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Transcript of Auto Car Wash
Institute of Management, Nirma University Page 1 of 20
Project Management
Final Project Report
Automatic Car Wash
September 9, 2013
Submitted To:-
Prof. H K Srivastava
Submitted by:-
Ameya Pai Angle
121105
MBA FT 2012-14
Institute of Management, Nirma University Page 2 of 20
Project Title: Automatic Car Wash
NAME OF THE CAR WASH SERVICE STATION
UPA Auto Services
PROJECT OBJECTIVE:
To set up a station with automatic car wash system in Ahmedabad
VISION
To be the best and most preferred car wash service provider in Ahmedabad
MISSION
To provide high quality service at affordable price
To establish a close relationship with customers by providing satisfactory services and gaining
their loyalty
Institute of Management, Nirma University Page 3 of 20
WORK BREAKDOWN STRUCTURE
Finance
1. Capital Raising
2. Balance sheet
3. Forecasting
Operations
1. Admin office
(i) Coffee machine
(ii) ATM
(iii)Seating Arrangement
2. Equipments/Machinery
3. Material
4. Replenishment
5. Parking
Construction
1. Soak pit
2. Office block
3. Land
4. Main Machinery
5. Amenities
Human Resource
Licenses and Permissions
Marketing
1. Marketing strategy
2. Sales Strategy
Services & Rates
Institute of Management, Nirma University Page 4 of 20
OPERATIONS
1. A quotation from KKE Car Wash Systems has been analyzed and it is decided to order
following package from them :
KKE 300 – 4 KKE100985 : KKE 300 : Basic Car Wash System 28,09,100.00
Polisher KKE100977 : Triple Foam Wax System
KKE100989 : Entry Point Under Chassis Wash
KKE100976 : Car Wash Standalone Exit Side
Blowers 30 hp
KKE101212 : Upgrade to SOFT FOAM brushes
KKE100974 : Backlit Wash Cycle Display
KKE102414 : Car Wash Lights
KKE102415 : Car Wash High Pressure Wheel
Blasters
With Water Recycling System : The Smarter Way 30,31,000.00
Apart from this , Recommended spare kits (Driver motor, brush motor, emergency costs,
emergency switches) cost Rs 1,00,000 .
Monthly Maintenance charges are only Rs.6000 and software charges are Rs35,000.
2. Coffee Vending Machine will be procured from Snapdeal.com. The cost of machine is
around Rs.18000. It needs to have a power connection, 5litre of water can and Premix of tea
and coffee.
Coffee (Nescafe) premix comes in 16 x 1kg basket. 1kg costs 175Rs. Yield is 80cups per
kg of pack. Cost of coffee premix is Rs2800 per 1280 cups on an average.
Tea (Nestea) premix comes in 16 x 1kg basket. 1kg costs Rs.145. Yield is 80cups per kg
pack. Cost of Tea premix is Rs2320 per 1280 cups on an average.
Apart from this Ice Tea packet costs Rs. 110 for 500gm pack. Water can from bisleri
costs Rs.80 for 20ltrs of water.
3. ATM machine will be setup in the premises. Maximum area that ATM machine can take is 4
m2
. Bank pays you rent of Rs.5000 to Rs.10,000 depending on the area in which it is to be
setup. The area is taken on lease. We will assume that bank pays a rent of Rs.8000 on an
average.
Institute of Management, Nirma University Page 5 of 20
4. Water is the most necessary resource needed for this business. On an average a car needs 115
to 170ltrs of water. Our water tank is going to be 10,000 liters. On an average, sintex tank
with 3 layers cost Rs. 7 per liter. Therefore cost of buying a 10,000ltr tank will cost roughly
Rs. 70,000.
5. Washing soap: We will get 3D Pink Car Washing soap. 5 gallon drum costs around 45$. So it
would cost around Rs.2700 per drum. 5 gallon is equivalent to 18.92 liters. 30ml of soap is
needed for 1 gallon of water. On an average a car consumes 40gallon (Avg 150 ltrs) of water.
Hence a car will consume around 1 liter of soap. Hence 1 drum can serve around 19 cars.
Hence Rs. 142 is consumed by a car in the form of soap. Soaps would be brought in bulk.
Considering 3 days shipping and delivery time. We would order for next lot when there
would be 15 drums left in the stock.
6. As seen in the video of KKE car wash system on YouTube, it takes 7 minutes on an average
to wash a cry and dry it. (External wash). Internal cleaning would take longer time. I.e.
atleast 15 to 20 minutes. But internal washing or cleaning would not be done in bay area.
7. Total area required is assumed to be 120 sq mtr. Out of this 45 sq mtr is required for the
washing bay. 16 sq mtr is required for the admin block, which would include Toilet,
changing room, Managers desk, Sofa set, Television, Coffee vending machine. 4 sq mtr is
reserved for ATM machine. Rest 55sq mtr has been kept for parking and interior cleaning.
8. Flat Screen 21 inch LG Tv would cost around Rs.10000. And cable connection would cost
maximum Rs. 250 per month.
9. For Sofa set I have 2 options
1. Buy new sofa set which is available for approx Rs. 30,000 ( including transport )
2. Second hand teak wood sofa set for Rs. 6000 which looks good in condition as per
the photo shown on online website
10. A HP DJ 1050 printer would be brought for Rs.4000. It is copier cum scanner.
11. Office Almirah for Rs.19,500 .
12. Philips mini vaccum cleaner for Rs.2500
13. A second hand office table is currently available in Ahmedabad for Rs.3000
New table would cost around Rs.8,000 minimum. Two tables would be brought
14. Two Desktop PC’s would be brought. Average cost of system with decent configuration of
Windows 7, 320Gb and 4gb RAM would be roughly Rs.13000 each.
Institute of Management, Nirma University Page 6 of 20
CONSTRUCTION
1. Land Selection:
Land selection has to be done on some factors. First being “shape and size”.
It should be rectangular area and there should be parking place too. Other features that
should be seen before land selection are that the it should setup at busy stress, Corner
plot, Near Traffic Signal, Near Shopping Mall, Cinema Theatre and public place where
there decent crowd. This is ideal location. But in ahmedabad, these would be residential
areas hence we need to setup in a location away from such place.
Currently the location that I have thought are Thaltej or Gota, on SG Highway. The
reason being is, it is easy to find commercial plot on lease in these areas. Also travelers
on SG Highway would easily locate the location.
The land would be taken on lease for at least 15 years. The rental cost of commercial land
in Thaltej is Rs.7 per sq ft and in Gota it is Rs. 3 per sq ft. We need a land of 120 sq mtr.
So rental cost approx would be Rs.9000 in Thaltej and Rs.4000 in Gota. We will choose
site at Gota.
2. Machinery Requirements:
Electric Supply: 3 phase 440V AC 50Hz (Mentioned in the brochure)
Bay Area :
o Length: 9.75mts
o Width: 4.5mts
o Height: 3.5mts
Approximate 45 sq mt area has been reserved for this.
3. Restroom
Rough cost of restroom construction is Rs.50,000. Western style commode would be
built and a wash basin. Toilet soap and a towel would be kept.
4. Cost of constructing Soak pit and oil and grease trap, water connection is Rs. 8lakh
including civil work beneath the bay area.
5. Construction of Office block is around Rs.12,000.
6. 55 sq mt has been kept for parking and interior cleaning.
(Civil work construction rates are approximate as per conversation with a veteran who
has been running a traditional car wash business )
Institute of Management, Nirma University Page 7 of 20
HUMAN RESOURCE
1. Staff Requirement:
1 Technician to operate the system
3 Laborers to park cars, wash interior and other odd jobs
1 Manager to manage the entire station
2. According to minimum wage Act , with effect from 1st April 2013, minimum wage for
Skilled, Semi-skilled and un-skilled laborers are around Rs.205.
3. Salary for Technician would be Rs. 12,000 per month (Gross )
Responsibilities:
Operate the car wash system and ensure its smooth functioning
Handle all the software and hardware related queries of the Car wash system
Ensure the maintenance and repairs of the car wash system and other equipments
including tool kits.
Documentation of the records
4. Salary for Manager would be Rs. 9,000 per month (Gross)
Responsibilities:
Billing and maintaining record of the transactions
Replenishment of the inventory and procurement of any material required.
Payment of bills
Salary distribution for other employees.
Handle all bank and finance related queries
Ensure cleanliness of the premises
5. Salary for Laborers would be Rs. 6500 (Net)
Responsibilities:
Institute of Management, Nirma University Page 8 of 20
Cleaning interiors, cleaning premises, parking vehicles, moving vehicle on and off the
bay, disposing garbage in the bins and dropping them to the agencies which accept the
automobile and garage wastes such a cotton waste.
6. Muster roll, safety kit or first aid box will be kept. Insurance from ESI would be given to all
employees. Provident Fund will not be given unless the strength of the employees is more than
10.
Agencies accept the waste and give receipts in return. Our business would maintain those receipts
as file records. These wastes are then dropped at waste treatment plants such as Taloja near
Panvel in Maharashtra.
LICENSES & PERMISSION
The licenses and permissions that are required are
Registration as per shop and establishment act
NOC from Municipality
To obtain NOC, money needs to be pumped under the table and around Rs.35,000 is required
including official amount.
NOC from Pollution control board
To obtain this NOC, again weights have to be kept on paper in form of cash. Around Rs.25,000 is
needed for this work.
Another Rs.20,000 ( unofficially ) is needed to obtain water and electricity connection.
Health Department personnel would come to inspect the premises as to check safety kits,
restrooms, drinking water etc. This process would cost Rs. 5000 to make them happy in form of
food, beverages and miscellaneous expense.
Also if the location is just besides highway, we need to keep road setback distance as prescribed
by the government.
(The information has been obtained from a conversation with a veteran who has been
running a traditional car wash business)
Institute of Management, Nirma University Page 9 of 20
SERVICES & RATES
Services that would be provided would be
1. Exterior Cleaning
2. Interior Cleaning
3. Combo offer for both Exterior and interior cleaning
Currently rough figure for exterior car wash would be Rs. 400
Rough figure for interior cleaning would be Rs.300
And combo offer would be for Rs.650
MARKETING
Marketing budget would be Rs.25000 initially for first month. From next month onwards
marketing budget would be Rs. 15,000 for every quarter.
The focus would be on the time required to perform one wash. As traditional car washers take at
least 20 minutes to wash the car, people have to wait in line for a long time. With automatic car
wash it takes hardly 7 to 8 minutes for a complete exterior wash. Hence an article would be
posted in various newspapers regarding our new service.
I would issue discount coupons of 10% in the first month and would insert them in newspapers
in the locality. Apart from this, such coupons would be available at www.snapdeal.com also and
maximum discount of 20% would be given. Information pamphlets would be distributed at
traffic signals.
Other marketing initiatives would be done online. Social media marketing would be done
through facebook. Few videos of our operations would be uploaded on youtube. Corporate
discount of 10% to 15% would also be offered.
FUTURE PLANS
We would start bike washing services soon.
There would be service to pick and drop facility but for extra
charges.
Would be buying a generator too.
Institute of Management, Nirma University Page 10 of 20
FINANCE
A current account would be opened in corporation bank with CC
(cash credit) limit of 40 lakhs. The same account would be used for all other transactions
related to my business.
I am assuming that my father will be giving me Rs.3500000 in
the form of cash generated from the piece of land which was sold last year.
Assuming that there would be around 40 cars per day, my
business runs for 26 days in a month.
Balance Sheets:
Cash 200000 Capital 3500000
Retained Earning 0
Bank Balance 603000
Loan
Plant Property Equipment 5297000 Long Term Debt 2700000
Machine 3030000
Equipment 100000
Software 35000
Water Tank 70000
Building 1200000
Soak Pit 800000
Television 10000
Furniture 15000
Printer 4000
Almira 20000
Desktop 13000
Total 5297000
Depreciation Accumulated 0
Liscence 100000 100000
Amortization 0
6200000 6200000Total Assets
Balance Sheet Beginning Year 1
Asset Liability
Total Liabilities
Institute of Management, Nirma University Page 11 of 20
Cash 200000 Capital 3500000
Retained Earning 189594.4
Bank Balance 1235561
Loan
Plant Property Equipment 4862367 Long Term Debt 2700000
Machine 3030000
Equipment 100000
Software 35000
Water Tank 70000
Building 1200000
Soak Pit 800000
Television 10000
Furniture 15000
Printer 4000
Almira 20000
Desktop 13000
Total 5297000
Depreciation Accumulated434633.3
Liscence 100000 91666.67
Amortization 8333.333
6389594 6389594
Balance Sheet Ending 1st Year
Asset Liability
Total LiabilitiesTotal Assets
Institute of Management, Nirma University Page 12 of 20
Cash 200000 Capital 3500000
Retained Earning 253631.5
Bank Balance 1299598
Loan
Plant Property Equipment 4862367 Long Term Debt 2700000
Machine 3030000
Equipment 100000
Software 35000
Water Tank 70000
Building 1200000
Soak Pit 800000
Television 10000
Furniture 15000
Printer 4000
Almira 20000
Desktop 13000
Total 5297000
Depreciation Accumulated434633.3
Liscence 100000 91666.67
Amortization 8333.333
6453631 6453631
Balance Sheet Ending 2nd Year
Asset Liability
Total Assets Total Liabilities
Institute of Management, Nirma University Page 13 of 20
Cash 200000 Capital 3500000
Retained Earning 324072.3
Bank Balance 1370039
Loan
Plant Property Equipment 4862367 Long Term Debt 2700000
Machine 3030000
Equipment 100000
Software 35000
Water Tank 70000
Building 1200000
Soak Pit 800000
Television 10000
Furniture 15000
Printer 4000
Almira 20000
Desktop 13000
Total 5297000
Depreciation Accumulated434633.3
Liscence 100000 91666.67
Amortization 8333.333
6524072 6524072
Balance Sheet Ending 3rd Year
Asset Liability
Total Assets Total Liabilities
Institute of Management, Nirma University Page 14 of 20
Income Statements:
Revenue from Operations 5834400
Operating Expense
Total Soap Coast 4433684
Machine Maintanence 72000
Salary 65500
Electricity 240000
Lease 48000
Cofee /Tea 30400
Miscellanious 30000
Total Operating Expense 4919584
Operating Profit 914815.8
Income From Other Source
ATM 96000
Non Operating Income 96000
EBITDA 1010816
Depreciation 434633.3
Amortization 8333.333
EBIT 567849.1
Interest 297000
EBT 270849.1
Tax 81254.74
PAT 189594.4
Year End 1st Year
Institute of Management, Nirma University Page 15 of 20
Revenue from Operations 6417840
Operating Expense
Total Soap Coast 4877052.632
Machine Maintanence 79200
Salary 72050
Electricity 264000
Lease 52800
Cofee /Tea 33440
Miscellanious 33000
Total Operating Expense 5411542.632
Operating Profit 1006297.368
Income From Other Source
ATM 96000
Non Operating Income 96000
EBITDA 1102297.368
Depreciation 434633.3333
Amortization 8333.333333
EBIT 659330.7018
Interest 297000
EBT 362330.7018
Tax 108699.2105
PAT 253631.4912
Year End 2nd Year
Institute of Management, Nirma University Page 16 of 20
Revenue from Operations 7059624
Operating Expense
Total Soap Coast 5364757.895
Machine Maintanence 87120
Salary 79255
Electricity 290400
Lease 58080
Cofee /Tea 36784
Miscellanious 36300
Total Operating Expense 5952696.895
Operating Profit 1106927.105
Income From Other Source
ATM 96000
Non Operating Income 96000
EBITDA 1202927.105
Depreciation 434633.3333
Amortization 8333.333333
EBIT 759960.4386
Interest 297000
EBT 462960.4386
Tax 138888.1316
PAT 324072.307
Year End 3rd Year
Institute of Management, Nirma University Page 18 of 20
RISK MANAGEMENT
Owner of the land might tell me to vacate the land. In such cases, I would try to make a
strong agreement in the beginning itself. Notice period would be little longer. Apart from
this, I would try to wash owner’s car for free as a small gesture of goodwill. A good
relationship would be maintained from the beginning itself.
There might be competition arising in future. I will try to mitigate it with strong
marketing and trying to attract customers with various new offers.
Inspection authorities would be tackled from the beginning itself through some unethical
ways which is not supposed to be done actually.
Soak pit and water treatment would be given utmost important. Soak pit would be
cleaned once in 6 months and water would not be released on the streets. Utmost care
would be taken and healthy relationship would be maintained with the neighbors.
EXIT POLICY
If I am trying to exit my business, I would plan it well in advance. First I would try to reduce my
CC limit from 40 lakhs to 25 lakhs to 15 lakhs and then to Nil in the period of one year. Than
would sell of the machinery or auction it. Would try to sell the business to someone who is not
from this state. Would ensure all the paperwork is done properly and then exit.
Institute of Management, Nirma University Page 19 of 20
REFERENCES
For land rates :
http://www.magicbricks.com/property-for-rent/Commercial-Land-real-estate-Ahmedabad
For Coffee vending Machine
http://www.snapdeal.com/product/nescafe-coffee-vending-machine-spectra/612445
For Coffee, Nestea and Ice tea premix
http://hospitality.financialexpress.com/20040712/equipmart03.shtml
http://bigbasket.com/pd/182914/nestea-iced-tea-premix-lemon-500-gm-pouch/
Water Used
http://www.scientificamerican.com/article.cfm?id=top-10-water-wasters
Tank
http://in.answers.yahoo.com/question/index?qid=20110523005228AAkucWZ
KKE Video
https://www.youtube.com/watch?v=7IEQQz9FpDA
TV
http://electronics.pricedekho.com/tv/lg/21fu3av-21-inch-flat-tv-price-pnYYj.html
Sofa sets
http://www.fabfurnish.com/Fab-Home-Gardenia-Sofa-Set-%28Double-Seater-and-Two-Single-
Seater-Sofa-With-Coffee-Table%29-13471.html
http://www.ebay.in/itm/Teak-Wood-Sofa-Set-
/261265753618?pt=IN_Furniture&hash=item3cd4a70612
Institute of Management, Nirma University Page 20 of 20
Printer
http://shopping.rediff.com/product/hp-all-in-1-printer-scanner-copier-dj-1050/10522345
Table
http://noida.quikr.com/Steel-almirah-locker-Manufacturer-In-Noida-New-Delhi-Gurgoan-NCR-
W0QQAdIdZ125934503
Philips vacuum cleaner
http://www.ebay.in/itm/Philips-Mini-Vacuum-Cleaner-Fc6048-
/380555454719?pt=IN_Home_Appliances&hash=item589adf68ff
Office Table
http://ahmedabad.olx.in/office-table-iid-537594282
Minimum wage rate
http://www.paycheck.in/main/salary/minimumwages/gujarat