service Coverage Ratio (Avg) | 2.35 (Strong Repayment Capability) |
| Employment Generation | 3 Direct Positions (Including Promoter) |
Mr. Tarun Patnaik is the sole proprietor of the enterprise. He possesses formal vocational education holding an ITI (Industrial Training Institute) Passout Certificate in Welding Trade. His technical training encompasses electric arc welding, gas cutting, MIG welding basics, blueprint reading, and shop floor safety practices.
| Attribute | Promoter Profile |
|---|---|
| Name | Tarun Patnaik |
| Age / Gender | 24 Years / Male |
| Educational Qualification | ITI Passout (Welder Trade) & Higher Secondary (10+2) |
| Technical Expertise | Arc Welding, TIG/MIG basics, Structural Metal Assembly, Tool Handling |
| Address | Rayagada, Odisha |
| Financial Standing | Equity Capital Investment of ₹1,00,000 funded through personal savings and family support. Owns local unencumbered family land suitable for collateral reference. |
Patnaik Fabrication & Welding Works will operate as a specialized light manufacturing workshop in Rayagada. The business will focus on fabricating custom metal structures required in local residential construction, commercial shops, agricultural equipment repair, and industrial sub-contract work.
Rayagada is an economically active district town in Southern Odisha characterized by presence of major industrial setups (such as Utkal Alumina International Ltd, JK Paper Ltd, and Indian Railways hub) alongside rapid residential urban expansion. This presents a steady demand for both civil structural fabrication and industrial maintenance welding works.
The business model is technically straightforward, operating on proven electrical welding and metal cutting processes. Technical parameters demonstrate high operational feasibility.
| Operational Head | Operational Plan & Specifications |
|---|---|
| Premises / Workshop Space | Rented premises of ~450 sq. ft. open floor area with high ceiling, concrete flooring, proper ventilation, and shade. Rent: ₹3,500/month. |
| Power & Utilities | Commercial 3-Phase Electric Power Connection (7.5 HP Sanctioned Load) required for continuous welding transformers and heavy cut-off saws. |
| Raw Material Sourcing | Mild Steel (MS) angles, channels, flat bars, square pipes, sheet plates, welding electrodes (E6013/E7018), grinding discs, and primer paints sourced directly from steel stockists in Rayagada and Berhampur. |
| Production Capacity | Estimated capacity to process 2.5 to 3.0 Tons of mild steel fabrication per month at optimal efficiency. |
| Manpower Requirement | 1 Lead Welder/Proprietor (Tarun Patnaik), 1 Skilled Fabrication Assistant (₹9,000/pm), 1 Semi-skilled Helper (₹6,500/pm). |
| Component | Description | Amount (₹) |
|---|---|---|
| Plant & Machinery | Heavy-duty Welding Transformers (400A), Angle Grinders, Cut-off Saws, Bench Drill, Gas Cutting set | 1,85,000 |
| Electrification & Setup | 3-Phase wiring, safety switches, main panels, earthing installation, worktables | 45,000 |
| Workshop Shed Advance & Fixtures | Shop rental advance, safety screens, storage racks | 20,000 |
| Safety Equipment & Hand Tools | Auto-darkening helmets, protective gear, clamps, measuring tools, vices | 20,000 |
| Working Capital (Initial Stock & Ops) | Raw MS steel inventory, welding electrodes, gases, and 1 month operating buffer | 1,30,000 |
| TOTAL PROJECT COST | 4,00,000 | |
| Source of Finance | Percentage (%) | Amount (₹) |
|---|---|---|
| Promoter's Equity Contribution | 25.00% | 1,00,000 |
| Bank Term Loan | 55.00% | 2,20,000 |
| Bank Working Capital Loan (Cash Credit) | 20.00% | 80,000 |
| TOTAL MEANS OF FINANCE | 100.00% | 4,00,000 |
| Financial Indicators (in ₹) | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Capacity Utilization (%) | 50% | 65% | 75% | 85% | 90% |
| Gross Income / Revenue | 7,20,000 | 9,80,000 | 11,80,000 | 13,80,000 | 15,20,000 |
| Raw Material Expenses | 4,10,000 | 5,50,000 | 6,50,000 | 7,50,000 | 8,20,000 |
| Power, Fuel & Consumables | 42,000 | 55,000 | 65,000 | 75,000 | 82,000 |
| Labor & Wages (Excl. Owner) | 1,20,000 | 1,38,000 | 1,56,000 | 1,74,000 | 1,92,000 |
| Shop Rent & Administrative Overhead | 54,000 | 59,000 | 65,000 | 71,000 | 78,000 |
| Operating Profit (EBITDA) | 94,000 | 1,78,000 | 2,44,000 | 3,10,000 | 3,48,000 |
| Depreciation (15% Machinery) | 27,750 | 23,588 | 20,050 | 17,042 | 14,486 |
| Interest on Term Loan (10.5%) | 21,400 | 17,500 | 12,800 | 8,100 | 3,200 |
| Interest on Cash Credit (11.0%) | 8,800 | 8,800 | 8,800 | 8,800 | 8,800 |
| Net Profit Before Tax (PBT) | 36,050 | 1,28,112 | 2,02,350 | 2,76,058 | 3,21,514 |
| Income Tax Provision | 0 | 0 | 5,000 | 12,000 | 18,000 |
| Net Profit After Tax (PAT) | 36,050 | 1,28,112 | 1,97,350 | 2,64,058 | 3,03,514 |
| Financial Ratio | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Net Profit Margin (%) | 5.01% | 13.07% | 16.72% | 19.13% | 19.97% |
| Debt Service Coverage Ratio (DSCR) | 1.62 | 2.25 | 2.68 | 3.12 | 3.45 |
| Return on Capital Employed (ROCE) | 16.5% | 32.4% | 42.1% | 48.5% | 51.2% |
| Break-Even Point (BEP) | 58.2% | 48.5% | 41.0% | 36.5% | 32.8% |
Term Loan Amount: ₹2,20,000 | Interest Rate: 10.50% p.a. | Tenure: 5 Years (60 Months including 3 months principal moratorium).
| Year | Opening Balance (₹) | Interest Paid (₹) | Principal Repaid (₹) | Closing Balance (₹) | Estimated Monthly EMI (₹) |
|---|---|---|---|---|---|
| Year 1 | 2,20,000 | 21,400 | 32,000 | 1,88,000 | ₹4,725 (Moratorium in M1-M3) |
| Year 2 | 1,88,000 | 17,500 | 44,000 | 1,44,000 | ₹4,725 |
| Year 3 | 1,44,000 | 12,800 | 48,000 | 96,000 | ₹4,725 |
| Year 4 | 96,000 | 8,100 | 52,000 | 44,000 | ₹4,725 |
| Year 5 | 44,000 | 3,200 | 44,000 | 0 | ₹4,725 |
Note: Cash Credit facility of ₹80,000 will be renewed annually upon satisfactory account conduct and submission of stock statements. Interest served monthly.
| Strengths (S) | Weaknesses (W) |
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| Opportunities (O) | Threats (T) |
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To ensure total regulatory compliance and smooth bank loan disbursement, the promoter will obtain/register the following approvals:
| Regulatory Approval / License | Issuing Authority | Current Status |
|---|---|---|
| Udyam MSME Registration | Ministry of Micro, Small & Medium Enterprises | Applied / Pre-registered |
| Trade License | Rayagada Municipality | To be obtained post-location lease agreement |
| GST Registration | Goods & Services Tax Department, Odisha | Voluntary registration to be taken for B2B billing |
| Labour Registration / Shop & Est. | Department of Labour, Govt. of Odisha | Compliant upon establishment |
| Commercial Power Load Approval | SOUTHCO Utility / TP Southern Odisha Distribution Ltd | Application ready for 7.5 HP industrial supply |
Conclusion & Bank Recommendation: The project is technically sound, economically viable, and financially robust with an average DSCR of 2.35. The promoter's ITI qualification provides operational capability. Credit sanction of ₹3,00,000 (₹2.20 Lakhs Term Loan + ₹0.80 Lakhs Cash Credit) against ₹1.00 Lakh promoter equity is strongly recommended under MUDRA / CGTMSE scheme.