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AUTOMOBILE REPAIRING & SERVICING WORKSHOP

SERVICE CAPACITY : 23,436 Nos. Passenger cars (Per Annum)

Value : Rs. 1,50,78,000/-

MONTH AND YEAR : May, 2014

OF PREPARATION

PREPARED BY : Sh. Abhishek Singh

Assistant Director (Mechanical)

1. INTRODUCTION The Automobile Repairing & Servicing Workshop business is a viable

business provided that it is operated with a good business acumen that involves

having a thorough knowledge and experience of the repair and service operations

and also managing the jobs with the right type of skilled manpower. When these

factors combine with good customer relationship management and effective

business development skills, the business is expected to give considerable profits

which are expected to grow over the years.

2. MARKET POTENTIAL The automotive industry in India is one of the larger markets in the world.

India's passenger car and commercial vehicle manufacturing industry is the sixth

largest in the world, with an annual production of more than 3.9 million units.

According to recent reports, India overtook Brazil and became the sixth largest

passenger vehicle producer in the world (beating such old and new auto makers as

Belgium, United Kingdom, Italy, Canada, Mexico, Russia, Spain, France, Brazil),

with impressive growth rate of 18 percent. In 2010 India emerged as Asia's third

largest exporter of passenger cars, behind Japan and South Korea. India is home to

40 million passenger vehicles. More than 3.9 million automotive vehicles were

produced in India making the country the second (after China) fastest growing

automobile market in the world. According to the Society of Indian Automobile

Manufacturers, annual vehicle sales are projected to increase to 4 million by 2015.

The majority of India's car manufacturing industry is based around three

clusters in the south, west and north. The southern cluster consisting of Chennai is

the biggest with 35% of the revenue share. The western hub near Mumbai and Pune

contributes to 33% of the market and the northern cluster around the National

Capital Region contributes 32%. Chennai, houses the India operations of Ford,

Hyundai, Renault, Mitsubishi, Nissan, BMW, Hindustan Motors, Daimler, Caparo,

Mini, and Datsun. Chennai accounts for 60% of the country's automotive exports.

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Gurgaon and Manesar in Haryana form the northern cluster where the country's

largest car manufacturer, Maruti Suzuki, is based. The Chakan corridor near Pune,

Maharashtra is the western cluster with companies like General Motors,

Volkswagen, Skoda, Mahindra and Mahindra, Tata Motors, Mercedes Benz, Land

Rover, Jaguar Cars, Fiat and Force Motors having assembly plants in the area.

Nashik has a major base of Mahindra and Mahindra with a SUV assembly unit and

an Engine assembly unit. Aurangabad with Audi, Skoda and Volkswagen also forms

part of the western cluster. Another emerging cluster is in the state of Gujarat with

manufacturing facility of General Motors in Halol and Tata Nano at their plant in

Sanand. Ford, Maruti Suzuki and Peugeot-Citroen plants are also set to come up in

Gujarat, are some of the other automotive manufacturing regions around the

country. In 2011, there were 3,695 factories producing automotive parts in all of

India. The average firm made US$6 million in annual revenue with profits close to

US$400 thousand.

Furthermore, a consistent growth rate of Indian GDP during the last decades

and increasing competition between leasing companies have caused the lease rates

to decline considerably which have made car an affordable commodity for a majority

of the middle-income class. These factors coupled together reflect on the growing

need for quality repair and service facilities. Once the car comes on the road it is

expected to run for an indefinite period requiring major repair and maintenance

services throughout its operational life. Moreover there is a considerable demand for

wheel alignment and wheel balancing services, which is required by almost every

car, whether new or old. The roughness of the roads and continuous friction causes a

continuous disruption to the alignment and balancing of the wheels which require

adjusting at least once every two weeks for proper upkeep and maintenance.

Conclusively it can be said that there exists an ample demand for quality repair and

service workshops and also that the existing scenario provides conducive

opportunities for entry into this business venture.

3. BASIS AND PRESUMPTIONS

i. The unit is expected to work at 75% efficiency on 8 hrs. Single shift basis for

full capacity utilizations.

ii. The full capacity utilisation will be achieved in three years. 70% in the first

year followed by 85% in the next year and the 100% in subsequent years.

iii. Labour and wages mentioned as per prescribed minimum wages and the

proprietor is considered as a manager.

iv. Interest considered @ 12.5% in the project provide for recurring and non-

recurring investment.

v. The cost of land, construction charges, cost of machinery and equipment, raw

materials and consumables other expenses etc. initiated in the profile are

based on the prices prevailing at the time of project preparation. Therefore,

they are subject to necessary changes from time to time based on local

conditions.

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4. IMPLEMENTATION SCHEDULE

Activity Period Starting to

Completion

Survey for collection of data in respect of demand, raw material, including power and fuel, availability of technology, pollution control etc

0 1st Month

Arrangement for margin money 0 1st Month

Preparation of project document and registration and other clearance

1st 2nd Month

Financial assistance 2nd 3rd Month

Selection of site and development of land 3rd 4th month

Make shift office 3rd 4th Month

Purchasing of machines & recruitment of staff 4th 5th Month

Construction of building & selection of machinery 5th 6th Month

Installation of machinery & purchase of raw materials 6th 7th Month

Trial production 7th 8th Month

5. TECHNICAL ASPECTS

The three main critical factors that affect the decision to invest in the proposed

business setup are:

i) Hands on Experience

Having a thorough knowledge and hands on experience of all the relevant

technical details is a must for entry into this business. Relevant work experience is

the most important pre-requisite because it has a direct impact on the successful

management of the business.

ii) Marketing Skill

Another critical factor is that the entrepreneur must have effective PR &

marketing skills. These marketing skills should enable the entrepreneur to carryout

business development activities to target his potential customers and also to

maintain his existing client base.

iii) Technical Skill

The third critical factor relates mostly to technical skills required especially for

operating computerized Wheel Alignment & Balancing machines and equipments.

The machine operators should be properly trained in order to completely inspect

steering and suspension systems, take computer measurements, make factory

adjustments to restore alignment specifications. In case of unskilled workers

handling these equipment, there will be loss of time, equipment and most important

of all unsatisfactory service leading to customer dissatisfaction.

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Repairs and Servicing of Passenger cars:

It is assumed that cars coming into the workshop soliciting repairs and

servicing would subscribe to the following main services:

(i) Maintenance Services which mostly constitute running repairs / services like

Gear oil / Engine Oil / Break Oil change, Oil Filter change, spark plugs / point

repair, lubricant replenishment / replacement, tuning, break shoe repairs, minor

suspension repairs etc. These maintenance services are usually characterized by their

very little job turnaround time and are usually disposed of within a half a day’s

work.

(ii) Major Repairs mainly related to repair and replacement services that require

comparatively greater job turnaround time and include activities like engine

overhaul (3 weeks), gearbox repair & replacement, steering box repair &

replacement, suspension replacement (3 – 5 days) etc.

Wheel Alignment & Balancing

(i) Wheel Alignment which consists of adjusting the angles of the wheels so that

they are perpendicular to the ground and parallel to each other. The purpose of

these adjustments is to maximize tires’ life and ensure a vehicle that tracks straight

and true when driving along a straight and level road.

(ii) Wheel Balancing refers to the proper distribution of weight around a revolving

tire and wheel assembly. Poor wheel balance can have a marked impact on both the

car and safety. Proper wheel balance ensures that the wheels, while spinning, do not

have a heavy spot that can cause vibration and premature wear of tires, struts,

shocks and other steering and suspension components. When combined with proper

wheel alignment, balanced wheels ensure smooth and enjoyable driving.

High Pressure Cleaning and polishing

High Pressure Cleaning mainly involves the cleaning of the outer body of the

car through high pressure water spray which contains a car body detergent and then

a little wax to smoothen the car paint.

Sublet Services

Sublet services are those ancillary services that are outsourced to other specialized

workshops / personnel that are not a part of the service mix offered by the Auto

Repair workshop. These sublet services include items like Air Conditioner Repair,

Machine Shop Items, Radiator Repairs, Silencer Repairs, Shoker Repairs, Upholstery

Items (seats, bumpers, plastic repairs etc.). These sublet services usually form a part

of the total job order of the Auto Repair Workshop and are usually a portion of the

lump sum amount charged to the customer by the Auto Repair Workshop.

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INSPECTION AND QUALITY CONTROL

In house detailed inspection for the serviced / repaired item is required

before delivery the vehicle to the customer, as this is the main factor to attract and

maintain a loyal customer base through a customer-oriented focus on business rather

than concentrating on volume and losing out old customers. All the workers at the

workshop need to be trained and held responsible for providing superior service

and developing long lasting trust bond with the customers. This is very important in

this industry, where trust and honesty reflect on the image of repair and service

facilities. This would help in maintaining a consistent revenue base, to ensure

stability of business on the long run.

POLLUTION CONTROL

No Special pollution control measures are needed for the servicing and

repairing of vehicle, however arrangement for proper ventilation should be ensured

in the engine testing areas and waste oils / fluids from the vehicles should be

collected separately before sending to recycling / treatment facility.

ENERGY CONSERVATION NEEDS

General awareness is to be created for economic use of electricity at all points.

Justifiable use of the energy sources and timely checks of contact points will facilitate

the smooth working and energy saving.

SERVICE TARGET (Per Annum):

Annual servicing of Passenger cars – 23,436 Nos

Value – Rs 1,50,78,000

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6. FINANCIAL ASPECT

6.1. Fixed Capital

Land & Building: Working Shed, Store and Parking 500 Sq Mtrs, Office and

Customer louge 100 Sq Mtrs on monthly rent basis.

6.1.1. Machinery and Equipments

Sl. No.

Description Qty.

(Nos.) Value (Rs.)

Total (Rs.)

1 Complete Mechanical Toolbox 3 12,000 36,000

2 Complete Computerized Alignment Equipment with all accessories and sensors, printer etc

1 3,80,000 3,80,000

3 Computerised wheel balancing machine for all type of wheels up to 65 kg. Weight and maximum 850 mm of external wheel diameter with all standard accessories

1 1,50,000 1,50,000

4 Semi-Automatic tyre changer 1 20,000 20,000

5 Construction of 5 ½ feet deep Pit for vehicle Inspection and precision wheel alignment jobs

3 10,000 30,000

6 Work Bench 2 3,500 7,000

7 Vices & fixtures LS 7,000 7,000

8 Voltmeter / Ammeter 1 5,000 5,000

9 Two post vehicle lift suitable for lifting Cars and LCVs upto 3 Tons capacity.

1 40,000 40,000

10 Hydraulic Puller Jack 4 2,000 8,000

11 Air Compressor (2 HP; 1k lbs) 2 15,000 30,000

12 Piston Pump with piping and nozzle 1 12,000 12,000

13 Water tank, oil collection tanks and bins LS 25,000 25,000

14 Battery Charger 1 7,000 7,000

15 Drill Machine (Hand) 1 3,500 3,500

16 Buffing Machine (Hand) 1 3,000 3,000

TOTAL OF PLANT & MACHINE

7,63,500

17 Electrifications and installations @ 5% of M/c Cost

38,175

18 Office Furniture, Sofa and Chairs for customer, interior decorations for customer lounge

LS 70,000

19 Pre-operative expenses @2.0 % 15,270

TOTAL FIXED CAPITAL Rs.8,86,945

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6.2. Working Capital (per month)

6.2.1. Personnel

S.No. Staff and Labour Nos. Rate (Rs.) Amount (Rs.)

1. Manager 1 20,000 20,000

2. Supervisor 1 12,000 12,000

3. Clerk/Accountant/ sales staff 2 9,500 19,000

4. Skilled Workers 4 10,000 40,000

5. Semi-skilled Workers 5 9,000 45,000

6. Helpers / Un skilled Worker 8 8,500 68,000

7. Peon/Chowkidar 1 8,500 8,500

8. Sweeper 1 8,500 8,500

Total 2,21,000

Perquisites @ 15% of Salary 33,150

Total Rs. 2,54,150

6.2.2. Raw Material

S.No. Raw Materials Qty. Amount

(Rs.)

1. Bush, break shoes, filter, points, clutch plates, spark plugs, nuts / bolts, rubber lining, adhesive, etc.

LS 2,00,000

2. lubricants, brake oil, coolant, battery water, etc. LS 4,00,000

3. Cleaning detergent, Wax polish, dashboard cleaner etc LS 50,000

4. Other Misc Items LS 25,000

Total Rs. 6,75,000

6.2.3. Utilities

a) Power 1600 Units @ Rs. 6 Per Unit Rs. 9,600

b) Water Charges (L.S.) Rs. 5,000

Total Rs. 14,600

6.2.4. Other Contingent Expenses

S.No Contingent expenses Amount (Rs.)

1. Rent 40,000

2. Postage and Stationery 500

3. Telephone expense for customer care and PR 6,000

4. Repair and maintenance 1,500

5. Transport charges 3,000

6. Advertisement and publicity 2,500

7. Insurance 2,500

8. Sales expenses 6,000

9. Misc Expenses 2,500

Total 64,500

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6.2.5. Total Recurring Expenditure (per month)

1. Staff and labour Rs. 2,54,150

2. Raw material Rs. 6,75,000

3. Utilities Rs. 14,600

4. Other contingent expenses Rs. 64,500

Total Rs. 10,08,250

6.3. Total Capital Investment

Total Fixed Capital Rs. 8,86,945

Total Recurring Expenditure (for 3 months) Rs. 30,24,750

Total Rs. 39,11,695/-

7. FINANCIAL ANALYSIS

7.1. Cost of Servicing (per annum)

1. Total recurring cost per year Rs. 1,20,99,000

2. Depreciation on plant and machinery @ 10% Rs. 23,350

3. Depreciation on Computerized Machines @ 20% Rs. 1,06,000

4. Depreciation of office equipment @ 20% Rs. 14,000

5. Interest on Capital Invested @ 12.5% Rs. 4,88,962

Total Rs. 1,27,31,312/-

7.2. Turnover (per annum)

S.No Total Sales (per annum) Qty.

(Nos.) Service rate (Rs)

Approximate Cost of bought

out items

Amount (Rs.)

1 Normal Maintenance Servicing with change of lubricnats

3,600 600 1,800 86,40,000

2 Major Repairing work & Engine Overhaul

36 12,000 10 % margin an avg cost of 10000 i.e 1,000

4,68,000

3 Wheel Allignment 6,600 400 -- 26,40,000

4 Wheel Balancing 4,200 250 -- 10,50,000

5 Car wash and polishing 6,600 200 -- 13,20,000

6 Subletting services 2400 400 20 % margin on avg. cost of 2000 i.e 400

9,60,000

Total 1,50,78,000

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7.3. Net Profit (per annum)

= Turnover – Cost of Production

= Rs. 1,50,78,000 – 1,27,31,312

= Rs. 23,46,688

7.4. Net Profit Ratio

= Net profit per year

X 100 Turnover per year

= 23,46,688

X 100 1,50,78,000

= 15.6 %

7.5. Rate of Return

= Net profit per year

X 100 Total Capital Investment

= 23,46,688 X 100

39,11,695 = 60 %

7.6. Break-even Point

Fixed Cost (per annum) (Rs.)

1. Rent per Annum 4,80,000

2. Interst on total capital investment @ 12 % 4,88,962

3. Depreciation of machinery & equipments @ 10% 23,350

4. Depriciation on Computerised Machines @ 20% 1,06,000

5. Depreciation of office equipment @ 20% 14,000

6. Insurance 30,000

7. 40% of salaries and wages 12,19,920

8. 40% of other expenses including utilities and excluding rent & insurance

1,75,680

Total Fixed Cost (Rs.) 25,37,912

B.E.P

= Fixed Cost

X 100 Fixed Cost + Net Profit

= 25,37,912

X 100 25,37,912 + 23,46,688

= 52 %

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ADDRESSES OF MACHINERY & EQUIPMENT SUPPLIERS:

1. M/s. Manatec Electronics

C-22 & 30, Industrial Estate,

Thattanchavady, Pondicherry.

2. M/s. Mani Kam Engineers

Samaipur Sohna Road, Rajiv Colony,

Ballabhgarh, Faridabad - 121004

3. M/s. Nepture Equipment Pvt. Ltd.

2, Zoroastrian Building,

16, Hornimiman Circle,

Fort, Mumbai.

4. M/s. Countech Engineers

A-1/2, Guru Nanak Street,

Moujpur, Delhi

NAMES AND ADDRESSES OF RAW MATERIALS SUPPLIERS:

Raw material can be purchased from the items authorized distributors &

original equipment manufacturers.