A
R
& S
W
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.
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
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 1
st 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.
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.
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
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 (Nos.)Qty. 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
6.2. Working Capital (per month)
6.2.1. PersonnelS.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
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) (Nos.) Qty. rate (Rs) Service
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
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 Turnover per year X 100 = 1,50,78,000 23,46,688 X 100
= 15.6 %
7.5. Rate of Return
= Total Capital Investment Net profit per year X 100 = 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 %
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.
