Detailed project report on vehicle scrap yard (pv/cv – 90%/10%) - Detailed Project Report (DPR) for Bank Loan | Manufacturing Business Idea | Cost Analysis | EIRI

VEHICLE SCRAP YARD (PV/CV – 90%/10%)

[EIRI/EDPR/4309] J.C.: 2491XL

Vehicle recycling is the dismantling of vehicles for spare parts. At the end of their useful life, vehicles have value as a source of spare parts and this has created a vehicle dismantling industry. The industry has various names for its business outlets including wrecking yard, auto dismantling yard, car spare parts supplier, and recently, auto or vehicle recycling. Vehicle recycling has always occurred to some degree but in recent years manufacturers have become involved in the process. A car crusher is often used to reduce the size of the scrapped vehicle for transportation to a steel mill.

The process of recycling a vehicle is extremely complicated as there are many parts to be recycled and many hazardous materials to remove. Briefly, the process begins with incoming vehicles being inventoried for parts. The wheels and tires, battery and catalytic converter are removed. Fluids, such as engine coolant, oil, transmission fluid, air conditioning refrigerant, and gasoline, are drained and removed. Certain high value parts such as electronic modules, alternators, starter motors, infotainment systems - even complete engines or transmissions - may be removed if they are still serviceable and can be profitably sold on; either in "as-is" used condition or to a remanufacturer for restoration. This process of removing higher value parts from the lower value vehicle body shell has traditionally been done by hand. As the process is labour intensive, it is often uneconomical to remove many of the parts.

A technique that is on the rise is the mechanical removal of these higher value parts via machine based vehicle recycling systems (VRS). An excavator or materials handler equipped with a special attachment allows these materials to be removed quickly and efficiently. Increasing the amount of material that is recycled and increasing the value the vehicle dismantler receives from an end-of-life vehicle (ELV).

After all of the parts and products inside are removed, the remaining shell of the vehicle is sometimes subject to further processing, which includes removal of the air conditioner evaporator and heater core, and wiring harnesses. The remaining shell is then crushed flat, or cubed, to facilitate economical transportation in bulk to an industrial shredder or hammer mill, where the vehicles are further reduced to fist-sized chunks of metal. Glass, plastic and rubber are removed from the mix, and the metal is sold by multiple tons to steel mills for recycling.

Recycling steel saves energy and natural resources. The steel industry saves enough energy to power about 18 million households for a year, on a yearly basis. Recycling metal also uses about 74 percent less energy than making metal. Thus, recyclers of end-of-life vehicles save an estimated 85 million barrels of oil annually that would have been used in the manufacturing of other parts. Likewise, car recycling keeps 11 million tons of steel and 800,000 non-ferrous metals out of landfills and back in consumer use.

According to the new policy, commercial vehicles aged >15 years and passenger vehicles aged >20 years will have to be mandatorily scrapped if they do not pass the fitness and emission tests. The policy does not treat a vehicle as scrap just because of its age, but considers other factors such as quality of brakes, engine performance and others. The objective is to phase out old cars, reduce urban pollution levels and stimulate automotive sales, which continues to record slowdown amid India’s post-COVID recovery phase. Additionally, the vehicle scrappage policy is also said to be a part of a larger stimulus package majorly requested by original equipment manufacturers (OEMs) to stir their demand.

Under the policy, automated testing stations and scrapping facilities will be set up in phases. Currently, 75 stations are proposed under Phase 1; this count will gradually scale up to 450–500 stations across the country. The government has also welcomed private players to invest in setting up such stations through partnership with the state governments. The government also plans to set up 50–70 facilities for scrapping vehicles in the next 4–5 years. An automobile industry body—the Society of Indian Automobile Manufacturers (SIAM)—has urged the government to allow dealer workshops to function as inspection and certification stations, as establishing new ones may not be commercially viable and delay the policy developments and implementation.

The Vehicle Scrappage Policy extends many obvious benefits, besides pollution control and improved road safety factor. Union Minister Mr. Nitin Gadkari has highlighted that raw materials derived from scrapped vehicles such as copper, rubber, steel, aluminium and plastic can be reused in new vehicles, which can help reduce the price of new vehicles and subsequently, boost sales.

However, at a broader level, the policy has a good mix of incentives for new vehicle buyers and automotive dealers and hence, is anticipated to generate positive results in the near future. This will also pave the way for a whole new business segment—‘Scrappage Facility’—which will flourish in a well-organised manner. Additionally, the policy addresses the intent of all stakeholders from exporters, importers, car dealers, micro, small & medium enterprises (MSMEs), original equipment manufacturers (OEMs) and end consumers. Prime Minister Mr. Narendra Modi, while introducing the policy stated, “The policy is an important link to achieve the circular economy of waste to wealth. It will also energize India's auto sector and metal sector under the principles of reuse, recycle and recover.” The Vehicle Scrappage Policy is expected to truly touch every aspect of the automobile industry in India, the result of which is expected to churn in the years to come.

COST ESTIMATION

Plant Capacity PV Scrap Vehicles 60 numbers per day and CV Scrap Vehicles 7 numbers per day

Land & Building (9515 sq.mt.) Rs. 14.98 Cr

Plant & Machinery Rs. 2.33 Cr

Working Capital for 1 Month Rs. 6.69 Cr

Total Capital Investment Rs. 23.96 Cr

Rate of Return 59%

Break Even Point 29%

CONTENTS

APPENDIX – A:

01. PLANT ECONOMICS
02. LAND & BUILDING
03. PLANT AND MACHINERY
04. OTHER FIXED ASSETS
05. FIXED CAPITAL
06. RAW MATERIAL
07. SALARY AND WAGES
08. UTILITIES AND OVERHEADS
09. TOTAL WORKING CAPITAL
10. TOTAL CAPITAL INVESTMENT
11. COST OF PRODUCTION
12. TURN OVER/ANNUM
13. BREAK EVEN POINT
14. RESOURCES FOR FINANCE
15. INSTALMENT PAYABLE IN 5 YEARS
16. DEPRECIATION CHART FOR 5 YEARS
17. PROFIT ANALYSIS FOR 5 YEARS
18. PROJECTED BALANCE SHEET FOR (5-10 YEARS)

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Detailed Project Report on Vehicle Scrap Yard (PV/CV – 90%/10%)

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