AUTOMOBILE REPAIRING & SERVICING WORKSHOP

SERVICE CAPACITY
Value

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

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

MONTH AND YEAR

OF PREPARATION

: May, 2014

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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Mechanical Division
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 nonrecurring 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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Automobile Repairing & Servicing Workshop

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

Period Starting to
Completion
0
1st Month

Arrangement for margin money

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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Mechanical Division
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 days
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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Automobile Repairing & Servicing 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
Value Rs 1,50,78,000

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Mechanical Division

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.
1

Description
Complete Mechanical Toolbox

Qty.
(Nos.)
3

Value
(Rs.)
12,000

Total
(Rs.)
36,000

Complete Computerized Alignment

Equipment with all accessories and sensors,
printer etc

3,80,000

3,80,000

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

1,50,000

1,50,000

Semi-Automatic tyre changer

20,000

20,000

Construction of 5 feet deep Pit for vehicle

Inspection and precision wheel alignment
jobs

10,000

30,000

Work Bench

3,500

7,000

Vices & fixtures

LS

7,000

7,000

Voltmeter / Ammeter

5,000

5,000

Two post vehicle lift suitable for lifting Cars

and LCVs upto 3 Tons capacity.

40,000

40,000

10

Hydraulic Puller Jack

2,000

8,000

11

Air Compressor (2 HP; 1k lbs)

15,000

30,000

12

Piston Pump with piping and nozzle

12,000

12,000

13

Water tank, oil collection tanks and bins

LS

25,000

25,000

14

Battery Charger

7,000

7,000

15

Drill Machine (Hand)

3,500

3,500

16

Buffing Machine (Hand)

3,000

3,000

TOTAL OF PLANT & MACHINE

17

Electrifications and installations @ 5% of

M/c Cost

18

Office Furniture, Sofa and Chairs for

customer, interior decorations for customer
lounge

19

Pre-operative expenses @2.0 %

7,63,500
38,175

LS

70,000

15,270
TOTAL FIXED CAPITAL Rs.8,86,945

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Automobile Repairing & Servicing Workshop

6.2. Working Capital (per month)

6.2.1. Personnel
S.No.
1.
2.
3.
4.
5.
6.
7.
8.

Staff and Labour

Manager
Supervisor
Clerk/Accountant/ sales staff
Skilled Workers
Semi-skilled Workers
Helpers / Un skilled Worker
Peon/Chowkidar
Sweeper

Nos.
1
1
2
4
5
8
1
1

Rate (Rs.)
20,000
12,000
9,500
10,000
9,000
8,500
8,500
8,500
Total
Perquisites @ 15% of Salary
Total

Amount (Rs.)
20,000
12,000
19,000
40,000
45,000
68,000
8,500
8,500
2,21,000
33,150
Rs. 2,54,150

6.2.2. Raw Material

S.No.

Raw Materials

Qty.

1.

Bush, break shoes, filter, points, clutch plates, spark

plugs, nuts / bolts, rubber lining, adhesive, etc.
lubricants, brake oil, coolant, battery water, etc.
Cleaning detergent, Wax polish, dashboard cleaner etc
Other Misc Items

LS

2.
3.
4.

LS
4,00,000
LS
50,000
LS
25,000
Total Rs. 6,75,000

6.2.3. Utilities
a)
b)

Power 1600 Units @ Rs. 6 Per Unit

Water Charges (L.S.)
Total

Rs. 9,600
Rs. 5,000
Rs. 14,600

6.2.4. Other Contingent Expenses

S.No
1.
2.
3.
4.
5.
6.
7.
8.
9.

Contingent expenses
Rent
Postage and Stationery
Telephone expense for customer care and PR
Repair and maintenance
Transport charges
Advertisement and publicity
Insurance
Sales expenses
Misc Expenses
Total

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Amount
(Rs.)
2,00,000

Amount (Rs.)
40,000
500
6,000
1,500
3,000
2,500
2,500
6,000
2,500
64,500

Mechanical Division

6.2.5. Total Recurring Expenditure (per month)

1.
2.
3.
4.

Staff and labour

Raw material
Utilities
Other contingent expenses

Rs. 2,54,150
Rs. 6,75,000
Rs. 14,600
Rs. 64,500
Rs. 10,08,250

Total

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.
2.
3.
4.
5.

Total recurring cost per year

Depreciation on plant and machinery @ 10%
Depreciation on Computerized Machines @ 20%
Depreciation of office equipment @ 20%
Interest on Capital Invested @ 12.5%
Total

Rs. 1,20,99,000
Rs. 23,350
Rs. 1,06,000
Rs. 14,000
Rs. 4,88,962
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
1,800

Amount
(Rs.)

Normal Maintenance
Servicing with change of
lubricnats

3,600

600

86,40,000

Major Repairing work &

Engine Overhaul

36

12,000

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

Wheel Allignment

6,600

400

--

26,40,000

Wheel Balancing

4,200

250

--

10,50,000

Car wash and polishing

6,600

200

--

13,20,000

Subletting services

2400

400

20 % margin on
avg. cost of 2000
i.e 400

4,68,000

9,60,000

Total 1,50,78,000

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Automobile Repairing & Servicing Workshop

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%

4.

Depriciation on Computerised Machines @ 20%

5.

Depreciation of office equipment @ 20%

14,000

6.

Insurance

30,000

7.

40% of salaries and wages

8.

40% of other expenses including utilities and excluding

rent & insurance
Total Fixed Cost (Rs.)

Fixed Cost
X 100
Fixed Cost + Net Profit

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

1,06,000

12,19,920

B.E.P
=

23,350

= 52 %
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1,75,680
25,37,912

Mechanical Division
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.

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