PROJECT REPORT

Of

BRAKE SHOE

PURPOSE OF THE DOCUMENT

This particular pre-feasibility is regarding Brake Shoe Manufacturing unit.

The objective of the pre-feasibility report is primarily to facilitate potential entrepreneurs in project
identification for investment and in order to serve his objective; the document covers various aspects
of the project concept development, start-up, marketing, finance and management.

[We can modify the project capacity and project cost as per your requirement. We can also prepare
project report on any subject as per your requirement.]

Lucknow Office: Sidhivinayak Building ,

27/1/B, Gokhlley Marg, Lucknow-226001

Delhi Office : Multi Disciplinary Training

Centre, Gandhi Darshan Rajghat,
New Delhi 110002

Email : info@udyami.org.in
Contact : +91 7526000333, 444, 555
 PROJECT AT A GLANCE
1 Name of the Entreprenuer xxxxxxxxxx

2 Constitution (legal Status) : xxxxxxxxxx

3 Father / Spouse Name xxxxxxxxxxxx

4 Unit Address : xxxxxxxxxxxxxxxxxxxxxx

District : xxxxxxx
Pin: xxxxxxx State: xxxxx
Mobile xxxxxxx

5 Product and By Product : BRAKE SHOE

6 Name of the project / business activity proposed : BRAKE SHOE MANUFACTURING UNIT

7 Cost of Project : Rs.22.99 Lakhs

8 Means of Finance
Term Loan Rs.15.42 Lakhs
Own Capital Rs.2.3 Lakhs
Working Capital Rs.5.28 Lakhs

9 Debt Service Coverage Ratio : 2.72

10 Pay Back Period : 5 Years

11 Project Implementation Period : 5-6 Months

12 Break Even Point : 25%

13 Employment : 12 Persons

14 Power Requirement : 30.00 HP

Asbestos based friction material,Steel sheets and

15 Major Raw materials
: Other Chemicals

16 Estimated Annual Sales Turnover (Max Capacity) : 176.67 Lakhs

17 Detailed Cost of Project & Means of Finance

COST OF PROJECT (Rs. In Lakhs)

Particulars Amount
Land Own/Rented
Plant & Machinery 16.53
Furniture & Fixtures 0.60
Working Capital 5.86
Total 22.99

MEANS OF FINANCE
Particulars Amount
Own Contribution 2.30
Working Capital(Finance) 5.28
Term Loan 15.42
Total 22.99
 BRAKE SHOE MANUFACTURING UNIT

Introduction:

Brake shoes are part of a drum brake system. Brake shoes are crescent-shaped
components with a rough friction material on one side. They sit inside of a brake
drum. When the brake pedal is pressed, the brake shoes are forced outward, pushing
against the inside of the brake drum and slowing down the wheel. Drum brakes and
brake shoes are parts of an older type of braking system and have become less
common on modern vehicles. Brake shoes may outlast brake pads due to their
location within the system. Since they are positioned in the rear of the vehicle, brake
shoes may last longer as they aren't taking as much of the stopping force. Brake
shoes are components of the drum brake assembly. They are forced to press against
the inner surface of the brake drum. The friction produced between the shoes and
the drum works to reduce speed and to stop the motorcycle. Brake shoes are
generally thought to be good between 30,000-35,000 miles in urban use. In less
demanding situations like highway driving in light traffic, brakes may last 80,000
miles or more.
Uses & Market Potential:

Brake shoes carry the brake lining inside brake drum systems. As when they are
applied, they tend to stop the vehicle. When the driver applies the brake, a wheel
cylinder in the drum brake system forces the brake shoe outward, against the inside
of the drum. This creates friction between the lining and drum, causing the vehicle
to brake. In the recent past, the automotive industry witnessed significant growth
across the globe. Perennial increase in the sales of the passenger vehicle, two-
wheeler, and LCV are significantly contributing to the growth of the brake shoe
market. Moreover, continuous growing economies, urbanization or residential sector
development, and various supportive government policies are attributing towards the
production and consumption of automotive in both developed and developing
countries across the globe. The rise in the demand for vehicles coupled with the
overall rise and expansion of automobile sector, the demand for automotive brake
shoe has risen. Data Bridge Market Research analyses that the automotive brake
shoe market will show a compound annual growth rate of 7.20% for the forecast
period of 2021-2028.
Product:
Brake Shoe

Raw Material:
The raw materials required are:

 Asbestos based friction material

 Steel Sheets

 Other Chemicals
Manufacturing Process:

The steps are:

 Stamping
 Welding
 Hot-Pressing
 Bonding
 Grinding
 Riveting
 Packaging

Area:

The industrial setup requires space for Inventory, workshop or manufacturing area, space
for power supply utilities and polishing area. Also, some of the area of building is
required for office staff facilities, office furniture, etc. Thus, the approximate total area
required for complete industrial setup is 1500-2000Sqft.

Cost of Machines:
Machine Quantity Rate
Stamping Press 1 425000
Forging Press 1 250000
Hot Press 1 450000
Welding Machine 1 170000
Hand Grinder 1 8000
Riveting Machine 1 300000
Other Equipment’s - 50000
Total Amount 1653000

Power Requirement- The estimated Power requirement is taken at 30 HP.

Manpower Requirement– Following manpower is required:

 Machine operator-2
 Skilled/unskilled worker-3
 Helper-4
 Manager cum Accountant-1
 Sales Personnel-2

FINANCIALS
PROJECTED BALANCE SHEET

PARTICULARS I II III IV V

SOURCES OF FUND
Capital Account
Opening Balance - 3.19 5.33 8.46 12.26
Add: Additions 2.30 - - - -
Add: Net Profit 4.89 6.54 8.32 9.80 11.31
Less: Drawings 4.00 4.40 5.20 6.00 8.00
Closing Balance 3.19 5.33 8.46 12.26 15.57
CC Limit 5.28 5.28 5.28 5.28 5.28
Term Loan 13.70 10.28 6.85 3.43 -
Sundry Creditors 2.97 3.53 4.12 4.73 5.36

TOTAL : 25.15 24.42 24.71 25.69 26.21

APPLICATION OF FUND

Fixed Assets ( Gross) 17.13 17.13 17.13 17.13 17.13

Gross Dep. 2.54 4.70 6.54 8.11 9.44
Net Fixed Assets 14.59 12.43 10.59 9.02 7.69

Current Assets
Sundry Debtors 4.26 5.27 6.21 7.20 8.24
Stock in Hand 4.57 6.61 7.71 8.87 10.07
Cash and Bank 1.72 0.10 0.19 0.60 0.21

TOTAL : 25.15 24.42 24.71 25.69 26.21

- - - - -
PROJECTED PROFITABILITY STATEMENT

PARTICULARS I II III IV V

A) SALES
Gross Sale 91.35 113.02 133.12 154.32 176.67

Total (A) 91.35 113.02 133.12 154.32 176.67

B) COST OF SALES

Raw Material Consumed 59.40 70.69 82.40 94.55 107.16

Elecricity Expenses 2.01 2.35 2.69 3.02 3.36
Repair & Maintenance 1.83 2.26 2.66 3.09 3.53
Labour & Wages 11.97 14.96 18.25 21.91 25.85
Depreciation 2.54 2.16 1.84 1.57 1.33
Cost of Production 77.75 92.42 107.84 124.13 141.23

Add: Opening Stock /WIP - 2.59 3.08 3.59 4.14

Less: Closing Stock /WIP 2.59 3.08 3.59 4.14 4.71

Cost of Sales (B) 75.16 91.93 107.33 123.59 140.66

C) GROSS PROFIT (A-B) 16.19 21.09 25.79 30.73 36.01

17.72% 18.66% 19.37% 19.91% 20.38%
D) Bank Interest i) (Term Loan ) 1.67 1.37 0.99 0.61 0.24
ii) Interest On Working Capital 0.58 0.58 0.58 0.58 0.58
E) Salary to Staff 7.31 9.21 10.87 13.80 16.28
F) Selling & Adm Expenses Exp. 1.60 2.83 3.99 4.32 5.30

G) TOTAL (D+E+F) 11.16 13.98 16.43 19.31 22.40

H) NET PROFIT 5.03 7.11 9.36 11.42 13.61

5.5% 6.3% 7.0% 7.4% 7.7%
I) Taxation 0.14 0.57 1.04 1.61 2.30

J) PROFIT (After Tax) 4.89 6.54 8.32 9.80 11.31

PROJECTED CASH FLOW STATEMENT

PARTICULARS I II III IV V

SOURCES OF FUND

Own Contribution 2.30 - - - -

Reserve & Surplus 5.03 7.11 9.36 11.42 13.61
Depriciation & Exp. W/off 2.54 2.16 1.84 1.57 1.33
Increase In Cash Credit 5.28 - - - -
Increase In Term Loan 15.42 - - - -
Increase in Creditors 2.97 0.56 0.59 0.61 0.63

TOTAL : 33.54 9.83 11.79 13.59 15.57

APPLICATION OF FUND

Increase in Fixed Assets 17.13 - - - -

Increase in Stock 4.57 2.04 1.10 1.15 1.20
Increase in Debtors 4.26 1.01 0.94 0.99 1.04
Repayment of Term Loan 1.71 3.43 3.43 3.43 3.43
Taxation 0.14 0.57 1.04 1.61 2.30
Drawings 4.00 4.40 5.20 6.00 8.00
TOTAL : 31.81 11.45 11.70 13.18 15.97

Opening Cash & Bank Balance - 1.72 0.10 0.19 0.60

Add : Surplus 1.72 - 1.62 0.09 0.41 - 0.39

Closing Cash & Bank Balance 1.72 0.10 0.19 0.60 0.21
COMPUTATION OF CLOSING STOCK & WORKING CAPITAL

PARTICULARS I II III IV V

Finished Goods
(10 Days requirement) 2.59 3.08 3.59 4.14 4.71
Raw Material
(10 Days requirement) 1.98 3.53 4.12 4.73 5.36

Closing Stock 4.57 6.61 7.71 8.87 10.07

COMPUTATION OF WORKING CAPITAL REQUIREMENT

Particulars Amount Margin(10%) Net

Amount
Stock in Hand 4.57
Less:
Sundry Creditors 2.97
Paid Stock 1.60 0.16 1.44

Sundry Debtors 4.26 0.43 3.84

Working Capital Requirement 5.28

Margin 0.59

MPBF 5.28
Working Capital Demand 5.28
REPAYMENT SCHEDULE OF TERM LOAN 11.0%

Year Particulars Amount Addition Total Interest Repayment Cl Balance

I Opening Balance
Ist Quarter - 15.42 15.42 0.42 - 15.42
Iind Quarter 15.42 - 15.42 0.42 - 15.42
IIIrd Quarter 15.42 - 15.42 0.42 0.86 14.56
Ivth Quarter 14.56 - 14.56 0.40 0.86 13.70
1.67 1.71
II Opening Balance
Ist Quarter 13.70 - 13.70 0.38 0.86 12.85
Iind Quarter 12.85 - 12.85 0.35 0.86 11.99
IIIrd Quarter 11.99 - 11.99 0.33 0.86 11.13
Ivth Quarter 11.13 11.13 0.31 0.86 10.28
1.37 3.43
III Opening Balance
Ist Quarter 10.28 - 10.28 0.28 0.86 9.42
Iind Quarter 9.42 - 9.42 0.26 0.86 8.57
IIIrd Quarter 8.57 - 8.57 0.24 0.86 7.71
Ivth Quarter 7.71 7.71 0.21 0.86 6.85
0.99 3.43
IV Opening Balance
Ist Quarter 6.85 - 6.85 0.19 0.86 6.00
Iind Quarter 6.00 - 6.00 0.16 0.86 5.14
IIIrd Quarter 5.14 - 5.14 0.14 0.86 4.28
Ivth Quarter 4.28 4.28 0.12 0.86 3.43
0.61 3.43
V Opening Balance
Ist Quarter 3.43 - 3.43 0.09 0.86 2.57
Iind Quarter 2.57 - 2.57 0.07 0.86 1.71
IIIrd Quarter 1.71 - 1.71 0.05 0.86 0.86
Ivth Quarter 0.86 0.86 0.02 0.86 - 0.00
0.24 3.43

Door to Door Period 60 Months

Moratorium Period 6 Months
Repayment Period 54 Months
CALCULATION OF D.S.C.R
PARTICULARS I II III IV V

CASH ACCRUALS 7.43 8.70 10.16 11.37 12.65

Interest on Term Loan 1.67 1.37 0.99 0.61 0.24

Total 9.11 10.07 11.15 11.98 12.88

REPAYMENT
Repayment of Term Loan 1.71 3.43 3.43 3.43 3.43
Interest on Term Loan 1.67 1.37 0.99 0.61 0.24

Total 3.39 4.79 4.42 4.04 3.66

DEBT SERVICE COVERAGE RATIO 2.69 2.10 2.53 2.97 3.52

AVERAGE D.S.C.R. 2.72

Assumptions:
1. Production Capacity of Brake shoe manufacturing unit is taken at 500 Sets per
day. First year, Capacity has been taken @ 30%.

2. Working shift of 10 hours per day has been considered.

3. Raw Material stock and Finished goods closing stock has been taken for 10
days.

4. Credit period to Sundry Debtors has been given for 14 days.

5. Credit period by the Sundry Creditors has been provided for 15 days.

6. Depreciation and Income tax has been taken as per the Income tax Act,1961.

7. Interest on working Capital Loan and Term loan has been taken at 11%.

8. Salary and wages rates are taken as per the Current Market Scenario.

9. Power Consumption has been taken at 30 HP.

10. Selling Prices & Raw material costing has been increased by 3% & 2%
respectively in the subsequent years.
 DISCLAIMER

The views expressed in this Project Report are advisory in nature. SAMADHAN
assume no financial liability to anyone using the content for any purpose. All the
materials and content contained in Project report is for educational purpose and
reflect the views of the industry which are drawn from various research material
sources from internet, experts, suppliers and various other sources. The actual
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considering specific requirement of the project, capacity and type of plant and
other specific factors/cost directly related to the implementation of project. It is
intended for general guidance only and must not be considered a substitute for a
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