Wire nail making business is profitable business in a small investment category. In this article, we are discussing about the business opportunities of wire nail manufacturing. Day by day, the usage of wire nails is drastically increasing in the world. Therefore, the business scope of nail manufacturing is also increasing day by day. Usually, wire nails are widely used for decoration works, plywood making and for carpentry works.
So, in any construction process, wire nails are unavoidable. By using its making machine, we can establish a wire nail making unit both in small scale an in large scale too. For this purpose different automatic and semi-automatic machines are available in the world.
In the coming sections of this article, we have comprehensively analyzed about all the details for the establishment of wire nail making unit. It includes the details about investment, machinery, electrical work, raw materials and profit and loss conditions. It is essential to understand about its market before you entering to this business.
Investment for wire nail making business
In this section we are examining the investment expenditures to establish a wire nail manufacturing unit in detail. As any other production unit, an equipped building is necessary for this business too.
Building and machinery investment
The size of building should be based on your requirements. Here we are analyzing the details of building which is necessary to install one set of machine. The minimum are to install this kind of a machine is 750 square feet. For that you have to spend about RS. 175,000. To install machinery, there will be an investment expenditure of RS. 626,000.
The details of machinery have given below in detail. The investment expenditure for electrical work and connection will be RS. 225,000. Three phase electrical connection is mandatory for the functioning of this unit. An amount of 25,000 rupees have to spend for license procedure.
So, the total fixed investment to establish such a unit is RS. 1,041,000. In addition to this, we have to arrange the working capital to run your unit for a minimum of one month. If you are producing the product by using a single machine, the amount of total output will be in between 650 kg to 750 kg.
On an average, if you are producing 650 kg of out per day, the total working capital for a month will be around 9 lakh rupees.
Machinery for wire nail making
Here we are discussing about the details of machinery to operate a wire nail manufacturing unit. Although we have many types of machines, here we are considering semi automatic machine. Three types of machineries are required for this production process. Firstly we should have a nail making machine.
Usually wire nail making machine needs three HP power for its operation. By using this machine, we can produce 650 kg to 750 kg output per day. Nails with the size of one inch to four inches can be produce by using this machine. After that, we should have a polishing barrel machine. This machine also needs 3 HP power consumption.
Besides these, we should have an automatic nail cutter and grander machine in this process. It needs only 1 HP power supply. Therefore, in total, to operate this kind of a single machine, we need 7 HP power. For that purpose, it is essential to have three phase power supply.
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Raw material for wire nail making
Required raw materials to run a nail manufacturing unit is comprehensively discussing in this section. Mainly, wire rolls of MS are the basic raw materials for this production.
We will have many categories of rolls with different quality and sizes. The selection of raw materials should be based on type of our product. For example, many, several kinds of raw material like one inch thin and one inch thicker are abundantly available in the market.
The market price for this type of wire rolls for one kg on November 2021 is 49 rupees. There will be a slight variation in this price in different periods of time.
Production cost calculation
Working tools per month
We should have many working tools for one month operation of this unit. For that purpose, ne need about 4,800 rupees for a month. Now we can list out all the tools. Firstly, we will have crimping dies; secondly, cutting tools, thirdly, header punch, fourthly, feeding finger and lastly ejector.
Electrical and salary cost
These are the basic working tools. Then we will have expenditure for electricity. Electricity bill for one usually will be RS. 4,500. Thirdly, there will be expenditure for salary of workers. Minimum number of workers t operate this kind of s unit will be three. Around 40,000 rupees have to be spent in a month in the head of salary.
Packaging and other cost
To work machine smoothly, there will be a expenditure of 2,000 rupees for oil in a month. RS 6,250 should be spending for packing materials. Any making unit will have a considerable production wastage. In this way, nail making unit is also have wastage in production. In the production one tone output, around 25 kg have to be transferred to scrap.
If we are taking 650 kg output in a day, we can produce 16,900 kg output by the working of 26 days. So, in total, we have to transfer 422 kg to scrap in a month. The current market rate of ne kg iron scrap is 28 rupees. By this calculation, totally we will have a scrap of 11,816 rupees in a month.
When we are deducting this price from the cost of our raw material, we should have the scrap of 8,862 rupees per month. By this way, the total working cost for a month is RS 67,062. That means total variable cost to produce one ton is 3,968 rupees. So, the combined cost for raw materials and working cost for one kg is 53 rupees.
Profit details of wire nail making business
Here we calculate the Profit details of wire nail making business. It is very easy to calculate the expected profitability of a wire nail manufacturing unit. As we calculated above, the cost for producing one kg output is 53 rupees. So, to estimate the expected profit from one kg nail, we have to consider the market price of one kg product too. We can supply this product in deferent ways.
Profit from one KG wire nail
We can either supply this in wholesale shops or for distributors and we can export it also. Here we are calculation the profit when we are supplying Wire nail to wholesalers. The market price of one kg wire nail in November 2021 is 75 rupees. There will be slight variation in this price based on the size of nail.
When we are considering the price 75 rupees, out gross profit from one kg will be 22 rupees. From this profit, we have to deduct the cost for transportation and marketing. When we are deducting marketing expense of 3% from this profit, we will have 21.34 rupees as net profit. Now we can calculate the net profit in a day.
Profit per day and month
On an average, we can produce 650 kg Wire nail output in a day. When we multiplying our per day profit of one kg with this total output, we will get RS 13,871as profit in a day. By this way, we can calculate monthly profit very easily. Usually, we will get 26 working days in a month. From 26 days, we will get the total output of 16,900 kg. Thus to get monthly profit we can multiply this total output with the profit on kg.
So, the total monthly profit will be 360,646 rupees. This is the total monthly profit from a single machine. You can expand your business by installing one more machine in future so as to increase your profit. Gradually you can develop your business in a large scale operation with huge amount of profit.
Wire nail making is an innovative business idea which is possible to establish with a minimum amount of investment. It is possible to produce and supply the output with a single machine even though the size of market is very limited. Wide marketing is required only when you are operating your business in large scale after the expansion of your unit.
In that point, you have to increase sales volume by depending distributors and other sales promotion policies. Thus, wire nail making is very attractive business opportunity which ensures highest expected profitability with limited capital investment. We have tried to include all the details related with this business idea. If you have any queries and doubts regarding this business idea, please feel free to raise it in commend box.