Government Policies on Indian Automobile Industry

8/7/2019 Government Policies on Indian Automobile Industry

http://slidepdf.com/reader/full/government-policies-on-indian-automobile-industry 1/33

Government Policies on Indian Automobile

Industry

The Indian Automobile Industry plays a major role in the economic scenario of the country. Theautomobile sector in India, record sales of more than one million passenger cars per year. The percentage of automobile exports has risen significantly during the last few years. Thegovernment policies on Indian automobile industry have been framed in order to aid in theexpansion of the automobiles sector in India.

During the early stages, the automobile industry was not accorded much importance by theIndian Government. However, the attitude changed during the 1990's. A number of reforms wereinitiated in 1991. Liberal policies affected during this period, proved to be beneficial to theautomobile industry. The fiscal measures, tax reliefs and reforms in equity regulations andforeign exchange led to significant growth in the automobile sector. A reduction in the

percentage of tariffs imposed on exports and a change in the banking policies was instrumentalin the expansion and growth of the banking sector

Prior to the mid 1990's, the Indian automobile sector comprised of indigenous companies. Theautomobile market in India was however, opened up to foreign investors in 1996. Internationalnames like Ford, Hyundai, Toyota, Volvo, Daimler Chrysler and GM Honda were thus, able tomake their foray into the Indian automobile sector. Furthermore, the auto emission rules issued by the government in recent years ensured that the vehicles manufactured in India, catered tointernational standards. At present, the automobiles sector contributes 4 % to the GDP. About 9.7million automobiles were manufactured in 2005-2006. Export figures had crossed the magicfigure of one billion during 2003-2004.

A reduction in the tariff imposed on car exports has been effected by the Indian government.There has also been a removal of the minimum capital investment required from new investors.The new policy is also in favor of reduction in excise duty for small automobiles and lowemission and multi utility cars. The tariff policy is also to be reviewed on a regular basis in order to affect a balance between domestic industry and international trade. There has also been a proposal for tax relaxation on investment of more than Rs. 500 Crore.

The government has recently proposed for an infrastructure that will provide one stop clearancefor any kind of proposal for foreign direct investment in the automotive sector. This will includethe local clearance system also for the same purpose. There are also plans for imposing a 100 %tax deduction on export profits. The government has also proposed for a concession in importduty for the establishment of new manufacturing units and industrial holdings.

The Indian government is also urging the state governments to ensure continuous power supplyto the automotive manufacturing units as well as granting them with the preferred plots of land.Captive Generation for the automobile sector has also been proposed. The auto policy of theIndian government also includes the promotion of vehicles which are run on alternative energy



resources. Talks are also on for extensive research, development and designing facilities thatwould effect modernization in the automotive sector.

The policies adopted by the Indian government for the growth and development of theautomobile sector, has led to a large number of foreign investments. It has also given rise to an

increased sales rate for two wheelers and other automobiles. India is also becoming the ultimateoutsourcing destination for global automobile companies like Ford, Mitsubishi, Toyota, Hyundaietc.

The liberalization policies of government have been one of the biggest factors behind the industry's

rapid growth. Supportive policy measures like relaxation of foreign exchange and equity regulations,

reduction tariffs on imports, and banking liberalization leading to a boom in financing driven purchases

and convenient EMIs have contributed to the present success of the Indian automobile industry.



Executive Summary

Environmental Engines Toyota Honda GM believes our future cars should save even moreenergy and produce even less pollution. Led by Jack Anderson, mechanical engineer andenvironmental guru; Jim Handy, public relations consultant; and Frank Lee Good, environmental

and corporate attorney, Environmental Engines Toyota Honda GM is going to climb to the top of the auto sales industry. We invite everyone to join us in driving this exciting new technology.

Our strategic focus will attract courageous early-adopters who envision themselves as "energy pioneers," the younger generation, and environmentalists. Each of these groups has outstanding projected growth rates, particularly the younger generation. Environmental Engines ToyotaHonda GM holds a competitive edge by specializing in zero emissions vehicles and hasfranchised with every auto manufacturer that could offer any competition. EnvironmentalEngines Toyota Honda GM will stand out as the preferable alternative to fossil fuel burningtransportation systems. As visibility of our vehicles increases, sales among environmentalists andthe younger generation will increase by 50% each month thereafter.

Profits will initially be repaid to the business to finance any overhead costs related to purchasinginventory, then to the rapidly expanding photovoltaic recharging station and mechanic's garage,then to pay off the initial investments. Inventory will be purchased in advance to stock theshowroom floor and to outfit every executive, sales person, and mechanic with a zero emissionsvehicle to drive around town at their own cost. Their savings earned by investing in a zeroemissions vehicle will spread by word-of-mouth, attract more customers, and bolster futuregrowth at the same high rate of 50%.

The highlights chart that follows affirms how exciting an opportunity this really is: with GM ananticipated a 50% monthly increase in sales starting small (selling six cars in the first month); a

modest gross margin within the first year, rising in the second and net profits being healthy inyears two and three.

Not only will the sky be cleaner through the success of our company, but the sky is the limit interms of our potential market dominance as well. All of these profits can then be fed back intoresearch and development opening the doorway to a secondary market role for EnvironmentalEngines Toyota Honda GM as a patent holding company and clearing house.



1.1 Keys to Success

The keys to success for Environmental Engines Toyota Honda GM are:

y Marketing: dealing with barriers to entry and partnering with local consumer and

environmental groups, solving problems with major advertising and promotion budgets.

y Product quality.

y Management: products delivered on time, costs controlled, marketing budgets managed. There

is a temptation to fix on growth at the expense of profits.

1.2 Objectives

The objectives for Environmental Engines Toyota Honda GM during the first three years of operation include:

1. To create a car dealership with a respectable gross margin in environmentally-friendlier

automobiles.

2. To develop a discerning and informed consumer base in new automobile buyers throughout the

surrounding metropolis who will exercise their buying power to support a 100% yearly sales

growth of automobiles with greater fuel efficiency standards and lower rates of carbon

monoxide emissions.

3. To achieve 1,000 unit sales of environmentally-friendlier automobiles in year one.

4. To stabilize the fuel efficient automobile market by increasing the market share by 15% after

three years.

1.3 Mission

The mission of Environmental Engines Toyota Honda GM is to provide early adopters and theyounger generation within the Ann Arbor community with environmentally-friendlier automobile choices and to convert traditional new automobile buyers into conscientiousconsumers who are aware of external as well as internal costs associated with automobile



transportation. We will attract courageous early-adopters who envision themselves as "energy pioneers," the younger generation, and environmentalists. When we adhere to these principleseverything will fall into place.

Company Summary

Environmental Engines Toyota Honda GM is an automobile dealership based in the Ann Arbor area. It is founded as a consumer-oriented and environmentally-friendly dealership, and isemphasizing consumer education to differentiate itself from less environmentally-concerneddealerships.

2.1 Start-up Summary

Environmental Engines Toyota Honda GM's start-up costs will include dealership construction,all equipment needed for the office, legal costs, consulting costs, website creation, and

advertising.

The inventory will be the largest chunk of start-up expenses. Start-up assets will include a mixedfloor inventory of 10 hybrid and zero-emissions automobiles from Honda, Toyota, and GM.Construction costs will be second and will include a show room, three offices, fully-stockedmechanic's garage, photovoltaic cells (charged by solar panels on the roof of the dealership), car wash, and automobile lot. The office equipment includes three computers, a fax machine, copier,four cellular phones, office supplies, additional land line, a DSL connection, and office furniture.

Start-up expenses will also include advertising. Four methods will be used: an interactive B-2-Bwebsite, the Yellow Pages, local newspapers, and direct marketing to local government,

consumer-protection and environmental organizations.



Start-up

Requirements

Start-up Expenses

Construction $320,000

Mechanic's Equipment $1,500

Photovoltaic Cells $125,000

Legal $500

Stationery etc. $100

Brochures $1,000

Consultants $1,000

Insurance $1,200

Real Estate Purchase $120,000

Research and Development $1,000

Website creation $1,500

Office Equipment $500

DSL Installation $150

Advertising $180,000

Franchise Royalties $60,000

Total Start-up Expenses $813,450

Start-up Assets

Cash Required $3,610,050

Start-up Inventory $125,000

Other Current Assets $189,500

Long-term Assets $440,000

Total Assets $4,364,550

Total Requirements $5,178,000



Start-up Funding

Start-up Expenses to Fund $813,450

Start-up Assets to Fund $4,364,550

Total Funding Required $5,178,000

Assets

Non-cash Assets from Start-up $754,500

Cash Requirements from Start-up $3,610,050

Additional Cash Raised $0

Cash Balance on Starting Date $3,610,050

Total Assets $4,364,550

Liabilities and Capital

Liabilities

Current Borrowing $2,000,000

Long-term Liabilities $1,500,000

Accounts Payable (Outstanding Bills) $0

Other Current Liabilities (interest-free) $178,000

Total Liabilities $3,678,000

Capital

Planned Investment

Jack Anderson $1,000,000

Jim Handy $150,000

Frank Lee Good $350,000

Additional Investment Requirement $0

Total Planned Investment $1,500,000

Loss at Start-up (Start-up Expenses) ($813,450)

Total Capital $686,550

Total Capital and Liabilities $4,364,550



Total Funding $5,178,000

2.2 Company Ownership

Environmental Engines Toyota Honda GM is a privately-held Michigan corporation. Jack Anderson, Environmental Engines Toyota Honda GM's founder, is the majority owner. Severalmembers of the board of directors also hold minority stock positions.

Two of these are also vendors of outside services:

y Jim Handy, public relations consultant.

y Frank Lee Good, environmental and corporate attorney.

Products and Services

Environmental Engines Toyota Honda GM believes that driving our zero emissions vehicles andhybrid automobiles around will be the best way to get other early-adopters, the younger generation, and environmentalists involved with cleaner forms of transportation.

Environmental Engines Toyota Honda GM will showcase America's most popular alternativevehicle, the four-door Toyota Prius. It runs on gasoline, like a regular car, but it also has anelectric motor under the hood, which supplements the gas engine and sometimes takes over completely. The gas engine shuts off automatically whenever the Prius comes to a stop. Theelectric motor powers it up when you press on the accelerator. Unlike every other car on thehighway, the Prius actually gets better mileage in stop-and-go city driving that while cruising at

high speed. It's in that stop-and-go driving than the car exhibits its most remarkable feature:whenever it switches to electric power, the Prius is dead quiet.

Since Toyota introduced the Prius to the United States two years ago, it has sold around 20,000of the compact cars. Demand still exceeds supply, and other auto makers, like Honda and GM,have hybrid cars available or on the drawing board.

Environmental Engines Toyota Honda GM believes our future cars should save even moreenergy and produce even less pollution. To emphasize the point, members of the board of directors will drive around in a totally electric automobile borrowed from the showroom - an all-electric Toyota RAV4 sports utility vehicle. Instead of plugging into a standard outlet that

supplies electricity from a coal or gas power plant, Environmental Engines Toyota Honda GM'sautomobiles' batteries will be recharged using photovoltaic cells - solar power. A solar-powered,five passenger electric car like this conserves energy and our environment.



Market Analysis Summary

Environmental Engines Toyota Honda GM's customers can be divided into three groups: early-adopters, the younger generation, and cost-conscious-new-automobile-buyers.

1.

arly-adopters. Environmental Engines Toyota Honda GM's first customers will likely be early-

adopters. The reason for this is that these people will eagerly seek out the risks in purchasing an

automobile that operates on alternative fuels in exchange for the status of being an automobile

pioneer. This type of customer will range widely in age but will share an interest in automobile

engineering and maintenance. Therefore, these customers will be most easily accessed by

advertising in magazines marketed to automobile enthusiasts, engineers, hobbyists, mechanics

and scientists. Other members of this customer-group will be attracted by consumer protection

reports that have given favorable ratings to our products.

2. The younger generation. The younger generation will be likely to purchase zero emission

automobiles because these automobiles affect their future. These automobiles will not pollute

their air or guzzle their gas. The reason for this is that after past generations have ignored thewarning signs of global warning, the younger generations are now witnessing the cumulative

and destructive effects that carbon-based-fuel systems are having on the environment and

global eco-political structures.

3. Environmentalists. Environmental Engines Toyota Honda GM's customers will also include

environmentalists. This category of customer exercises their purchasing power for the obvious

environmental benefits and future rewards of zero emissions transportation systems. Therefore,

these customers will be most easily accessed by direct marketing campaigns to local

conservation groups, outdoors athletic clubs, and environmentally-sensitive political parties.

4.1 Market Segmentation

Early-adopters. Environmental Engines Toyota Honda GM's will be targeting early-adopterswho characteristically can be described as: over 28 years of age; either vocational (mechanicaleducation) or higher education (four-year college degree or higher); mechanical or professionaloccupation earning a higher income (over $50,000); living within the city limits of Ann Arbor or Detroit; attracted by consumer protection reports that have given favorable ratings to our vehicles.

The younger generation. Environmental Engines Toyota Honda GM's will be targeting urbanyouths between the ages of 14 and 27; who are athletically or academically active; come fromupper middle to upper class homes (household incomes over $50,000); tend to make big ticket

purchases; and need individual transportation.

Environmentalists. Environmental Engines Toyota Honda GM's will be targetingenvironmentalists who characteristically can be described as: over twenty-one years of age;higher education (four-year college degree or higher); professional occupation earning a higher income (over $50,000); living within the city limits of Ann Arbor or Detroit; tending to buyorganic and eco-friendly products; accessible by direct marketing to local conservation groups,outdoors athletic clubs, and environmentally-sensitive political parties.



Market Analysis

Year 1 Year 2 Year 3 Year 4 Year 5

Potential Customers Growth CAGR

Early-adopters 15% 625 719 827 951 1,094 15.02%

The younger generation 100% 365 730 1,460 2,920 5,840 100.00%

Environmentalists 50% 100 150 225 338 507 50.06%

Total 61.64% 1,090 1,599 2,512 4,209 7,441 61.64%

4.2 Target Market Segment Strategy

Environmental Engines Toyota Honda GM's will be targeting early-adopters for four reasons.

1. Early-adopters will eagerly seek out the risks in purchasing an automobile that operates on

alternative fuels in exchange for the status of being an automobile pioneer.

2. Favorable reviews by these customers will lend credibility to zero emissions vehicles as not only

environmentally-friendly, but also as the economically preferable transportation option.

3. These customers will be most easily accessed by advertising in magazines marketed to

automobile enthusiasts, engineers, hobbyists, mechanics and scientists, and through good

ratings in consumer protection reports.

4. The younger generation will be attracted to zero-emissions vehicles once they see early-

adopters driving these automobiles around.



Environmental Engines Toyota Honda GM's will be targeting the younger generation for threereasons.

1. The younger generation is not vested in perpetuating fossil-fuel-based transportation and

economic systems and therefore, requires less marketing to demonstrate the advantages of

zero-emissions vehicles.

2. The younger generation will be likely to purchase an automobile of some sort between age

sixteen and twenty-one. If the younger generation buys into the former gasoline-based

automobile market, there will be more gas-burning vehicles on the road. More gas guzzling

vehicles will pollute the air. Therefore, converting the next wave of vehicle consumers to a non-

fossil-fuel-dependent form of transportation will more likely achieve Environmental Engines

Toyota Honda GM's mission of a zero-emission transportation system nationwide.

3. Most importantly, investing in the future customer base of the younger generation will ensure

exponential increase in Environmental Engines Toyota Honda GM's sales for years to come.

Environmental Engines Toyota Honda GM's will be targeting environmentalists for two reasons.

1. These people will accept the risks in purchasing an automobile that operates on alternative fuels

in exchange for the obvious environmental benefits and future rewards of zero emissions

transportation systems.

2. These customers will be accessible by direct marketing to local conservation groups, outdoors

athletic clubs, and environmentally-sensitive political parties.

4.3 Service Business Analysis

Auto sales is one of the largest industries in the world.

The automobile industry is diversified into many large and small sub-groups, each supplied with

high concentrations of capital. Many sub-groups enjoy support from classic car and eclecticengineering enthusiasts.

Services are bought and sold upon word-of-mouth recommendations and product image.

Specific competitors in the niche industry of zero emission vehicles will be franchised andsupportive of Environmental Engines Toyota Honda GM.

4.3.1 Competition and Buying Patterns

Auto sales is about transportation for the individual. Customers seem to choose their vehicle

based on their self image. One automobile maker's success depends on image and trends in one part of the market, and on advertising and word-of-mouth recommendations in another.

Visibility, delivery, reliability, and features are critical. While price is less a factor in thisindustry than delivery and reliability, materials used by manufacturers in volume must comefrom reliable sources because the niche industry of zero emission vehicles should not be subjectto risky fluctuations in wholesale and subsequently retail values. Features will also be important because our vehicles must be viewed as the highest technology.



Target customers choose between competing vehicles based on brand name image and word-of-mouth. Vehicle performance and image are major factors in developing word-of-mouthrecommendations. Customers like that their choice of zero emissions vehicles protects theenvironment.

Strategy and Implementation Summary

Environmental Engines Toyota Honda GM holds a competitive edge by specializing in zeroemissions vehicles and has franchised with every auto manufacturer that could offer anycompetition.

Environmental Engines Toyota Honda GM will grow from three executives plus a small group of three sales persons and one mechanic, all of who will bring their professional expertise andcontacts to provide a solid foundation of connections for future marketing ventures.

Environmental Engines Toyota Honda GM's media strategy will focus on direct marketing tolocal groups and clubs, as well as advertising in magazines. Sales prospects will be finalized in person, through mail-order, over the phone, and via the Internet.

As visibility of our vehicles increases, sales among environmentalists and the younger generationwill increase by 50% each month thereafter.

5.1 Sales Strategy

The sales strategy of Environmental Engines Toyota Honda GM will optimize selling byfocusing on serving the immediate needs of the customer - foster the "energy pioneer" image,

individual transportation, reducing dependence on fossil fuels, and minimizing the automobile'simpact on the environment. Informed by the customer's immediate needs, our sales team willfocus on informing the customer of the benefits to driving our vehicles.

Sales prospects will be finalized in person, through mail-order, over the phone, and via theInternet. Sales people will be compensated with a two percent commission. Sales persons will betrained in Web-based publishing and database management to optimize order processing.

Prices, delivery and conditions of sale are negotiable within the bounds of profitability.

5.1.1 Sales Forecast

Beginning in January of the first year sales will start small (2 Toyota Priuses, 1 RAV4, 1 Honda)among the early-adopters because the general market has not yet been developed.

As visibility of our vehicles increases, sales among environmentalists and the younger generationwill increase by 20% each month thereafter. As word spreads, this rate of increase will maintainsteady for at least ten years because the younger generation, one of our target markets, will onlycontinue to grow.



This high rate of growth is believable because the industry is in its start-up stage and will notreach saturation at any foreseeable point in the future. Furthermore, if gasoline prices willcontinue to rise our non-fossil fuel burning vehicles will only become more attractive. If gasoline prices do not rise, then our sales team will focus on the obvious environmental benefits andfuture rewards of zero emissions transportation systems.

Sales Forecast

Year 1 Year 2 Year 3

Sales



Toyota Prius $5,937,075 $7,124,490 $8,549,388

Toyota RAV4 $2,770,635 $3,324,762 $3,989,715

Honda $989,513 $1,187,415 $1,424,898

GM $0 $0 $0

Mechanic Labor $395,805 $474,966 $569,959

Total Sales $10,093,028 $12,111,634 $14,533,960

Direct Cost of Sales Year 1 Year 2 Year 3

Toyota Prius $4,749,660 $4,987,143 $5,984,572

Toyota RAV4 $2,216,508 $2,327,334 $2,792,800

Honda $791,610 $831,191 $997,429

GM $0 $0 $0

Mechanic Labor $316,644 $332,476 $398,971

Subtotal Direct Cost of Sales $8,074,422 $8,478,144 $10,173,772

5.2 Milestones

Environmental Engines Toyota Honda GM set 12 realistic milestones for itself within the firstyear. Achievement of each of these organizational and marketing milestones will buildmomentum within the organization. The culmination of our first year in the sale of 1,000

vehicles will feedback into our mission statement and reaffirm the purpose and success of Environmental Engines Toyota Honda GM.

Milestones

Milestone Start Date End Date Budget Manager Department

First Thousand Vehicles Sold 1/1/2003 1/1/2004 $0 Jack Anderson Management

First Marketing Campaign 1/1/2003 1/15/2003 $1,000 Jim Handy Marketing

Publishing Website 1/15/2003 2/15/2003 $1,000 Jim Handy Web

Receive First Internet Sale 2/15/2003 3/15/2003 $0 Sales Staff Web

Develop Employee Policies 1/1/2003 1/15/2003 $0 Frank Lee Good Legal

Service First Customer's Vehicle 1/1/2003 1/15/2003 $0 Mechanic Staff Mechanic



Refuel First Customer's Vehicle 1/1/2003 1/15/2003 $0 Jack Anderson Photovoltaics

First Consumer Protection Review 1/1/2003 3/15/2003 $0 Jack Anderson Management

Second Marketing Campaign 2/15/2003 3/15/2003 $1,000 Jim Handy Marketing

Hire Sales and Mechanic 1/1/2003 1/15/2003 $0 Board of Directors

Board of

Directors

Totals $3,000

5.3 Marketing Strategy

Environmental Engines Toyota Honda GM's media strategy will focus on direct marketing tolocal conservation groups, outdoors athletic clubs, and environmentally-sensitive political parties, as well as advertising in magazines marketed to automobile enthusiasts, engineers,hobbyists, mechanics and scientists, and through good ratings in consumer protection reports.Impact will grow from three executives (Jack Anderson, Jim Handy, and Frank Lee Good) plus asmall group of three sales persons and one mechanic, all of who will bring their professionalexpertise and avocational contacts to Environmental Engines Toyota Honda GM and provide asolid foundation of connections for future marketing ventures.

5.4 Competitive Edge

Environmental Engines Toyota Honda GM holds a competitive edge by specializing in zeroemissions vehicles and has franchised with every auto manufacturer that could offer anycompetition. Environmental Engines Toyota Honda GM will stand out as the preferablealternative to fossil fuel burning transportation systems. As visibility of our vehicles increases,sales among environmentalists and the younger generation will increase by 50% each monththereafter. As word spreads, this rate of increase will maintain steady for at least ten yearsamongst our target market in the younger generation who will continue to grow and develop over time.

Furthermore, our vehicles will readily attract new investment because we introduce the conceptof sustainability to individual transportation systems by bringing fuel efficiency, economy of size, and environmentally friendlier alternatives to the market.

As the central distribution point of environmentally friendlier engines, Environmental EnginesToyota Honda GM will bring unparalleled know-how and will also aim to serve as a clearinghouse for product innovations and design patents.

Web Plan Summary

Environmental Engines Toyota Honda GM will host a site on the World Wide Web to serve asan educational tool, offering a menu of custom vehicle options to potential walk-in and telephone



customers and as a B-2-B ordering site for a few very reliable purchasers, such as largecorporations and municipalities.

The menu of custom vehicle options will require as little bandwidth as possible while providingas much photographic and text detail as possible to the potential customer. These potential

customers will be the early-adopters who will encounter the exciting prospect of being anenergy-pioneer, the younger generation surfing for the next cool look, and the environmentalistin search of alternative transportation options.

The B-2-B site will be accessible through an account number and will allow large corporationsand municipalities with large bandwidth capacity to design large orders of vehicles to facilitatecustomized mass production orders to be forwarded on to Toyota, Honda and GM. Our B-2-Bsite can pivot off of the success of Toyota's, Honda's and GM's online ordering.

6.1 Website Marketing Strategy

Environmental Engines Toyota Honda GM will host a site on the World Wide Web to serve asan educational tool, offering a menu of custom vehicle options to potential walk-in and telephonecustomers and as a B-2-B ordering site for a few very reliable purchasers, such as largecorporations and municipalities.

6.2 Development Requirements

The menu of custom vehicle options will require as little bandwidth as possible while providingas much photographic and text detail as possible to the potential customer.

The B-2-B site will be accessible through an account number and will allow large corporations

and municipalities with large bandwidth capacity to design large orders of vehicles to facilitatecustomized mass production orders to be forwarded on to Toyota, Honda and GM.

Management Summary

The founders and executive board of Environmental Engines Toyota Honda GM include suchindustry leaders as Jack Anderson, Jim Handy, and Frank Lee Good.

Jack Anderson, the majority owner, is renowned in both scientific and environmentalistcommunities throughout the nation. Jack Anderson earned two degrees from the University of

Michigan the first in mechanical engineering, the second in business. Though Jack Andersonexcelled academically, his sites were set even higher as president of the University of MichiganMountaineering Club. Through his contacts in the mountaineering club Jack Anderson alsodeveloped an interest in consumer protection and environmentalism and served theEnvironmentalists For Future Occupationally Responsible Technicians (EFFORT) as treasurer.Through Jack's activism in EFFORT, he met Jim Handy and Frank Lee Good.



After college, Jack managed an Internet-based custom-ordering automobile-hobbyist distributioncompany where he increased overall product sales by over 50% in three years. During this time,Jack also developed correspondence with columnists at the New York Times, the ScientificAmerican, and Consumer Reports. In order to keep Jack as manager, the company offered Jack a10% interest in the company's stock, motivating Jack to increase the company's value by 100%

in the next five years. Throughout Jack's eight years of managerial and ownership experience inauto sales, Jack has learned the finer points in eclectic car sales and marketing as well as thetechnical side of automobile engineering.

Jim Handy, public relations consultant, and Frank Lee Good, environmental and corporateattorney, can lend their professional services to the success of Environmental Engines ToyotaHonda GM and are also vendors of outside services through which they may also lend clientsand contacts for marketing purposes.

7.1 Personnel Plan

Jack Anderson will act as manager for the first three years for a minimal salary of $36,000 inexchange for his commitment of energy and know-how.

The executive staff will be compensated for their services by a return of profits on their investment.

Three sales staff will work the sales floor for the first year compensated solely by commissionsearned on a 5% pay scale.

Two mechanics, specializing in alternative energy vehicles, will be paid $3,200 monthly. Themechanics' salaries will steadily increase every year by 5% to reflect the increased human capital

acquired by the mechanics' maintenance experience with our vehicles and our photovoltaic cells.

The maintenance and secretarial staff will take care of administrative matters and sales roomdecorum.

Personnel Plan


Jack Anderson $36,000 $36,000 $36,000

Frank Lee Good $0 $0 $0

Jim Handy $0 $0 $0

Sales Person 1 $12,480 $13,104 $13,759

Sales Person 2 $12,480 $13,104 $13,759



Sales Person 3 $12,480 $13,104 $13,759

Sales Person 4 $0 $12,480 $13,104

Sales Person 5 $0 $0 $12,480

Sales Person 6 $0 $0 $12,480

Mechanic 1 $38,400 $40,320 $42,336

Maintenance $12,480 $13,104 $13,759

Secretary $12,480 $13,104 $13,759

Mechanic 2 $38,400 $40,320 $42,336

Total People 0 0 0

Total Payroll $175,200 $194,640 $227,532

Financial Plan

Environmental Engines Toyota Honda GM is expected to grow in sales at a rate of 20% per month, starting from the conservative estimate of six cars sold. The financing will come initiallyfrom the executive board, allowing plenty of opportunity for credit to cover unforeseen expenses,if necessary. Growth will be rapid and produce profits almost immediately.

Profits will initially be repaid to the business to finance any overhead costs related to purchasinginventory and to pay down the principal on outstanding debt, then to the rapidly expanding photovoltaic recharging station and mechanic's garage, then to pay off the initial investments.

Inventory will be purchased in advance to stock the showroom floor and to outfit everyexecutive, sales person, and mechanic with a zero emissions vehicle to drive around town at their own cost. Their savings earned by investing in a zero emissions vehicle will spread by word-of-mouth, attract more customers, and bolster future growth at the same high rate of 20%.

8.1 Important Assumptions

Environmental Engines Toyota Honda GM has made some important assumptions about thecosts of building business capacity and acquiring inventory. We will build our business capacitysteadily based on the assumption of roughly $175,000 in annual payroll, 10% current and long-term interest rates, a 30% tax rate, and an available inventory totaling $9,616,733. Assumingdemand does not outstrip supply, these conservative assumptions project immediate success for Environmental Engines Toyota Honda GM.

While we are prepared for our manufacturers to release new products during the next 12 months,drastic increases in the price of inventory could threaten the stability of our business. Suchfluctuations would only be threatening if they were industry-wide (i.e., Toyota, Honda and GM



all doubled the dealer's wholesale cost of purchasing inventory.) Barring monopolisticmanipulations of the supply of inventory, success is just around the corner.

General Assumptions


Plan Month 1 2 3

Current Interest Rate 10.00% 10.00% 10.00%

Long-term Interest Rate 10.00% 10.00% 10.00%

Tax Rate 30.00% 30.00% 30.00%

Other 0 0 0

8.2 Break-even Analysis

For our break-even analysis, we assume normal monthly running costs per month, as shown below, which include our full payroll, lease, marketing, utilities, and an estimation of other running expences. Payroll alone, at our present run rate, is only about $48,000 for two mechanicswhile all sales staff operate on commission.

Margins are harder to assume as the average per unit costs do not include marketing costs, promotions, or salesman commissions. Our overall average per unit revenue over per unit costs is based on past sales from other dealerships. We hope to attain a margin that high in the future.

The chart shows what we need to sell per month to break-even, according to these assumptions.This is less than one percent of our planned 2003 sales level, and significantly below last year'saverage dealership sales level, so we believe we can maintain it.







Pro Forma Profit and Loss


Sales $10,093,028 $12,111,634 $14,533,960

Direct Cost of Sales $8,074,422 $8,478,144 $10,173,772

Sales Commission $504,651 $605,582 $726,698

Total Cost of Sales $8,579,074 $9,083,725 $10,900,470

Gross Margin $1,513,954 $3,027,908 $3,633,490



Gross Margin % 15.00% 25.00% 25.00%

Expenses

Payroll $175,200 $194,640 $227,532

Sales and Marketing and Other Expenses $180,000 $189,000 $198,450

Depreciation $14,400 $14,400 $14,400

Rent $60,000 $60,000 $60,000

Utilities (Including costs of photovoltaic cell

maintenance)$18,000 $18,900 $19,845

Insurance $2,400 $2,400 $2,400

Payroll Taxes $26,280 $29,196 $34,130

Licensing $12,000 $12,000 $12,000

Total Operating Expenses $488,280 $520,536 $568,757

Profit Before Interest and Taxes $1,025,674 $2,507,372 $3,064,733

EBITDA $1,040,074 $2,521,772 $3,079,133

Interest Expense $304,500 $224,000 $140,000

Taxes Incurred $216,352 $685,012 $877,420

Net Profit $504,822 $1,598,361 $2,047,313

Net Profit/Sales 5.00% 13.20% 14.09%

8.4 Projected Cash Flow

This table and chart show our exciting month-by-month cash flow for the next three years.



Pro Forma Cash Flow


Cash Received

Cash from Operations

Cash Sales $2,523,257 $3,027,908 $3,633,490

Cash from Receivables $5,004,070 $8,570,585 $10,284,702

Subtotal Cash from Operations $7,527,327 $11,598,494 $13,918,192

Additional Cash Received

Sales Tax, VAT, HST/GST Received $0 $0 $0

New Current Borrowing $0 $0 $0

New Other Liabili ties (interest-free) $0 $0 $0

New Long-term Liabili ties $0 $0 $0

Sales of Other Current Assets $0 $0 $0

Sales of Long-term Assets $0 $0 $0

New Investment Received $0 $0 $0

Subtotal Cash Received $7,527,327 $11,598,494 $13,918,192

Expenditures Year 1 Year 2 Year 3



Expenditures from Operations

Cash Spending $175,200 $194,640 $227,532

Bill Payments $9,005,828 $11,468,912 $12,413,432

Subtotal Spent on Operations $9,181,028 $11,663,552 $12,640,964

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0

Principal Repayment of Current Borrowing $360,000 $360,000 $360,000

Other Liabili ties Principal Repayment $0 $0 $0

Long-term Liabili ties Principal Repayment $480,000 $480,000 $480,000

Purchase Other Current Assets $0 $0 $0

Purchase Long-term Assets $0 $0 $0

Dividends $0 $0 $0

Subtotal Cash Spent $10,021,028 $12,503,552 $13,480,964

Net Cash Flow ($2,493,701) ($905,058) $437,228

Cash Balance $1,116,349 $211,291 $648,518

8.5 Projected Balance Sheet

The Balance Sheet includes all assets, liabilities, and capital of Environmental Engines ToyotaHonda GM.

Pro Forma Balance Sheet


Assets

Current Assets

Cash $1,116,349 $211,291 $648,518

Accounts Receivable $2,565,701 $3,078,841 $3,694,609

Inventory $1,667,311 $1,750,676 $2,100,812

Other Current Assets $189,500 $189,500 $189,500



Total Current Assets $5,538,860 $5,230,308 $6,633,439

Long-term Assets

Long-term Assets $440,000 $440,000 $440,000

Accumulated Depreciation $14,400 $28,800 $43,200

Total Long-term Assets $425,600 $411,200 $396,800

Total Assets $5,964,460 $5,641,508 $7,030,239

Liabili ties and Capital Year 1 Year 2 Year 3

Current Liabilities

Accounts Payable $1,935,088 $853,775 $1,035,193

Current Borrowing $1,640,000 $1,280,000 $920,000

Other Current Liabili ties $178,000 $178,000 $178,000

Subtotal Current Liabili ties $3,753,088 $2,311,775 $2,133,193

Long-term Liabilities $1,020,000 $540,000 $60,000

Total Liabilities $4,773,088 $2,851,775 $2,193,193

Paid-in Capital $1,500,000 $1,500,000 $1,500,000

Retained Earnings ($813,450) ($308,628) $1,289,733

Earnings $504,822 $1,598,361 $2,047,313

Total Capital $1,191,372 $2,789,733 $4,837,046

Total Liabilities and Capital $5,964,460 $5,641,508 $7,030,239

Net Worth $1,191,372 $2,789,733 $4,837,046

8.6 Business Ratios

The business ratios table is based on accurate research of a collection of standard business ratios

for a zero emissions car dealership specializing in hybrid and electric vehicles. Our projectionsfor this niche market are compared to a collection of standard business ratios for other auto salesindustries.

The variance between our ratios and those of other auto sales industries is a function of the exactnature of Environmental Engines Toyota Honda GM.



y Where market saturation has stifled our competitors' sales growth, our sales growth

reaches respecatable levels after the first year because this is a pre-boom market.

Environmental Engines Toyota Honda GM is an industry-pioneer in an auto sales market that is

about to experience tremendous growth.

y Where our accounts receivable seem high relative to our competitors, we have targeted the

younger generation as one of our key growth markets and have calculated a high ratio of sales

on credit accordingly.

y Our inventory will remain low, overcoming a weakness of other auto sales companies because

we emphasize customized vehicle design, ensuring each vehicle satisfies every customer and

limiting our overhead in inventory.

Each of these values are acceptable, and in fact, preferable to the ratios demonstrated by industrycompetitors.

Ratio Analysis

Year 1 Year 2 Year 3 Industry Profile

Sales Growth 0.00% 20.00% 20.00% 6.06%

Percent of Total Assets

Accounts Receivable 43.02% 54.57% 52.55% 14.27%

Inventory 27.95% 31.03% 29.88% 62.82%

Other Current Assets 3.18% 3.36% 2.70% 14.66%

Total Current Assets 92.86% 92.71% 94.36% 91.75%

Long-term Assets 7.14% 7.29% 5.64% 8.25%

Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabili ties 62.92% 40.98% 30.34% 40.75%

Long-term Liabilities 17.10% 9.57% 0.85% 8.35%

Total Liabilities 80.03% 50.55% 31.20% 49.10%

Net Worth 19.97% 49.45% 68.80% 50.90%

Percent of Sales

Sales 100.00% 100.00% 100.00% 100.00%

Gross Margin 15.00% 25.00% 25.00% 7.81%

Selling, General & Administrative

Expenses9.86% 11.49% 10.48% 3.80%



Advertising Expenses 0.00% 0.00% 0.00% 0.93%

Profit Before Interest and Taxes 10.16% 20.70% 21.09% 0.31%

Main Ratios

Current 1.48 2.26 3.11 2.16

Quick 1.03 1.51 2.12 0.56

Total Debt to Total Assets 80.03% 50.55% 31.20% 52.00%

Pre-tax Return on Net Worth 60.53% 81.85% 60.47% 2.74%

Pre-tax Return on Assets 12.09% 40.47% 41.60% 5.70%

Additional Ratios Year 1 Year 2 Year 3

Net Profit Margin 5.00% 13.20% 14.09% n.a

Return on Equity 42.37% 57.29% 42.33% n.a

Activity Ratios

Accounts Receivable Turnover 2.95 2.95 2.95 n.a

Collection Days 54 113 113 n.a

Inventory Turnover 10.91 4.96 5.28 n.a

Accounts Payable Turnover 5.65 12.17 12.17 n.a

Payment Days 27 49 27 n.a

Total Asset Turnover 1.69 2.15 2.07 n.a

Debt Ratios

Debt to Net Worth 4.01 1.02 0.45 n.a

Current Liab. to Liab. 0.79 0.81 0.97 n.a

Liquidity Ratios

Net Working Capital $1,785,772 $2,918,533 $4,500,246 n.a

Interest Coverage 3.37 11.19 21.89 n.a

Additional Ratios

Assets to Sales 0.59 0.47 0.48 n.a

Current Debt/Total Assets 63% 41% 30% n.a



Acid Test 0.35 0.17 0.39 n.a

Sales/Net Worth 8.47 4.34 3.00 n.a

Dividend Payout 0.00 0.00 0.00 n.a

Appendix

Sales Forecast

Month 1 Month 2 Month 3 Month 4 Month 5 Mo nth 6 Mo nth 7 Month 8 Month 9 Month 10 Month 11 Month 12

Sales

Toyota Prius 0% $150,000 $180,000 $216,000 $259,200 $311,040 $373,248 $447 ,898 $537 ,477 $644,973 $773,967 $928,760 $1,114,513

Toyota RAV4 0% $70,000 $84,000 $100,800 $120,960 $145 ,152 $174,182 $209,019 $250,823 $300,987 $361,185 $433,422 $520 ,106

Honda 0% $25,000 $30 ,000 $36,000 $43,200 $51,840 $62,208 $74,650 $89,580 $107,495 $128,995 $154,793 $185,752

GM 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Mechanic Labor 0% $10,000 $12,000 $14,400 $17,280 $20,736 $24,883 $29,860 $35,832 $42,998 $51,598 $61 ,917 $74,301

Total Sales $255,000 $306,000 $367,200 $440,640 $528 ,768 $634,522 $761 ,426 $913,711 $1,096,453 $1,315 ,744 $1,578 ,893 $1,894,671

DirectCostof Sales Month 1 Month 2 Month 3 Month 4 Month 5 Mo nth 6 Mo nth 7 Month 8 Month 9 Month 10 Month 11 Month 12

Toyota Prius $120,000 $144,000 $172,800 $207,360 $248 ,832 $298,598 $358,318 $429 ,982 $515,978 $619,174 $743,008 $891,610

Toyota RAV4

$56,000 $67 ,200 $80,640 $96,768 $116,122 $139 ,346 $167 ,215 $200,658 $240,790 $288,948 $346,737 $416,085

Honda

$20,000 $24,000 $28 ,800 $34,560 $41,472 $49,766 $59,720 $71,664 $85,996 $103,196 $123,835 $148 ,602

GM $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Mechanic Labor

$8 ,000 $9,600 $11,520 $13,824 $16,589 $19,907 $23,888 $28,665 $34,399 $41 ,278 $49 ,534 $59,441

Subtotal DirectCostof Sales $204,000 $244,800 $293,760 $352,512 $423,014 $507,617 $609,141 $730 ,969 $877,163 $1,052,595 $1,263,114 $1,515 ,737

Personnel Plan

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Jack Anderson 0% $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000

Frank Lee Good 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Jim Handy 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Sales Person 1 0% $1,040 $1,040 $1,040 $1,040 $1,040 $1,040 $1,040 $1,040 $1,040 $1,040 $1,040 $1,040

Sales Person 2 0% $1,040 $1,040 $1,040 $1,040 $1,040 $1,040 $1,040 $1,040 $1,040 $1,040 $1,040 $1,040

Sales Person 3 0% $1,040 $1,040 $1,040 $1,040 $1,040 $1,040 $1,040 $1,040 $1,040 $1,040 $1,040 $1,040

Sales Person 4 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Sales Person 5 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0



Sales Person 6 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Mechanic1 0% $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200

Maintenance 0% $1,040 $1,040 $1,040 $1,040 $1,040 $1,040 $1,040 $1,040 $1,040 $1,040 $1,040 $1,040

Secretary 0% $1,040 $1,040 $1,040 $1,040 $1,040 $1,040 $1,040 $1,040 $1,040 $1,040 $1,040 $1,040

Mechanic 2 0% $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200

Total People 0 0 0 0 0 0 0 0 0 0 0 0

Total Payroll $14,600 $14,600 $14,600 $14,600 $14,600 $14,600 $14,600 $14,600 $14,600 $14,600 $14,600 $14,600

General Assumptions

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month

12

Plan Month 1 2 3 4 5 6 7 8 9 10 11 12

Current Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%

Long-term Interest

Rate10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%

Tax Rate 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00%

Other 0 0 0 0 0 0 0 0 0 0 0 0

Pro Forma Profitand Loss


Sales $255,000 $306,000 $367,200 $440,640 $528,768 $634,522 $761,426 $913,711 $1,096,453 $1 ,315 ,744 $1 ,578 ,893 $1 ,894,671

DirectCostof Sales $204,000 $244,800 $293,760 $352,512 $423,014 $507,617 $609,141 $730,969 $877,163 $1 ,052,595 $1 ,263,114 $1 ,515 ,737

Sales Commission

$12,750 $15,300 $18,360 $22,032 $26,438 $31 ,726 $38 ,071 $45 ,686 $54,823 $65,787 $78,945 $94,734

Total Costof Sales $216,750 $260,100 $312,120 $374,544 $449,453 $539,343 $647,212 $776,654 $931,985 $1 ,118 ,382 $1 ,342,059 $1 ,610 ,471

Gross Margin

$38 ,250 $45 ,900 $55,080 $66,096 $79,315 $95,178 $114,214 $137,057 $164,468 $197,362 $236,834 $284,201

Gross Margin %

15 .00% 15 .00% 15 .00% 15 .00% 15 .00% 15 .00% 15 .00% 15 .00% 15 .00% 15 .00% 15 .00% 15 .00%

Expenses

Payroll $14,600 $14,600 $14,600 $14,600 $14,600 $14,600 $14,600 $14,600 $14,600 $14,600 $14,600 $14,600

Sales andMarketing and Other Expenses $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000

Depreciation

$1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1 ,200 $1 ,200 $1 ,200

Rent

$5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5 ,000 $5 ,000 $5 ,000

Utilities (Including costs of photovoltaiccell

maintenance)

$1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1 ,500 $1 ,500 $1 ,500

Insurance $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200

Payroll Taxes 15% $2,190 $2,190 $2,190 $2,190 $2,190 $2,190 $2,190 $2,190 $2,190 $2,190 $2,190 $2,190



Licensing

$1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1 ,000 $1 ,000 $1 ,000

Total Operating Expenses $40 ,690 $40 ,690 $40 ,690 $40 ,690 $40 ,690 $40 ,690 $40 ,690 $40 ,690 $40 ,690 $40,690 $40,690 $40,690

ProfitBefore InterestandTaxes ($2,440) $5,210 $14,390 $25 ,406 $38 ,625 $54,488 $73,524 $96,367 $123,778 $156,672 $196,144 $243,511

EBITDA

($1,240) $6,410 $15,590 $26,606 $39 ,825 $55,688 $74,724 $97,567 $124,978 $157,872 $197,344 $244,711

InterestExpense $28 ,583 $28 ,000 $27 ,417 $26,833 $26,250 $25 ,667 $25 ,083 $24,500 $23,917 $23,333 $22,750 $22,167

Taxes Incurred

($9,307) ($6,837) ($3,908) ($428) $3,713 $8,646 $14,532 $21 ,560 $29 ,958 $40,001 $52,018 $66,403

NetProfit

($21 ,716) ($15 ,953) ($9,119) ($999) $8,663 $20 ,175 $33,908 $50,307 $69 ,903 $93,337 $121,376 $154,941

NetProfit/Sales -8 .52% -5 .21% -2.48% -0 .23% 1 .64% 3.18% 4.45% 5 .51% 6.38% 7.09% 7.69% 8.18%

Pro Forma Cash Flow


Cash Received

Cash from Operations

Cash Sales $63,750 $76,500 $91,800 $110,160 $132,192 $158,630 $190,356 $228,428 $274,113 $328 ,936 $394,723 $473,668

Cash from Receivables $0 $6,375 $192,525 $231,030 $277,236 $332,683 $399,220 $479,064 $574,877 $689,852 $827,822 $993,387

Subtotal Cashfrom Operations $63,750 $82,875 $284,325 $341,190 $409,428 $491,314 $589,576 $707,492 $848 ,990 $1,018 ,788 $1 ,222,545 $1 ,467 ,055

Additional Cash Received

Sales Tax, VAT, HST/GST Received 0 .00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Current Borrowing

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New OtherLiabiliti es (interest-free)

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Sales of Other CurrentAssets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Sales of Long-termAssets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New InvestmentReceived

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Cash Received

$63,750 $82,875 $284,325 $341,190 $409,428 $491,314 $589,576 $707,492 $848 ,990 $1,018 ,788 $1 ,222,545 $1 ,467 ,055

Expenditures Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Expenditures from Operations

Cash Spending

$14,600 $14,600 $14,600 $14,600 $14,600 $14,600 $14,600 $14,600 $14,600 $14,600 $14,600 $14,600

Bill Payments $12,011 $360 ,007 $353,144 $416,911 $493,513 $585,516 $696,002 $828,667 $987,947 $1,179 ,164 $1 ,408 ,706 $1 ,684,239

Subtotal Spenton Operations $26,611 $374,607 $367,744 $431,511 $508,113 $600,116 $710,602 $843,267 $1,002,547 $1,193,764 $1 ,423,306 $1 ,698 ,839

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Principal Repaymentof CurrentBorrowing

$30,000 $30,000 $30 ,000 $30 ,000 $30,000 $30,000 $30 ,000 $30,000 $30,000 $30,000 $30,000 $30,000

Other Liabilities Principal Repayment

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Long-term Liabilities Principal Repayment

$40,000 $40,000 $40 ,000 $40 ,000 $40,000 $40,000 $40 ,000 $40,000 $40,000 $40,000 $40,000 $40,000



Purchase Other CurrentAssets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal CashSpent

$96,611 $444,607 $437,744 $501,511 $578,113 $670,116 $780,602 $913,267 $1,072,547 $1,263,764 $1 ,493,306 $1 ,768 ,839

NetCash Flow

($32,861) ($361 ,732) ($153,419) ($160,321) ($168 ,685) ($178 ,803) ($191 ,026) ($205,776) ($2 23 ,557) ($244,976) ($270,761) ($301,784)

Cash Balance $3,577 ,189 $3,215 ,458 $3,062,038 $2,901 ,717 $2,733,032 $2,554,230 $2,363,2 03 $2,157 ,428 $1,933,871 $1,688 ,894 $1 ,418 ,133 $1 ,116,349

Pro Forma Balance Sheet

Month 1 Month 2 Month 3 Month 4 Month 5 Mo nth 6 M on th 7 Month 8 Month 9 Month 10 Month 11 Month 12

Assets Starting Balances

CurrentAssets

Cash $3,610 ,050 $3,577 ,189 $3,215 ,458 $3,062,038 $2,901 ,717 $2,733,032 $2,554,230 $2,363,203 $2,157 ,428 $1 ,933,871 $1,688 ,894 $1,418 ,133 $1 ,116,349

Accounts Receiva ble $0 $191,250 $414,375 $497,250 $596,700 $716,040 $859,248 $1 ,031 ,098 $1,237,317 $1 ,484,781 $1,781 ,737 $2,138,084 $2,565 ,701

Inventory $125,000 $224,400 $269,280 $323,136 $387,763 $465,316 $558,379 $670,055 $804,066 $964,879 $1,157 ,855 $1,389 ,426 $1 ,667 ,311

OtherCurrentAssets $189,500 $189,500 $189,500 $189,500 $189,500 $189,500 $189,500 $189,500 $189,500 $189,500 $189,500 $189,500 $189,500

Total CurrentAssets $3,924,550 $4,182,339 $4,088 ,613 $4,071 ,924 $4,075 ,680 $4,103,888 $4,161,357 $4,253,856 $4,388 ,311 $4,573,030 $4,817 ,986 $5,135,143 $5 ,538 ,860

Long-term Assets

Long-term Assets $440,000 $440,000 $440,000 $440,000 $440,000 $440,000 $440,000 $440 ,000 $440,000 $440 ,000 $440,000 $440 ,000 $440,000

A cc um ul at ed D ep re ci at io n $0 $1,200 $2,400 $3,600 $4,800 $6,000 $7,200 $8 ,400 $9,600 $10,800 $12,000 $13,200 $14,400

Total Long-term Assets $440,000 $438,800 $437,600 $436,400 $435,200 $434,000 $432,800 $431 ,600 $430,400 $429 ,200 $428,000 $426,800 $425,600

Total Assets $4,364,550 $4,621 ,139 $4,526,213 $4,508 ,324 $4,510 ,880 $4,537 ,888 $4,594,157 $4,685 ,456 $4,818 ,711 $5 ,002,230 $5,245 ,986 $5,561,943 $5 ,964,460

Liabilities and Capital Month 1 Month 2 Month 3 Month 4 Month 5 Mo nth 6 M on th 7 Month 8 Month 9 Month 10 Month 11 Month 12

Current Liabilities

Accounts Pa yable $0 $348,306 $339,332 $400,562 $474,117 $562,463 $668,556 $795,947 $948,895 $1 ,132,511 $1,352,930 $1,617 ,512 $1 ,935 ,088

Current Borrowing $2,000 ,000 $1,970 ,000 $1,940,000 $1 ,910 ,000 $1,880 ,000 $1 ,850 ,000 $1,820,000 $1 ,790 ,000 $1,760,000 $1 ,730,000 $1,700 ,000 $1,670 ,000 $1 ,640 ,000

OtherCurrentLiabilities $178,000 $178,000 $178,000 $178,000 $178,000 $178,000 $178,000 $178,000 $178,000 $178,000 $178,000 $178,000 $178,000

Subtotal CurrentLiabilities $2,178 ,000 $2,496,306 $2,457 ,332 $2,488 ,562 $2,532,117 $2,590 ,463 $2,666,556 $2,763,947 $2,886,895 $3,040,511 $3,230 ,930 $3,465,512 $3,753,088

Long-term Liabilities $1,500 ,000 $1,460 ,000 $1,420,000 $1 ,380 ,000 $1,340,000 $1 ,300 ,000 $1,260,000 $1 ,220 ,000 $1,180 ,000 $1 ,140,000 $1,100 ,000 $1,060,000 $1 ,020 ,000

Total Liabilities $3,678 ,000 $3,956,306 $3,877 ,332 $3,868 ,562 $3,872,117 $3,890 ,463 $3,926,556 $3,983,947 $4,066,895 $4,180 ,511 $4,330 ,930 $4,525,512 $4,773,088

Paid-in Capital $1,500 ,000 $1,500 ,000 $1,500 ,000 $1 ,500 ,000 $1,500 ,000 $1 ,500 ,000 $1,500 ,000 $1 ,500 ,000 $1,500 ,000 $1 ,500 ,000 $1,500 ,000 $1,500 ,000 $1 ,500 ,000

Retained Earnings ($813,450) ($813,450) ($813,450) ($813,450) ($813,450) ($813,450) ($813,450) ($813,450) ($813,450) ($813,450) ($813,450) ($813,450) ($813,450)

Earnings $0 ($21 ,716) ($37,669) ($46,788) ($47 ,787 ) ($39,124) ($18 ,949) $14,959 $65 ,266 $135 ,169 $228,505 $349 ,881 $504,822

Total Capital $686,550 $664,834 $648,881 $639,762 $638,763 $647,426 $667,601 $701,509 $751,816 $821 ,719 $915,055 $1,036,431 $1 ,191 ,372

Total Liabilities and Capital $4,364,550 $4,621 ,139 $4,526,213 $4,508 ,324 $4,510 ,880 $4,537 ,888 $4,594,157 $4,685 ,456 $4,818 ,711 $5 ,002,230 $5,245 ,986 $5,561,943 $5 ,964,460

Net Worth $686,550 $664,834 $648,881 $639,762 $638,763 $647,426 $667,601 $701,509 $751,816 $821 ,719 $915,055 $1,036,431 $1 ,191 ,372



Documents

Government Policies on Indian Automobile Industry