SMEDA Auto Repair & Service Workshop

Pre-Feasibility Study
AUTO REPAIR & SERVICE WORKSHOP
Small and Medium Enterprise Development Authority

Government of Pakistan
www.smeda.org.pk
HEAD OFFICE
st
Waheed Trade Complex, 1 Floor , 36-Commercial Zone, Phase III, Sector XX, Khayaban-e-Iqbal, DHA Lahore
Tel: (042) 111-111-456, Fax: (042) 5896619, 5899756
helpdesk@smeda.org.pk
REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE
PUNJAB SINDH NWFP BALOCHISTAN
Waheed Trade Complex,
1st Floor, 36-Commercial Zone, 5TH Floor, Bahria Ground Floor Bungalow No. 15-A
Phase III, Sector XX, Complex II, M.T. Khan Road, State Life Building Chaman Housing Scheme
Khayaban-e-Iqbal, DHA Lahore. Karachi. The Mall, Peshawar. Airport Road, Quetta.
Tel: (042) 111-111-456 Tel: (021) 111-111-456 Tel: (091) 9213046-47 Tel: (081) 831623, 831702
Fax: (042) 5896619, 5899756 Fax: (021) 5610572 Fax: (091) 286908 Fax: (081) 831922
helpdesk@smeda.org.pk helpdesk-khi@smeda.org.pk helpdesk-pew@smeda.org.pk helpdesk-qta@smeda.org.pk
September, 2004
Pre-Feasibility Study Auto Repair & Service Workshop
DISCLAIMER
The purpose and scope of this information memorandum is to introduce the subject matter
and provide a general idea and information on the said area. All the material included in
this document is based on data/information gathered from various sources and is based on
certain assumptions. Although, due care and diligence has been taken to compile this
document, the contained information may vary due to any change in any of the concerned
factors, and the actual results may differ substantially from the presented information.
SMEDA does not assume any liability for any financial or other loss resulting from this
memorandum in consequence of undertaking this activity. Therefore, the content of this
memorandum should not be relied upon for making any decision, investment or otherwise.
The prospective user of this memorandum is encouraged to carry out his/her own due
diligence and gather any information he/she considers necessary for making an informed
decision.
The content of the information memorandum does not bind SMEDA in any legal or other
form.
DOCUMENT CONTROL
Document No. PREF-4
Revision 1
Prepared by SMEDA-Sindh
Approved by Provincial Chief - Sindh
Issue Date September, 2004
Issued by Library Officer
PREF-4/September, 2004/Rev1
1 PROJECT PROFILE
1. 1 Purpose of the Documents
This document is developed to provide the entrepreneur with potential investment
opportunity in setting up and operating a Auto Repair & Service Workshop offering
various services. This pre-feasibility gives insight into various aspects of a Workshop setup
including both technical and general information for each particular service offered. The
document is designed to provide all relevant details to facilitate the entrepreneur in making
the correct decision providing various technological as well as business alternatives. The
document also allows flexibility in change of various parameters to suit the customized
needs of the entrepreneur.
1. 2 Project Brief
The Auto Repair market has a lot of competition, almost all offer repair and service
features. Very few have fully stocked parts owing to the problem of tied up capital in case
of non-utilization of these parts. However, quick availability of parts supports the service
and repair departments by allowing them to turnaround jobs at a faster rate than the
competition. Wheel alignment and balancing facilities are also provided by many large
scale workshops along with their primary services.
The proposed pre-feasibility addresses the unmet need of having a quality auto repair
workshop that provides:
(i) Quick and quality repair & maintenance services;

(ii) Wheel Alignment and Balancing Facilities
(iii) High Pressure Cleaning Services; and
(iv) Easy access to new and used retail parts to meet the demands of the customer.
1. 3 Opportunity Rationale
The Auto Repair & Service 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.
1.3.1 Market Entry Timing
The Pakistani automobile industry has registered a considerable growth over the past
couple of years. It was further estimated that the car industry experienced a growth rate of
51.4% during July 02 to April 031 signifying an increasing demand for cars which is
expected to continue in the future (albeit at a lesser rate).
Furthermore, 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 which constitutes a considerable segment of the population of
Pakistan. These factors coupled together reflect on the growing need for quality repair and
service facilities.
Unlike many countries, the Pakistani car industry is unique in the sense that 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 in Pakistan and also that the existing scenario provides conducive opportunities
for entry into this business venture.
1. 4 Key Success Factors/Practical Tips for Success

The three main critical success 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.
1
Auto Industry in Pakistan, A research Publication by Capital One Securities, February 2004
iii) Technical Skill
The third critical factor relates mostly to technical skills required especially for
operating computerized Wheel Alignment & Balancing machines and high pressure
cleaning equipment. 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.
1. 5 Proposed Business Legal Status

Although the legal status of business tends to play an important role in any setup, the
proposed Auto Repair & Service Workshop is assumed to operate on a sole proprietorship
basis which may extend to partnership in case of addition of new services that might add
significant business to the existing setup.
1. 6 Project Investment
This section will provide the total cost of the project.
ITEM COST (RS.)

Construction – Office / Store 675,000
Construction – Service Stations 850,000
Masonry Work 120,000
Mechanical Repairs Equipment 90,000
Denting Equipment 100,000
Painting Equipment 30,000
Wheel Alignment Machine 1,000,000
Wheel Balancing Machine 650,000
High Pressure Cleaning Equipment 550,000
Piston Pump 250,000
Spare Parts Purchases 125,000
Lubricant Purchases 25,000
ITEM COST (RS.)

Advance Rent & Deposit 900,000
Working Capital 552,000
Pre Operating Costs 50,000
Office Furniture & Equipment 80,000
Total Cost 6,047,000
1. 7 Proposed Product Mix

A typical Auto Repair Workshop is assumed to provide the following four major services:
(i) Mechanical, and

(ii) Denting & Painting
(iii) Wheel Alignment & Balancing
(iv) High Pressure Cleaning
The following table presents an overview of the proposed main services to be offered
under the first two major categories identified above:
MECHANICAL DENTING & PAINTING

 Maintenance Services  Cosmetic Repair
 Major Repairs  Accidental Repair
 Body Restoration Services
1. 7. 1 Mechanical Repairs
It is assumed that cars coming into the workshop soliciting mechanical repairs 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.
1.7.2 Denting & Painting Services

The main denting and painting services provided to the customers would be as follows:
(i) Cosmetic Repairs which are also known as ‘touching services’ where minor
body defacements (like scratches, dents, paint shrouding etc.) are repaired.
(ii) Accidental Repairs which constitute chassis, mudguard, bumper, bonnet

repairs / replacement services etc. Most of the cars coming for denting &
painting services come under this category.
(iii) Body Restoration Services which include complete restoration of vehicle body
for example restoration of decayed body, completely destroyed accidental body
restoration etc.
1.7.3 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.
1.7.4 High Pressure Cleaning

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.
1.7.5 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 & Coolant
Replenishment, Machine Shop Items, Radiator Repairs, Silencer Repairs, Road Spring
Repairs, Upholstery Items (seats, bumpers, plastic repairs etc.), Wheel Alignment /
Balancing, Axle End / Tire Rod Repair & replacement 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.
1. 8 Recommended Project Parameters
Capacity Human Resource Equipment Location

5 (Management) Local / Eurpoean / High Income
867 Cars / Month
20 (Technical Staff) Chinese Locality
Financial Summary
Cost of Capital
Project Cost IRR NPV Payback Period
(WACC)
6,047,000 33% Rs. 4,099,801 3 Years & 5 months 17.5%
1. 9 Proposed Location
The Auto Workshop business is very much dependent on the location of its setup. Auto
Workshops located on main roads or prime locations usually depend on walk-in customers
while those that are based on off-road locations have their business coming in from
contacts, referrals and companies. The main factors to consider for deciding on the location
are:
 Anticipated Source of Business:
If the Auto Workshop owner has contacts and a good referral network he can setup
up the workshop in an off road locality which would cost him much lower than
locating himself on the main road. On the other hand if the entrepreneur wants to
bank his business on walk in customers then he needs to be on main roads to
provide easy access to the walk in customers but will have to comparatively pay a
higher rent. This becomes more critical for wheel alignment & balancing and high
pressure cleaning services.
 Accessibility of Sublet Services

As discussed earlier, most of the workshops do not offer all the services hence
some services are outsourced to other specialized workshops / personnel. Quick
and easy accessibility to these services would minimize job turnaround time thus
the location needs to be in close proximity to these service providers.
 Existing Competition
Concentration of similar types of workshops can give difficult competition, which

increases if the competitors are well established and famous for their service.
Therefore it is advisable to choose such locations only when the owner is expected
to have considerable amount contacts and referrals.
 Quick Accessibility to Parts Market
Maintaining a spare parts inventory is crucial for reducing the job turnaround time.
However many auto workshops prefer to be located within close proximity to the
spare parts markets to ensure ready availability of desired spare parts. Therefore
less money is tied up in maintaining an adequate spare parts inventory.
1. 10 Key Success Factors/Practical Tips for Success

The main objective for an Auto Repair Workshop is to offer a hassle free quality repair and
service operations that eliminate waiting on part of the customer and help to offer value
added services to the customer who need their cars fixed right away. The following factors
need a continuous focus for making the proposed setup a successful business venture:
 Growing and Maintaining a Referral Network of Customers
The main factor is 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.
 Expedient and Convenient Auto Repair & Service Facilities
This business is very unique in the sense that switching costs are almost negligible
for the customer hence the main effort required is to maintain and enhance
customer loyalty by providing quick and quality services. Otherwise, the customer
would not take time to move to other workshops.
 Skilled & Experienced Manpower
The knowledge and experience of the entrepreneur is not sufficient to run the
business smoothly. Provision of quality repair and service facilities solicits skilled
and experienced workmen which are an integral component of this business. It is
important that the manpower hired should have the required technical capability
and customer relationship management skills. Unless the entrepreneur is not skilled
and does not possess the required know-how he would not be able to properly hire
and manage the manpower.
 Auto Parts Inventory
An adequate auto parts inventory based on prior experience and business volume
needs to be maintained in order to give quick service and prevent any
inconvenience caused to the customer. Moreover, quick accessibility to used / new
auto parts is another important factor that enables to provide hassle-free service to
the customers. However, the entrepreneur needs to carefully manage the auto parts
inventory to ensure that minimal working capital is tied up. Some workshops
usually keep auto parts for the most common car brands while parts of less
common / unpopular brand are usually made available on call basis.
 Specialized Skills
Some Auto Workshops become famous due to their expertise in particular area /
field or brand. These workshops develop their expertise over a period of years and
become famous for specialized areas like Denting & Painting, Axle Repair &
Maintenance etc. Some workshops are known experts for specific car brands like
Suzuki, Toyota etc. These specialized skills draw the attention of car owners of
particular brands or those who are facing specific problems, hence consistent
quality needs to be maintained to develop such skills. Another specific issue that
relates to specialized skills is the proper use of alignment and balancing equipment
such that the customer is properly satisfied. This can be achieved only when the
workers operating these machines are properly trained and knowledgeable about
the processes.
2 PROCESS FLOW
The Auto Workshop that provides mechanical and denting & painting services follows a
basic process flow as follows:
2. 1 Mechanical Services:
REPAIR /
CAR JOB ORDER TIME / COST
REPLACEMENT
ESTIMATE
DELIVERY TO
TEST TRIAL
CUSTOMER
The above diagram illustrates the basic process flow for mechanical repairs. The customer
comes in with the mechanical problem wherein a job card is prepared based on the
problems faced by the customer. The foreman then checks the car to check for any
additional problems. The customer is then provided with time and cost estimates
depending on the whether the parts need to be repaired or replaced. On agreement of the
customer the job is allocated by the foreman. It is necessary to test run the car before it is
finally delivered to the client.
2. 2 Denting & Painting:
DENTING /
CAR JOB ORDER TIME / COST
RESHAPING
ESTIMATE
PAINTING RUBBING BODY FILLING BODY

ON PATCHES PREPARATION
FOR PAINT
PART FINAL
DRYING FINISHING REPLACEMENT DELIVERY TO
(IF ANY) CUSTOMER
The above diagram illustrates the basic process flow for denting and painting. After the
estimation of time and cost the car is given to the Head Denter who reshapes the car back
into form and hands it over to the painter. Initially the reshaped body is prepared for
painting by applying coating and then patches are filled which are then smoothened by
rubbing. The body is then painted and left for drying after which finishing touches and
waxing is done to ensure proper shine. In case of accidents, irreparable parts are replaced
before making the final delivery to the customer. However subletting activities can also
take place during this process on need basis.
2. 3 Wheel Alignment Procedure
With the development of computerized alignment machines the wheel alignment process
has been very much simplified. However there are two types of wheel alignments that are
widely practiced:
 Two Wheel Alignment:
The term Two Wheel Alignment is a process where both front wheels are aligned
to provide the best Toe in, Caster and Camber settings to provide the best all
around handling and tire wear under normal driving conditions.
 Four Wheel Alignment:
The term Four Wheel Alignment is a process where both front and rear wheels are
aligned. In a typical Four Wheel Alignment, the rear wheels are checked for toe and
tracking.
In a typical situation the Rear wheel "Toe" is adjusted by adding or removing small shims
between the rear wheel hub and the rear axle. Tracking is checked with the computerized
software and the rear axle is checked to make sure that it "tracks" properly behind the front
wheels. On a Four Wheel Alignment, the adjustments are first made to true up the rear
alignment, then the front is adjusted. Therefore a full Four Wheel Alignment will cost
more because there is a lot more work involved.
For a general overview the

above diagram Rear
presents an
Front
illustration of a car where the
front wheels are not aligned to
the rear thrust line. This can
happen from normal wear
and stress, whether the vehicle
has adjustable or non-adjustable rear suspension. To steer straight ahead, the driver would
have to steer the front wheels slightly to the right. A common result would be that the
vehicle would possibly pull to the side. Wheel alignment requires a lot of accuracy because
it takes only a small misalignment to create problems.
Stage 1: The first stage involves the following steps:
1. Placement of the car accurately on the alignment frame ensuring that Toe, Camber
and Casters are in a proper visible position.
2. Angle readings are measured at all four wheels as indicated on the screen
3. The steering wheel is centered.
4. Front wheels are referenced to rear thrust line and set to specifications.
5. A continuous series of alignment iteration would be required unless the computer
shows zero angle deviation.
At the end this would result in all four wheels being parallel when the steering would be
centered. This is illustrated as follows:
Front Rear
Stage Two: The second stage involves the following steps:
1. Angle readings are measured at all four wheels.

2. Rear wheels are set to specification. (Rear thrust line corresponds to vehicle
centerline.)
3. Steering wheel is centered.
4. Front wheels are referenced to the rear thrust line and set to specification.
2.3.1 Symptoms of a Car Requiring Wheel Alignment
 Excessive or uneven tire wear.

 Steering wheel pulls to the left or right.
 Feeling of looseness or wandering.
 Steering wheel vibration or shimmy.
 Steering wheel is not centered when car is moving straight ahead.
2.3.2 Benefits of 4 Wheel Alignment
Most of the customers shy away from getting rear wheels aligned because of the cost and /
or their lack of knowledge of the workshops offering such services. The following are
some of the benefits of a four wheel alignment the importance of which should be
communicated to the customer by the Workshop employees:
 Reduced Tire Wear
Improper alignment is a major cause of premature tire wear. Over the years, a properly
aligned vehicle can add thousands of miles to tire life.
 Better Mileage
Mileage increases as rolling resistance decreases. Total alignment sets all four wheel
parallel which, along with proper inflation, minimizes rolling resistance.
 Improved Handling
Most of the time the cars pull to one side and the steering wheel vibrates. The driver
has to constantly move the steering wheel to keep the car traveling straight ahead.
Many handling problems can be corrected by total 4 wheel alignment. With all the
system components aligned properly, road shock is more efficiently absorbed for a
smoother ride.
 Safer Driving
A suspension system inspection should be made part of the alignment procedure. This
allows for spotting worn parts before they cause costly problems.
2. 4 Wheel Balancing Procedure
Properly balanced tires help minimize uneven wear and extend their life. When tires are
balanced, small lead weights are attached to the wheels to limit vibration of the tire and
wheels as they turn. Tires and wheels should be balanced when the tires are rotated
(normally every 6,000 miles), after putting on new tires, after fixing a flat tire, and any
other time a tire is removed from its rim.
There are two "planes" on which a wheel / tire assembly can be balanced:
1. The radial or static plane. Imbalance on the static plane can be described as wheel
"bounce" or wheel hopping, up and down.
2. The lateral or dynamic plane. Imbalance on the dynamic plane can be described as
side to side shake of the tire and wheel assembly, "shimmy" or "wobble".
Radial or Static Plane Lateral or Dynamic

(Bounce) Plane (Wobble)
The radial and lateral balancing wheel procedure is very simple wherein the wheel are
removed from the car and mounted onto the balancing machine one at a time. The
computer screen shows the angular deviations between the rim and the wheel (rubber) and
with the help of the machine the operator tries to balance the wheel horizontally and
vertically at best.
2.4.1 Symptoms of a Car Requiring Wheel Balancing
The most common signs of unbalanced tires are vibration and noise problems. When
driving with an out-of-balance wheel, the wheel literally bounces down the road rather than
spinning smoothly. This can affect the speed, handling and mileage of the car.
Most new models have lightweight suspension systems and are therefore, more sensitive to
imbalance than older cars. It is advised that the workshop employees recommend their
customers to have their car’s wheels balanced when rotating the tires, about every 6,000
miles, etc. It is not uncommon for wheels to lose a wheel weight from time to time; so
periodic balancing minimizes the impact of unbalanced wheels on the car.
2. 5 High Pressure Cleaning
High Pressure Cleaning & service mainly involves the cleaning of the outer body of the car
through a diesel driven pressure pump machine which ejects water at a very high pressure
from the hoses. The car is parked on a ramp after which it is lifted into the air by a Pressure
Piston Pump. The water slightly mixed with detergents for proper cleaning is sprayed from
the spray guns after which dry air is also used to remove any water drops left on the body.
Some Service stations also spray dry air slightly mixed with wax to give a shiny finish
which increases the life of the body paint. However most of the service stations manually
remove the water droplets with cleaning clothes.
2. 6 Equipment Requirement
The equipment required for running an Auto Workshop would relate to the activities that
the workshop tends to undertake. In this case, the equipment required would be as follows:
MECHANICAL REPAIRS & MAINTENANCE

Equipment Number Estimated Cost (Rs.)
Complete Mechanical Toolbox 2 26,000
Work Bench 2 5,000
Vice 2 9,000
Tool Box Cupboard 1 5,000
Voltmeter / Ammeter 2 5,000
Timing Light 2 12,000
Battery Charger 1 7,000
Compression Gauge 1 6,000
Others - 15,000
Total 90,000
DENTING
Denting Toolbox 2 20,000

Mechanical Toolbox 1 13,000
Pressure Jack (Large) 1 30,000
Gas Cylinder 1 6,000
Carbide Tank 1 3,000
Welding Kits 2 6,000
Drill Machine (Hand) 2 3,000
Puller Jack 1 4,000
Others - 15,000
Total 100,000
PAINTING
Painting Compressor (2 hp; 1k lbs) 1 15,000
Spray Gun (Small) 1 3,000
Spray Gun (Large) 1 4,000
Pipe 1 1,000
Others - 7,000
Total - 30,000
HIGH PRESSURE CLEANING

High Pressure Cleaner (including
1 550,000
Piston Pump)
Piston Pump 1 250,000
Total - 800,000
WHEEL ALIGNMENT & BALANCING
Complete Computerized Alignment

Equipment (Including Heads, Disc 1 1,000,000
plates etc.) – A Class
Computerized Wheel Balancing
1 650,000
Machine
Total - 1,650,000
2. 7 Spare Parts & Lubricants Inventory

As is practiced widely, the proposed workshop would maintain an estimated inventory of
Rs. 125,000 for spare parts & lubricants.
2.7.1 Spare Parts & Consumables

This would mainly include items for general repairs like bush, break shoes, filter,
points, clutch plates, spark plugs, nuts / bolts etc. for about 8 to 10 models of most
common car brands like Suzuki, Toyota and Honda. These purchases would also
include daily consumables items like carbide, sand papers etc. that are required for
denting & painting services.
It is estimated that initial purchases for spare parts & consumables would amount to
Rs. 125,000 which would subsequently average to purchases of Rs. 3,200 on a
daily basis (Rs. 80,000 for 25 day month) after commencing of operations.
2.7.2 Lubricants
The workshop would also be required to keep a minimum inventory of lubricants to
meet the immediate requirements of the customer. Usually lubricants are expensive
and many workshops don’t find it affordable to keep a large inventory of such
items.
It is estimated that an initial inventory of Rs. 25,000 would be required for

lubricants and the monthly purchases would amount to Rs. 10,000 per month after
resuming of operations.
3 MACHINERY & EQUIPMENT
3. 1 Wheel Alignment Machine
The procedure of wheel alignment was traditionally carried out based on manual iterations
which was largely dependent on the skill of the worker. The system was totally manual
where the angles and the alignment deviations were brought into conformity through
‘guesswork.’ Through the subsequent introduction of technology, alignment machines
were introduced which later developed in totally computerized and automated alignment
packages in which the alignment can now be done by sitting on a computer.
Majority of the wheel alignment machinery in the market is computer operated with
software based operating system. Some machines have electronic panels that only show the
deviations while the newer ones have a computer interface having more features. While
buying the alignment equipment, its important features need to be considered like
o User friendly interface of the software. Nowadays most machines are based on
XP based alignment software offering a very easy interface for the worker.
o The features of the software is also another important factor wherein the depth
and extent of alignment procedures and aspects are considered
o The features of the machine / alignment equipment need to be considered

especially the alignment time. Most of the newly automated machines require
only 5 minutes for complete alignment while the others which are possessed by
a majority of the alignment shops usually take 20 – 30 minutes for complete
alignment.
The prices of wheel alignment machines are based on two factors (i) Condition and (ii)
Make or Brand. Wheel alignment machines have a very long life lasting for over 15 – 20
years with very little depreciation. Because of this many machine suppliers in local
markets are refurbishing old / used machinery by repainting them and selling them in the
market.
There are two main makes of the machinery (i) of European Origin of famous brands like
LAUNCH, RAV, BIESRBERTH, HOFFMAN etc. and (ii) of Chinese Origin. However
since China is relatively new in this technology many people prefer to opt for European
brands because of their quality of features and brand establishment.
Brand new European machines cost around Rs. 850,000 – 1,000,000 (A Class) while the
others cost around Rs. 650,000 – 750,000 (B Class). Brand new Chinese machinery with A
Class features also costs around Rs. 650,000 – 750,000 but despite the low cost people
prefer to opt for European brands since Chinese Machinery are still in the testing stages.
For the purpose of this study we have assumed procurement of a new European branded
machinery costing around Rs. 1,000,000 having the latest features and easy to operate
facilities.
3. 2 Wheel Balancing Machines
The Wheel balancing Machinery is available on similar brands and makes as those of
alignment machines. However the price variation of these electronically operated machines
is greater where used machines cost around Rs. 200,000 while new ones cost around Rs.
1,200,000.
For the purpose of this study we have assumed purchase of a wheel balancing machinery
containing good features and costing around Rs. 650,000. The wheel balancing equipment
similar to alignment equipment has a very long life but requires more maintenance as
compared to alignment machinery.
3. 3 High Pressure Cleaning Equipment
High pressure cleaning equipment is relatively delicate machinery which has a lot of
deprecation such that it needs to be replaced after every 3 years. Usually the water tank and
the pressure valves and hoses loose their durability within this time period and need to be
completely replaced. For some service stations the replacement time period ranges around
2 years depending on the continuous use of the product.
High pressure cleaning equipment is available in local markets ranging from Rs. 750,000
to 800,000 of various European Brands like ITM ITALIA, EUROCLEAN, KRENZELEY
etc. Due to its high depreciation the high pressure equipment requires a lot maintenance
costs on a monthly basis which even amounts to one fourth of its original cost per month.
For the purpose of this study we are assuming a quality pressure cleaning equipment
costing around Rs. 550,000 having life of 3 years with a maintenance cost of
approximately 25 % of its written down value. An additional Rs. 250,000 will be required
for the purchase and installation of Piston Pressure Lift.
Since the machines require diesel fuel for operation, it is assumed that the fuel cost would
be Rs. 5,000 per month.
4 LAND & BUILDING REQUIREMENT

4. 1 Land Requirement
The proposed Auto Workshop setup is assumed to operate in 1,000 sq. yards that allows
ample space for Denting & Painting and Mechanical services and also for general parking
services for walk-in customers.
4. 2 Covered Area Requirement

The workshop is assumed to be totally covered with around 95% of the total area catering
to technical works and the remaining 5% for General Office and Stores. It is recommended
that minimum space be utilized for office and store setup to allow maximum number of
cars within the workshop vicinity.
The covered area for workshop operations would be divided between the proposed services
and would assume the following break up (including parking for standby / waiting
customers):
 Mechanical Works – 350 Sq. Yards

 Denting & Painting – 300 Sq. Yards
 Wheel Balancing & Alignment – 150 Sq. Yards
 High Pressure Cleaning – 150 Sq. Yards
4. 3 Recommended Mode
The proposed land will be acquired on a rental basis with 3 month deposit and 3 months
advance rent after which rent will be payable on a monthly basis.
4. 4 Office Furniture & Equipment

A total of Rs 80,000 is required for purchase of office furniture and related equipment. The
following table gives an assumed breakup:
OFFICE FURNITURE
Item Number Estimated Cost (Rs.)
Table & Chair Set (Owner) 1 10,000
Table & Chair Set (Customer Service) 1 5,000
Air Conditioner (Split Unit) 1 30,000
Waiting Chairs 10 10,000
Sofa Set for Customers 1 15,000

Curtains / Interior Décor - 10,000
Total 80,000
The Office Furniture & Equipment will be depreciated at the rate of 10% per annum
according to the diminishing balance method for the projected period.
4. 5 Suitable Location
The proposed location for an Auto Workshop considering the factors mentioned earlier
would be in a medium – high income locality area where almost all of the nearby residents
are expected to have at least one car.
5 HUMAN RESOURCE REQUIREMENT

The Auto Workshop is a labor intensive industry where the labor cost constitutes a
considerable portion of the cost of sales. The following table gives a breakup of the total
administrative manpower required to operate the proposed setup.
GENERAL MANAGEMENT
Designation / Type Number Monthly Salary (Rs.)
Owner 1 -
Accountant 1 2,500 (10-12 hours)
Purchaser 1 5,000
Office Assistant / Store Keeper 1 2,500
Guard 1 2,000 (Night Duty Only)
Considering the size of the proposed establishment it is assumed that the owner would be
managing the overall affairs of the workshop. A part-time accountant is required to process
and check bills, invoices, job orders etc. The accountant is required to come at least once a
week with a minimum duration of 3 hours per each visit.
The purchaser would be primarily responsible for making daily purchases; spare parts
inventory purchases and other purchases as and when required. The office assistant would
be responsible for handling customers & complaints, following-up on bills and managing
all activities related to spare-parts store keeping. A security guard would be required for
ensuring safe custody of customer cars during the night.
The following table gives the details for the proposed technical labor that forms the
integral part of the cost of sales:
JOB / DUTY ALLOCATION

Foreman 1 8,500
MECHANICAL REPAIRS & MAINTENANCE
Mechanics (Ustad) 2 12,000
Assistant Mechanics 2 8,000
Helpers 2 3,000
DENTING
Head Denter (Ustad) 1 8,000
Denters 2 12,000
Assistant Denter 1 4,000
Helper 1 2,000
PAINTING
Painter Ustad 1 8,000
Assistant Painters 2 10,000
Helper 1 2,000
Total 16 122,500
The foreman would be responsible for checking and diagnosing the customer’s car to
ascertain any additional repairs / replacements that might not have been identified by the
customer. Once the estimates and repair / replacement work is agreed with the customer
the foreman would then allocate the job and ensure its timely completion. The foreman
would also be required to check the cars (trial run) before delivering them to the customers.
WHEEL ALIGNMENT & BALANCING

Operator (Incharge) 1 8,000
Assistant Operator 1 4,000
HIGH PRESSURE CLEANING
Cleaner (Incharge) 1 8,000
Assistant Cleaner 1 4,000
Total 4 24,000
The total monthly salary of the technical staff would amount to Rs. 146,500 and is
assumed to increase by 10% per annum.
6 FINANCIAL ANALYSIS & KEY ASSUMPTIONS

The project cost estimates for the proposed Auto Workshop have been formulated on the
basis of discussions with relevant stakeholders and experts. The cost projections cover the
cost of land, building, inventory, equipment including office furniture etc. The specific
assumptions relating to individual cost components are given as under:
6. 1 Revenue & Cost Projections

Revenue projections for this Auto Workshop include sales streams from two main sources
i.e. Denting & Painting and Mechanical Repairs & Maintenance. The Sales are expected to
grow at a real rate of 12% per annum which reflects on the anticipated growth in the
number of cars on the road hence the business is expected to increase based on volume
rather than increased service charges.
6.1.1 Gross Margins

The following table gives the Gross Margins for the proposed services:
SERVICE GROSS MARGIN

Denting & Painting 27 %
SERVICE GROSS MARGIN

 Cosmetic Touchups 14 %
 Accidental Repairs 29 %
 Full Body Restoration 30 %
Mechanical Repairs & Maintenance 29 %
 Maintenance Services 33 %
 Major Repairs 14 %
Wheel Alignment & Balancing 90 %
 Alignment 91 %
 Balancing 89 %
High Pressure Cleaning 76 %

Overall 56 %
6.1.2 Margins on Parts / Lubricants / Services

The Auto Workshop being a service oriented setup charges a margin on each of the
products it uses and services it provides. The following table presents the breakdown of the
margin:
SERVICE MARGIN
Spare Parts 10.0 %
Lubricants 12.5 %
Subletting 25.0 %
It is assumed that the cost of parts, lubricants and sublet service is expected to increase at
the rate of 10 % per annum for the projected period.
6. 2 Rent Cost
The rent for the assumed premises will be Rs. 150,000/- per month. It is assumed that Rs.
900,000 will be given in advance before possession of premises. This will include 3
months deposit and 3 month advance rent. The rent would be payable on a monthly a basis
and is expected to increase at the rate of 10% per annum for the projected period.
6. 3 Construction Cost
The Auto Workshop involves construction cost which translates into three main
components as follows:
 Office / Store Construction which involves a two storey building in which the ground
floor would accommodate the owner’s office and administration while the first storey
would serve as a store for spare parts and other items. The office and store construction
cost is taken to be as Rs. 750 per square feet which comes to a total of Rs. 675,000 for
the two storey structure (450 sq. ft. x 2). This cost is inclusive of all accessories and
fittings except for AC and Office Furniture.
 Masonry work would be required in the area allocated for Denting & Painting and
Mechanical Works. It is assumed that the proposed workshop would be able to
accommodate 6 cars for mechanical repairs and around 8 cars for denting & painting at
one time. This would require a total of 14 bay areas to be constructed with
underground ducts and ramps in 6 of the bay areas for mechanical repairs. The cost for
masonry will be as follows:
MASONRY WORK FOR BAY AREAS

Item Bay Areas Estimated Cost (Rs.)
Mechanical Work (Duct & Ramp) 6 60,000
Denting 4 30,000
Painting 4 30,000
Total 14 120,000
6.4
 The third main construction would be required for making two separate sections for (i)
Wheel Alignment & Balancing and (ii) High Pressure Cleaning. The cost of
construction for these would be approximately
o Wheel Alignment & Balancing (Rs. 400 per Sq. Feet x 1000 Sq. Feet)
o High Pressure Cleaning (Rs. 400 per Sq. Feet x 1000 Sq. Feet) requiring high
ceiling for piston pump car lift.
CONSTRUCTION COST FOR WHEEL ALIGNMENT / BALANCING

& PRESSURE CLEANING
Item Estimated Cost (Rs.)
Wheel Alignment & Balancing 400,000
Ramp for Alignment 50,000
High Pressure Cleaning 400,000
Total 850,000
(Note: For wheel alignment there should be at least a minimum space of 5 feet from the
front & back end of the car and a space of 2 feet at the sides for flexibility in operating the
machine)
6. 4 Utilities Requirement
The following table presents the assumed breakup of utilities on a monthly basis:
UTILITY MONTHLY CHARGES (RS.)

Electricity 12,000
Water 10,000
Telephone 2,500
Entertainment 1,000
Total 25,500
It is assumed that utilities expenses will increase by 10% every year.
6. 5 Depreciation on Building & Equipment

Depreciation on Building, Technical Equipment, Alignment & Balancing Equipment and
Office Furniture & Fixtures is assumed to be at the rate of 10% per annum based on the
diminishing balance method for the projected period. Depreciation on High Pressure
Cleaning Equipment will be calculated on a straight-line basis with no salvage value at the
end of 3rd year; hence it has been assumed that this equipment will be replaced after every
three years at a cost which will be 10% greater than the acquisition cost of the previous
equipment.
6. 6 Labor Allocation Costs

The technical labor costs form an integral part of the cost of sales for the proposed Auto
Workshop. This makes it difficult to trace the labor costs specifically to the services
offered since a person can work on more than one function at one time. For the purpose of
this study the following breakup of labor costs are considered according to the workload
based on the number of cars for a particular type of service:
Labor Cost per Car (Rs.)
Denting & Painting Mechanical Repairs
Monthly pay Cosmetic Accident Restoration Minor Major
Mechanical 46,000 - - - 23,000 23,000

Denting 38,000 - 28,500 9,500 - -
Painting 30,000 18,000 4,500 7,500 - -
Foreman 8,500 1,700 1,700 1,700 1,700 1,700
Total 122,500 19,700 34,700 18,700 24,700 24,700
Cars (Estimated) 6 7 2 100 2
Labor Costs 3,283 4,957 9,350 247 12,350
6. 7 Working Capital & Pre Operating Costs

It is estimated that an additional amount of approximately Rs. 516,000 will be required as
cash in hand to meet the working capital requirements / contingency cash for the initial
stages. The requirement is based on the utilities and salaries expenses for at least three
months. The following table gives the break up.
ITEM 3 MONTHS COST (RS.)

Utilities 76,500
Salaries 475,500
Total 552,000
The provision for pre operating costs is assumed to be Rs. 50,000 which will be amortized
equally over a 5 year period.
6. 8 Account Receivables
A collection period of 45 days is assumed for sales. Further provision for bad debts has
been assumed equivalent to 10% of Gross receivables.
6. 9 Traveling & Miscellaneous Office Expenses

A monthly figure of Rs. 5,000 (200 per day) is assumed to be incurred for traveling
expenses and office purchases which are expected to increase at the rate of 10% per annum
for the projected period.
6. 10 Financial Charges
It is assumed that long-term financing for 5 years will be obtained in order to finance the
Auto Workshop setup which would mainly include Construction of Building, Masonry
work, Purchase of Equipment etc. This facility would be required at a rate of 15%
(including 1% insurance premium) per annum with 60 monthly installments over a period
of five years. The installments are assumed to be paid at the end of every month.
6. 11 Taxation
The tax rate applicable to sole proprietorship is the same as that of the salaried individual.
Therefore, we are assuming that the tax rate would be the same for the proposed photo lab
setup.
6. 12 Cost of Capital
The cost of capital is explained in the following table:
Particulars Rate
Required return on equity 20.0 %
Cost of finance 15.0 %
Weighted average cost of capital 17.5 %
The weighted average cost of capital is based on the debt/equity ratio of 50:50.
6. 13 Owner’s Withdrawal
It is assumed that the owner with withdraw from the business once the desired profitability
is reached from the start of operations. The amount would depend on business
sustainability and availability of funds for future growth.
6. 14 Key Assumptions
Item Assumption(s)
Sales Increase 12 % per year
Increase in Cost of Sales 10 % per year
Increase in Staff Salaries 10 % per year
Increase in Utilities (Electricity / Water / 10 % per year
Gas)
Increase in Rent 10 % per year
Increase in Office Expenses 10 % per year
Debt / Equity Ratio 50 : 50
Depreciation
o Building & Masonry Work 10 % per annum (Diminishing Balance)
o Technical Equipment 10 % per annum (Diminishing Balance)
o Office Furniture & Equipment 10 % per annum (Diminishing Balance)
o Wheel Alignment & Balancing 10 % per annum (Diminishing Balance)
o Piston Pump Car Lift 10 % per annum (Diminishing Balance)
o High Pressure Cleaning Straight Line 33 % per year
High Pressure Cleaning Maintenance Cost 25 % of Cost Price
High Pressure Cleaning Replacement 3 years
Lease Period 5 Years
Lease Installments Monthly
Financial Charges (Lease Rate) 15 % per annum
Tax Rate Income Tax on Salaried Individuals
6.15.a Revenue & Cost

MONTHLY REVENUE / COST SCHEDULE
Gross
Item Revenue / Fee Charged (Rs.) Cost of Sales (Rs.) Margin
(%)
Fee
Estimated Spare
Charged Revenue Material Labor Lubricants Subletting Total Cost
Cars Parts
(Rs.)
Denting & Painting 181,000 132,271 27%
Cosmetic Touchup
(3 Piece Patching & 5,000 6 30,000 1,000 3283 - - - 25,698 14%
Paint)
Accidental Repairs 13,000 7 91,000 3,000 4,957 591 116 520 64,285 29%
Full Body Restoration 30,000 2 60,000 6,000 9,350 2,727 667 2,400 42,288 30%
Mechnical Repairs 190,000 135,556 29%
General Repairs 1,500 100 150,000 - 247 614 67 84 101,130 33%
Major Repairs 20,000 2 40,000 - 12,350 3,636 427 800 34,426 14%
TOTAL 371,000 267,827 28%
ASSUMPTIONS ASSUMPTIONS
General % age of
Full Body Restoration % age of Revenue Repairs Revenue
Spare Parts 10% Sublet 7%

Subletting 10% Parts 45%
Lubricant 2.5% Lubricant 5%
ASSUMPTIONS ASSUMPTIONS
% age of
Accidental Repairs % age of Revenue Major Repairs Revenue
Spare Parts 5% Parts 20%

Subletting 5% Lubricant 2.5%
Lubricant 1% Subletting 5.0%
6.15.b Revenue & Cost

MONTHLY REVENUE / COST SCHEDULE
Gross
Item Revenue / Fee Charged (Rs.) Cost of Sales (Rs.) Margin
(%)
Fee Charged Estimated Spare Total
Revenue Material Labor Lubricants Subletting
(Rs.) Cars Parts Cost
Wheel Alignment /
125,000 12,000 90%
Balancing
Wheel Alignment 350 250 87,500 - 32 - - - 8,000 91%
Wheel Balancing 150 250 37,500 - 16 - - - 4,000 89%
High Pressure Cleaning 62,500 17,000 73%
High Pressure Cleaning 250 250 62,500 20 48 - - - 17,000 73%
TOTAL 187,500 29,000 85%
6.16 Projected Income Statement

AUTO WORKSHOP
Projected Income Statement (Rs.) Year1 Year2 Year3 Year4 Year5 Year6 Year7 Year8 Year9 Year10
Revenue 6,702,000 7,506,240 8,406,989 9,415,827 10,545,727 11,811,214 13,228,560 14,815,987 16,593,905 18,585,174
Denting & Painting 2,172,000 2,432,640 2,724,557 3,051,504 3,417,684 3,827,806 4,287,143 4,801,600 5,377,792 6,023,127
Genera l Repairs / Maintenance 2,280,000 2,553,600 2,860,032 3,203,236 3,587,624 4,018,139 4,500,316 5,040,354 5,645,196 6,322,620
Wheel Alignment & Balancing 1,500,000 1,680,000 1,881,600 2,107,392 2,360,279 2,643,513 2,960,734 3,316,022 3,713,945 4,159,618
High Pressure Cleaning 750,000 840,000 940,800 1,053,696 1,180,140 1,321,756 1,480,367 1,658,011 1,856,972 2,079,809
Net Sales 6,618,225 7,412,412 8,301,901 9,298,130 10,413,905 11,663,574 13,063,203 14,630,787 16,386,481 18,352,859
Cost of Sales 3,561,930 3,918,123 4,309,935 4,740,929 5,215,022 5,736,524 6,310,176 6,941,194 7,635,313 8,398,844
Gross Profit 3,140,070 3,588,117 4,097,054 4,674,899 5,330,705 6,074,690 6,918,383 7,874,793 8,958,592 10,186,329
Gross Profit Margin 46% 47% 48% 49% 50% 51% 52% 53% 53% 54%
General Administrative & Selling Expenses

Salaries 144,000 158,400 174,240 191,664 210,830 231,913 255,105 280,615 308,677 339,544
Utilities Expense 306,000 336,600 370,260 407,286 448,015 492,816 542,098 596,307 655,938 721,532
Rent Expense 900,000 990,000 1,089,000 1,197,900 1,317,690 1,449,459 1,594,405 1,753,845 1,929,230 2,122,153
Office Miscellaneous & Traveling Expenses 60,000 66,000 72,600 79,860 87,846 96,631 106,294 116,923 128,615 141,477
Amortization of Preliminary Expenses 10,000 10,000 10,000 10,000 10,000 - - - - -
Maintenance Expense 91,667 45,833 - 100,833 50,417 - 110,917 55,458 - 122,008
Depreciation Expense 567,833 529,383 494,778 481,967 453,937 428,710 426,172 405,738 387,348 392,980
- - - -
Subtotal 2,079,500 2,136,217 2,210,878 2,469,511 2,578,735 2,699,529 3,034,990 3,208,888 3,409,808 3,839,694
Operating Income 1,060,570 1,451,900 1,886,175 2,205,388 2,751,970 3,375,161 3,883,393 4,665,905 5,548,784 6,346,635
Financial Charges(15%PerAnnum) 424,156 353,587 271,673 176,591 66,224 - - - - -
Earnings Before Taxes 636,414 1,098,314 1,614,502 2,028,797 2,685,746 3,375,161 3,883,393 4,665,905 5,548,784 6,346,635
Tax 101,603 256,910 437,576 582,579 812,511 1,053,806 1,231,688 1,505,567 1,814,574 2,093,822
Net Profit 534,810 841,404 1,176,927 1,446,218 1,873,235 2,321,355 2,651,706 3,160,338 3,734,210 4,252,813
Monthly Profit After Tax 44,568 70,117 98,077 120,518 156,103 193,446 220,975 263,362 311,184 354,401
6.17 Projected Balance Sheet

AUTO WORKSHOP
Projected Balance Sheet (Rs.) Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Assets
Current Assets
Cash & Bank Balance 552,000 826,879 1,371,554 2,032,376 2,146,430 3,100,595 4,960,684 6,328,771 8,595,775 11,162,954 13,266,437
Accounts Receivable (Net) 0 83,775 93,828 105,087 117,698 131,822 147,640 165,357 185,200 207,424 232,315
Lubricants & Spare Parts Inventory 150,000 165,000 181,500 199,650 219,615 241,577 265,734 292,308 321,538 353,692 389,061
Prepaid Rent 900,000 900,000 900,000 900,000 900,000 900,000 900,000 900,000 900,000 900,000 900,000
Total Current Assets 1,602,000 1,975,654 2,546,882 3,237,113 3,383,743 4,373,993 6,274,058 7,686,436 10,002,513 12,624,070 14,787,813
Fixed Assets
Building & Workshop 1,645,000 1,480,500 1,332,450 1,199,205 1,079,285 971,356 874,220 786,798 708,119 637,307 573,576
Technical Equipment 220,000 198,000 178,200 160,380 144,342 129,908 116,917 105,225 94,703 85,233 76,709
Office Furniture 80,000 72,000 64,800 58,320 52,488 47,239 42,515 38,264 34,437 30,994 27,894
Machinery 2,200,000 1,851,667 1,519,833 1,202,850 1,485,898 1,175,975 876,878 1,232,857 932,104 639,244 1,063,353
Total Fixed Assets 4,145,000 3,602,167 3,095,283 2,620,755 2,762,013 2,324,478 1,910,530 2,163,144 1,769,363 1,392,777 1,741,532
Intangible Assets
Pre Operating Costs 50,000 40,000 30,000 20,000 10,000 0 0 0 0 0 0
Total Assets 5,797,000 5,617,820 5,672,165 5,877,868 6,155,756 6,698,471 8,184,588 9,849,580 11,771,876 14,016,847 16,529,345
Owner's Equity 3,023,500 3,258,310 3,799,714 4,576,640 5,522,859 6,846,094 8,317,448 9,969,154 11,879,492 14,113,702 16,616,515
Long Term Liability 3,023,500 2,584,510 2,074,951 1,483,478 796,922 0 0 0 0 0 0
Total Equity & Liabilities 6,047,000 5,842,820 5,874,665 6,060,118 6,319,781 6,846,094 8,317,448 9,969,154 11,879,492 14,113,702 16,616,515
6.18 Projected Statement of Cash Flows

AUTO WORKSHOP
Projected Statement of Cash Flows (Rs.) Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year10
Cash Flow From Operating Activities
Net Profit 0 534,810 841,404 1,176,927 1,446,218 1,873,235 2,321,355 2,651,706 3,160,338 3,734,210 4,252,813
Add: Depreciation Expense 0 567,833 529,383 494,778 481,967 453,937 428,710 426,172 405,738 387,348 392,980
Amortization Expense 0 10,000 10,000 10,000 10,000 10,000 0 0 0 0 0
(Increase) / decrease in receivables (83,775) (10,053) (11,259) (12,610) (14,124) (15,819) (17,717) (19,843) (22,224) (24,891)
(Increase) / decrease in inventory (15,000) (16,500) (18,150) (19,965) (21,962) (24,158) (26,573) (29,231) (32,154) (35,369)
Net Cash Flow From Operations 0 1,013,869 1,354,234 1,652,295 1,905,610 2,301,087 2,710,088 3,033,588 3,517,003 4,067,180 4,585,532
Cash Flow From Financing Activities
Receipt of Long Term Debt 3,023,500

Repayment of Long Term Debt (438,990) (509,559) (591,473) (686,555) (796,922)
Owner's Equity 3,023,500 (300,000) (300,000) (400,000) (500,000) (550,000) (850,000) (1,000,000) (1,250,000) (1,500,000) (1,750,000)
Net Cash Flow From Financing Activities 6,047,000 (738,990) (809,559) (991,473) (1,186,555) (1,346,922) (850,000) (1,000,000) (1,250,000) (1,500,000) (1,750,000)
Cash Flow From Investing Activities
Capital Expenditure (1,645,000)

Office Furniture (80,000)
Technical Equipment (2,670,000) (605,000) (665,500) (732,050)
Lubricant & Parts Inventory (150,000)
Preliminary Operating Expenses (50,000)
Advance Rent (900,000)
Net Cash Flow From Investing Activities (5,495,000) 0 0 0 (605,000) 0 0 (665,500) 0 0 (732,050)
NET CASH FLOW 552,000 274,879 544,675 660,822 114,055 954,165 1,860,088 1,368,088 2,267,003 2,567,180 2,103,482
Cash at the Beginning of the Period 0 552,000 826,879 1,371,554 2,032,376 2,146,430 3,100,595 4,960,684 6,328,771 8,595,775 11,162,954
Cash at the End of the Period 552,000 826,879 1,371,554 2,032,376 2,146,430 3,100,595 4,960,684 6,328,771 8,595,775 11,162,954 13,266,437

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Pre-Feasibility Study

AUTO REPAIR & SERVICE WORKSHOP

Small and Medium Enterprise Development Authority

(i) Quick and quality repair & maintenance services;

1.3.1 Market Entry Timing

1. 4 Key Success Factors/Practical Tips for Success

ii) Marketing Skill

iii) Technical Skill

1. 5 Proposed Business Legal Status

ITEM COST (RS.)

ITEM COST (RS.)

1. 7 Proposed Product Mix

(i) Mechanical, and

MECHANICAL DENTING & PAINTING

 Body Restoration Services

1.7.2 Denting & Painting Services

(ii) Accidental Repairs which constitute chassis, mudguard, bumper, bonnet

1.7.3 Wheel Alignment & Balancing

1.7.4 High Pressure Cleaning

1.7.5 Sublet Services

1. 8 Recommended Project Parameters

Capacity Human Resource Equipment Location

 Anticipated Source of Business:

 Accessibility of Sublet Services

Concentration of similar types of workshops can give difficult competition, which

 Quick Accessibility to Parts Market

1. 10 Key Success Factors/Practical Tips for Success

 Growing and Maintaining a Referral Network of Customers

 Expedient and Convenient Auto Repair & Service Facilities

 Skilled & Experienced Manpower

 Auto Parts Inventory

2. 2 Denting & Painting:

PAINTING RUBBING BODY FILLING BODY

2. 3 Wheel Alignment Procedure

 Two Wheel Alignment:

 Four Wheel Alignment:

For a general overview the

Stage 1: The first stage involves the following steps:

Stage Two: The second stage involves the following steps:

1. Angle readings are measured at all four wheels.

2.3.1 Symptoms of a Car Requiring Wheel Alignment

 Excessive or uneven tire wear.

2.3.2 Benefits of 4 Wheel Alignment

 Reduced Tire Wear

2. 4 Wheel Balancing Procedure

Radial or Static Plane Lateral or Dynamic

2.4.1 Symptoms of a Car Requiring Wheel Balancing

2. 5 High Pressure Cleaning

MECHANICAL REPAIRS & MAINTENANCE

Denting Toolbox 2 20,000

HIGH PRESSURE CLEANING

Complete Computerized Alignment

2. 7 Spare Parts & Lubricants Inventory

2.7.1 Spare Parts & Consumables

It is estimated that an initial inventory of Rs. 25,000 would be required for

3 MACHINERY & EQUIPMENT

3. 1 Wheel Alignment Machine

o The features of the machine / alignment equipment need to be considered

3. 2 Wheel Balancing Machines

3. 3 High Pressure Cleaning Equipment

4 LAND & BUILDING REQUIREMENT

4. 2 Covered Area Requirement

 Mechanical Works – 350 Sq. Yards

SMEDA Auto Repair & Service Workshop

SMEDA Auto Repair & Service Workshop