BUSINESS DEVELOPMENT PLAN e-Express car service center

SUBMITTED TO: Mr. Ashish Tiwari Mr. Bishal Shrestha Mr. Pradeep Rajopadhadya

SUBMITTED BY: Sunita Bista MBA, Term IV

August 16, 2010

TABLE OF CONTENTS: Contents Executive summary CHAPTER 1: INTRODUCTION

4 7

1.1 Background ............................................................................................................................... 7 1.2 Mission...................................................................................................................................... 7 1.3 Objective ................................................................................................................................... 7 1.4 Critical Success Factor .............................................................................................................. 8 1.4.1 Distinct services 8

1.5 Company Values ....................................................................................................................... 8 1.6 Registration ............................................................................................................................... 8 1.7 Companys profile .................................................................................................................... 9 1.8 Product/ Service ........................................................................................................................ 9 1.9 ORGANIZATION STRUCTURE: ......................................................................................... 10 CHAPTER 2: MARKET ANALYSIS 11

2.1 MARKET FEASIBILITY: ..................................................................................................... 11 2.1.1 Market research and Analysis: 11

2.2 Marketing Objectives: ............................................................................................................. 11 2.3 Market Segmentation: ............................................................................................................. 11 2.4 Target Marketing .................................................................................................................... 12 2.5 Positioning .............................................................................................................................. 13 2.6 Marketing Mix ........................................................................................................................ 13 2.7 Market Trends and growth ...................................................................................................... 14 2.8 Main Competitors ................................................................................................................... 15 2.9 Marketing Strategy.................................................................................................................. 15

2.10 Marketing Budget: ................................................................................................................ 15 2.11 Forecast: ................................................................................................................................ 16 CHAPTER 3: ENVIRONMENTAL ANALYSIS 20

3.1 SWOT ANALYSIS: ............................................................................................................... 20 3.2 PEST ANALYSIS: ................................................................................................................. 21 CHAPTER 4: OPERATION PLAN 22

4.1 Moment of truth ...................................................................................................................... 22 4.2 Quality..................................................................................................................................... 22 4.3 Process and capacity design .................................................................................................... 23 4.4 Location strategy:.................................................................................................................... 23 4.4.1 Selecting the site 4.4.2 Items considered for selecting the site: 23 23

4.5 Layout strategy: ...................................................................................................................... 23 4.6 HR PERSONNEL: ...................................................................Error! Bookmark not defined. 4.7 JOB DESCRIPTION: ............................................................................................................. 26 4.8 Inventory management: .......................................................................................................... 27 CHAPTER 5: FINANCIAL ANALYSIS 28

Pre-operating expenses ................................................................................................................. 28 Projected Income Statement for 5 Years ...................................................................................... 30 CHAPTER 6 34

6.1 Critical risks and contingencies .............................................................................................. 34 6.2 Exit strategy: ........................................................................................................................... 34 APPENDIX: 35

Lists of Tables: Table no.1: Price Table no.2: Car registration figure Table no.3 : Marketing budget Table no.4 : marketing expenses Table no.5 : Fixed expenses Table no. 6: Sales of 1st quarter Table no. 7: Sales of 2nd quarter Table no. 8: Sales of 3rd quarter Table no. 9: Sales of 4th quarter Table 10: 5 Years Sales projection Table no. 11: staffs and salary Table no.12: Pre- operating expenses Table no.13: initial investment Table no. 14: operating expenses Table no 15: Income statement Table no. 16: Statement of retained earnings Table no. 17: projected cash flow Table no. 18: Projected balance sheet Table no. 19: Break even analysis 14 14 15 16 16 17 18 18 19 19 26 28 29 29 30 31 31 32 33

List of figures: Figure no. 1: Organization chart Figure no. 2: Layout design 10 25

Executive summary

e-Express car service center is a car service center located at Dhobi Khola which provides various services like car washing, car cleaning, repair and maintenance of Diesel type vehicle, Denting and painting and accidental repair. The distinct service it will be providing is online booking facility through the use of technology. Since the market trend for automobiles has been increasing, the market for modern service center seems promising. Out of 50,000 vehicles in Kathmandu, our aim is targeting only 1000 vehicles. The authorized service center of respective vehicles and local service center are major competitors. But we believes that if we will be able to provide qualitative service like accidental repair, pick up and drop facility, online booking facility to avoid returning of customer due to mismatch of schedule. These will be our key success factor and competitive strategy. Market feasibility analysis consists of survey of 300 people who owns car from mitra park, om nursing home, Medicare, Bhatbhateni and nearby area. 85% of people show positive response for the improved car service center at dhobi Khola, Kalopul that is accessible to them and also with online booking facility. Market has been segmented, targeted and positioned. Price has been charged as per market rate with promotion basically on newspaper. Price has different markup for different services like washing, denting and painting etc. The sale for the first year is expected to be Rs 13,526,250. The sale is expected to increase every year by 10% Operation plan includes the moment of truth which is most important in service industry and how it will provide qualitative service in terms of determinants like reliability, responsiveness, courtesy, communication and tangibility. Location has been chosen in such a way that it faces the main road with no traffic delays and legal restriction and room for expansion. Layout consists of area for service managers room, customer care office, warehouse etc. Capacity of the service center is not more than 20 vehicles in a day. We can see in the income statement for the five years that the increase in the service revenue, the expenses have also increased due to the inflation or due to the expansion but the Net Profit has increased from Rs 549196.5 to Rs.1877266.5 by the end of 5 years. From this, we have analyzed that the project seems to be profitable with respect to the amount of profit it will be giving in the period of five years. From this pro-forma cash budget, we can see that there is surplus cash at the end of the every year so this gives the satisfactory result. There are various internal and external risk associated with every business like labor conflict, water and electricity shortages, political instability and economic slowdown.

From the operation plan, marketing analysis and financial analysis we can see that this service center has a good chance of success in the business. But there is tough competition in the market and we also have to think about exit strategy- either lease or sell.

CHAPTER 1: INTRODUCTION

1.1 Background Today, the road of Kathmandu is busied with about 93,266 public vehicles registered on Department of Transport management reflects that the purchaser of cars are increasing day by day. Similarly, the market for the car service center seems promising. The auto industry today is a buyers market and the general economic slowdown makes it vital for industry participants to stay ahead of demand trends. To exploit this opportunity a new service center is going to established recently at Basundhara (Bank of Dhobi khola) named as e-Express Auto Service Center (e-ESC). As the industry grows and transforms, it is imperative that the service aspect evolves correspondingly. Given the evolution in vehicle technology, product range and quality in the Nepali market, the skills required to service vehicles have also changed. Todays vehicles require sophisticated tools and equipment for problem diagnosis and correction, which can be handled only by trained technicians. Given an extremely competitive market scenario where product features and pricing are increasingly in capable of differentiating, Service depth and quality surfaces as a key differentiator and an effective tool to retain customers. Servicing of modern vehicles requires quite a different set of skills and technology as compared to the past and e-ESC tactfully bridges the gap between the industrys requirements and supply in the market. Today, customers, across product segments, are more aware and demanding. At the same time, the variety of choices available has made them more prone to switching loyalties if not completely satisfied. As a result, service providers today are keenly focused on improving not only the technical aspect of servicing, but also the softer aspects of customer management. Continuous improvements are made in improving service quality, vehicle turnaround times and customer satisfaction. This underscores the need for consistently upgrading the technical and soft skills of service manpower. 1.2 Mission The mission of e-express car service center (e-ESC) is to provide top quality after sales service and develop our own competitive advantage in the industry. e-ESC will also support the its sales team to boost up the per year sales figure of our car. 1.3 Objective To act as solution for those who hold their luxury cars by providing quality service in terms of reliability, better communication and courtesies. To develop brand awareness and acceptance of the customer by converting them more committed towards the authorized service station.

1.4 Critical Success Factor In view of the scenario discussed above, e-Express Auto Service Center identified key success factors for auto servicing: Ensuring availability of adequate numbers of skilled manpower, across different locations and different levels. Skills include not only technical skills but also business management skills (for senior management) and customer man. Continuous improvement in productivity and quality, to reduce turnaround times, improve capacity utilization, reduce costs and increase customer satisfaction. Focus on softer aspects of customer management system pioneering the online Job card management system and individual login account to individual vehicle with entire history of the car. Semi automated service (washing) facility, computerized diagnosis system, Pneumatic tools and repairing system, highly modern and latest tools and equipment and the most important 24 hour power backup and water facility. Availability of spare parts at the most affordable price despite of being using genuine Delphi (Japanese) make at the category. Though there are many service center, as name suggests this service center provides online service that can be considered as its competitive advantage. 1.4.1 Distinct services For customer convenience, our service center provide full fledge web based online booking system where every individual vehicle has entire history record of their vehicle and service detail .The customer can have access to this record by clicking VIEW HISTORY and can make their service schedule through online booking. As per the nature of the complain registered by customer the car service center approves date. If required, it provide pick up and drop facility. This service center gives preferences to the booked vehicle and services their vehicle as quick as possible. It also gives post service follow up call if customers are not satisfied. 1.5 Company Values Any Company will be guided by the values. Its decisions, actions and the service it provides helps to demonstrate these values. Putting values into practice creates long-term benefits for customers, employees, and the communities. Customer satisfaction is the prime motto that will be achieved through affordability, quality and on-time delivery. Company will regard every employee as essential team members with fair and equitable treatment.

1.6 Registration In order to register this company under the name of e-Express car service center Some of the legal formalities are done which are as follows:

An application form is submitted along with the Rs 5 stamp at the office of the registrar which is situated at Tripureshwor. Besides this citizenship certificate of the Partners and the company register stamp is provided to the office of the registrar. Once the company is registered the next steps is to take PAN number that is Permanent account number from in land revenue Department which situated at Lazimpath. For this necessary documents are: Application form. Copy of the citizenship certificate of the Partners, Copy of the company/firm registration certificate, two passport size photo of the Partners, Hand drawn sketch of the business location.

1.7 Companys profile e-Express car service center basically focuses on providing servicing facility to the customer. The main aim of company is to provide qualitative service in terms of reliability, affordability, accessibility and better communication. These can be achieved only when there is effective diagnosis of problem in customers vehicles and then cater them accordingly and as soon as possible. So, for this experienced mechanics and technicians has been selected and hired. Similarly, through a small survey, we have found that many people want their car to be serviced in particularly 3-5 months for general purpose like car washing and others. Mostly, they do not get their car serviced when they want due to mismatch of schedule. So, our company will be providing online booking system where customer can register themselves with username and password. Once they enter into booking page , they can type the specific date at which they want their car to served and the software will respond whether time is available on that particular day or not. In this way, the customer also do not have to return without servicing car that saves their valuable time and the company will be able to respond them promptly. 1.8 Product/ Service Basically, car service center is service oriented industry. We will be focusing on following prime services as:

Car washing (exterior with diesel spray). Car cleaning (interior with wax and formula). Car detailing and History record of the maintenance schedule of each and every vehicle visiting the service centre online Repair and Maintenance of EFI and Diesel Type vehicle. Denting and Painting for any types of color. Accidental Repair (Major and minor). Customer Care Service (with tele- marketing and post follow-up for the work satisfaction). 24 hour Mobile service availability for customers. Online booking service for booking dates at which customer wants their cars to be serviced for general purpose.

1.9 ORGANIZATION STRUCTURE: The basic organization structure of the company will be: The top most level is managing director(Sunita Bista)

Figure no. 1: Organization chart

CHAPTER 2: MARKET ANALYSIS 2.1 MARKET FEASIBILITY: 2.1.1 Market research and Analysis: In order to understand the need of the customer, a small survey was conducted within the following areas: Housing areas: Mitra Park Housing and Naxal(behind Police headquarter) housing Hospital areas:Om Nursing Home and Medicare doctors( who own cars but are busy) Department stores area: Bhatbhateni Department store, Blue bird department store

The research objective was to find out what sorts of car service they need. Nearly, 300 customers are surveyed from these locations and about 85% of wants such a service center that provides quick service and also prefer online booking facility too. Because most of the car owners are professionals who are busy. Car, being a luxurious item, people want special care with quick service. Research also shows that many car owners who visit the workshops for general purpose like car washing has to return due to lack of time of service provider or due to mismatchment of proper schedule. So, about 85% of customers showed positive response for online booking facility that will save their valuable time. So, through market feasibility analysis, the service center at Dhobikhola, Kalopul is viable.

2.2 Marketing Objectives: First year marketing objective: During first year of operation, the company aims to target 1000 vehicles out of approximately 50,000 vehicles registered (Department of Transportation) because if customer gets satisfied with our service they may come from various places and generally customer visit each quarter i.e. 2 to 3 time for general servicing like washing, cleaning etc. Second year marketing objective: To develop brand awareness and acceptance of the customer by converting them more committed towards the authorized service station. 2.3 Market Segmentation: Geographic The immediate geographic target is the city of Katmandu.

A 15 km radius is in need of the services; however, 87% of the business will be from a seven km radius. The total targeted population is just over 1000 vehicles. Demographic Male: Female- 63%: 37%. The reason for this discrepancy in the male to female ratio is generally explained by the fact that men typically care more about their automobiles. Men are more likely to spend money on their cars with accessories and are more likely to buy a car as a reward for some accomplishment as a treat for them. Women tend to view cars more so as an object of utility. Using this line of reasoning, women are more likely to use the automatic car wash as they are less concerned about preserving their "precious" car. 40% of the households have an income exceeding Rs 4, 00,000 per annum. 63% of the target population has a proper education degree, they are aware about authorized service station for their cars. Behavioral facts: 62-65% of the target customers have possessed their cars with the help of bank loans. Individual and family image is personified by the type and condition of the automobile that they have. 2.4 Target Marketing Our service Centre segments its customers by type of car ownership. Normally, it is believed that the type of car that a person owns says volumes about their driving, and, therefore their car washing and detailing requirements. New car owners: Owners of newer cars are most likely to use an authorized service station. These owners take great pride in their cars and will bring them often to the wash and detail service. The goal with these customers is to promote regular use of the wash and detail service. The aim is to inform these customers that our Service Centre will keep their car looking as good as it did the day they drove it off the lot. Older luxury car owners: These people have either owned their high-end luxury cars for several years or are unable to afford the expense of a new luxury car but want the feel of relaxed driving. Both of these groups want to keep their cars in the best shape possible. Those who have bought second-hand cars will often spend many hours in their cars and will place high importance on keeping their cars looking good. These owners will bring their cars in for regular washes and occasional maintenance. Sports car owners: These people are often younger or middle-aged men and will regard the look of their car as important. They will also pride themselves on the look of their car and will have their car hand washed (at least) weekly. These drivers will have an occasional detail, but will keep their cars so clean the detail will not be necessary very often. Lifetime owners: Many of these people have owned their cars for more than five or six years, and are more likely to be executive. They are attached to their cars as friends and

though it may be more sensible for them to purchase a new car, they will bring their car in for a wash occasionally, just when the car is dirty. They like their cars to look presentable, and want to keep it in good shape but are not tied up in the look of their car. For this reason, they will not have a detail carried out on their car unless they are selling it. Local businesses: Some local businesses have fleets of cars and small vans that must be kept clean to maintain their company image. These businesses will be looking for a cost effective, efficient car washing service to perform this service, and will prefer to use a car wash service during the week rather than during weekends, like the general public.

2.5 Positioning Our Service Centre seeks to position themselves as the premier auto service provider in the Katmandu area. This positioning will be achieved by leveraging their competitive edge; servicing has been providing by almost all auto service centers but our prime focus is on how to provide efficient and quick service. So, better positioning strategy will be our online facilities that are new concept. Online booking facilities will attract the customers in the sense that every customers want quick service and if they get chance to view their historical data entry by themselves they will get chance to know that what services has been done with their vehicle till now at the same time online booking for servicing can be done that becomes easy for them and also minimizes the chance of not getting servicing when they sent their cars or usually visit by themselves. So, this is our prime positioning strategy and this will help to retain our customers. We are also providing online placement of the car which our customers want to sell on our companys website and thus reduces their tension of selling their car by themselves. 2.6 Marketing Mix Product

Basically, our product is auto service center. Providing good quality after sales service of cars to customers is our prime motto. Promotion and marketing

Express car e-service center will use several methods of promotion starting with Free Checkup Camp to retrieve the database and actual position of our customers. After this ECS will be more focus on direct marketing through customer care service (tele-marketing/service reminder). At initial stage, advertisement can be best way to increase awareness among customers about our product. Advertisement on newspaper like kantipur to attract large customers will cost Rs 1 lakh Free check up camp also consists of costs. But basically lubricants supplier or other will act as sponsor. So, the company cost will be 50,000 to 60,000.

Pricing

Pricing of our facility will be competitive among the competitors authorized service station but making our customer feel the worth what they have paid for. Basically, our pricing is as per the market rate. ITEMS Service Repair & Maintenance Dent & Paint Lubricants Spare Parts Local Parts Table no.1: Price Rate 400 /vehicle 1,350 /average/ vehicle 10,000/ average/ vehicle 1,400 /average/ vehicle 3,200 /average/ vehicle 2,500 /average/ vehicle

Place/location

Location shall not be the issue for our customer as it is located at the central Kathmandu whatsoever for the customer away and busy ECS is also providing pick up and drop facility. 2.7 Market Trends and growth As per the Department of Transportation, the automotive sector has phenomenal growth. Car registration figure up to 2008\09 Serial number 1 2 3 4 5 6 7 8 9 Year 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 CAR/ JEEP/ VAN 5152 4374 2906 7079 4781 6531 8400 9553 10,200

Table no.2: Car registration figure

Total vehicle registered in Kathmandu upto now is 93,600 vehicles .Approximately 50,000 cars\jeep\van will visit car service center rest may be government vehicles that usually have their own service center. Out of 50,000 vehicles that go for servicing, only 1000 vehicles is our target market. From the above data, market trend is growing. The need of car service center also gets emerged.

2.8 Main Competitors The main competitors for our service center are authorized service centre of all the brands existing in Kathmandu. Apart from this local service station of nearby area located at 5 km radius of e-Express car service center. 2.9 Marketing Strategy e-Express car service center will target servicing of car/ van/ jeep. In the initial years, only 1000 vehicles will be served. Our prime focus on the first three years is to provide better and quick service to them and to retain those customers rather than increasing the number of customers. Because every vehicle needs servicing of 3-4 times in the year. So, retaining those target customers will be valuable. After that, there is a great chance of promoting car service center through word of mouth from customers and that will probably increase our target number of customers. 2.10 Marketing Budget: Website design( for online booking) Advertisement in Kantipur Free check up camps Tele- marketing and service reminder Commission and other marketing activities Others (Chanda,offering from political parties) Total 300000 100000*3 TIMES= 300000 100000 30,000 200000 20000 950000 Table no.3: Marketing budget

Annual marketing expenses Marketing Year 1 Expenses 950000 760000 650000 500000 500000 Year 2 Year 3 Year 4 Year 5

Table no.4 : marketing expenses

Analysis The marketing expenses has been decreasing as year passes because in car service center targeting certain year passes because in car service center targeting certain customers and retaining them is enough through qualitative service. Once, they are satisfied they will come again and again. So, no need of aggressive marketing.

2.11 Forecast: Projected expenses for the year 2067 FIXED EXPENSES SALARY SECURITY GUARD FOOD FUEL WATER RENT ELECTRICITY INTERNET COMMUNICATION PRINTING & STATIONARY OVERTIME MISCLENIOUS TOTAL Table no.5 : Fixed expenses

1,96,150 22,600 25,000 15,000 2,200 25,000 10,000 2,400 4,000 1,500 15,000 3,000 321850

REVENUE SERVICING REPAIR & MAINT DENT & PAINT LUBRICANTS SPARE PARTS LOCAL PART

MARGIN 90% 85% 33% 22% 18% 30%

Remaining % is for variable cost like for cleaning we need towels, pick up facility in case of emergency, managing inventory which is done less frequently. Usually, research done in various car service agency shows that people come for service usually quarterly basis i.e. four times in the year. So, projected sales in each quarter have been shown as:

Projected Sales of first Quarter 067/068 ITEMS Service Repair & Maintenance Dent & Paint Lubricants Spare Parts Local Parts No of Vehicle/day 6 3 0.5 4 5 2 Working Day 25 25 30 25 25 25 Rate 400 1,350 10,000 1,400 3,200 2,500 Revenue/Month 60,000 101,250 150,000 140,000 400,000 125,000 976,250 Table no. 6: Sales of 1st quarter

Projected Sales of Second Quarter 067/068 ITEMS Service No Vehicle/day 6 of Working Day 25 25 30 25 25 25 Rate 400 1,350 10,000 1,500 3,200 2,500 Revenue/Month 60,000 135,000 150,000 150,000 400,000 125,000 1,020,000 Table no. 7: Sales of 2nd quarter

Repair & Maintenance 4 Dent & Paint Lubricants Spare Parts Local Parts 0.5 4 5 2

Projected Sales of Third Quarter 067/068 ITEMS Service Repair & Maintenance Dent & Paint Lubricants Spare Parts Local Parts No of Vehicle/day 7 4 0.5 4 5 2 Working Day 25 25 30 25 25 25 Rate 450 1,500 12,000 1,500 3,500 3,000 Revenue/Month 78,750 150,000 180,000 150,000 437,500 150,000 1,146,250 Table no. 8: Sales of 3rd quarter

Projected Sales of fourth quarter 067/068 ITEMS Service Repair & Maintenance Dent & Paint Lubricants Spare Parts Local Parts No of Vehicle/day 7 5 0.5 5 5 3 Working Day 25 25 30 25 25 25 Rate Revenue/Month 450 78,750 1500 187,500 12500 187,500 1500 187,500 4000 500,000 3000 225,000 1,366,250 Table no. 9: Sales of 4th quarter Projected Sales for 5 Years Year Item 1 Sales

Projected sales revenue for 1st year 13,526,250 14,878,875 Projected sales revenue for 2nd year 2 16,366,763 Projected sales revenue for 3rd year 18,003,439 Projected sales revenue for 4th year 19,803,783 Projected sales revenue for 5th year Table 10: 5 Years Sales projection

3 4

CHAPTER 3: ENVIRONMENTAL ANALYSIS 3.1 SWOT ANALYSIS: SWOT analysis is necessary in each and every business. Strengths: Online service- most latest and modern service Service infrastructure adequate workshops at the right locations, with proper machinery, tools and other facilities Availability of spare parts for all the models. Availability of skilled work force.

Weakness: The need to have fairly constant volume of business to support the business.

Opportunity: Easy to grasp customer through online service. The number of registered vehicles is in increasing trend every year. So, there is high chance of success of this business.

Threats: Future\ potential competition from a franchised firm A slump in the economy, reducing discretionary spending.

3.2 PEST ANALYSIS: Political Environment: Unstable political system in our country hampers every new business. Due to political instability it may hamper the business to certain aspect because of bandhs and strikes. So people may not be able to come to the service center and at the same time, mechanics, technicians also may not be able to come to the service center for servicing due to which car servicing may not been done promptly that may hamper business. Economic Environment: Economic situation of country also matters. If there occurs slump in an economy, then spending pattern of consumers may decrease for luxurious item like car that directly hits this business. Socio-Cultural Environment: Culture, customs and norms of society affect any business. There will be no social- cultural impact on the society. There has been change in the cultural aspect of the people and owning cars has become a matter of social prestige. Thus, demand of more cars means the increase in need of car servicing. So due which it will be profitable for this kind of car servicing center. Technological Environment: New technology can be comparative advantage for business like car service center. Due to advance technology we can be able to use modern facilities like online booking system. These technologies will help to gain competitive edge in this competitive world. Legal Environment: There is no legal restriction for opening car service center. Thus, after environmental analysis and SWOT analysis the car service centre with online feature seems feasible in business market.

CHAPTER 4: OPERATION PLAN 4.1 Moment of truth It occurs when there is interaction between customers and service provider. For any car service center, when customer comes for repairing their cars their problem should be correctly diagnosed and troubleshoot accordingly. First interaction occurs when customer visit to service center with various car problems, they should be greeted properly. If the customer gets dissatisfied at this very first step their chances of revisiting is less. Second interaction occurs when customer explains their problem to the mechanics or service provider. At that time, conscious listening to the problem is necessary for effective diagnosis. Effective diagnosis of problem and addressing it properly is quite important. This is the most important step where service center can differentiate them. 4.2 Quality Our auto service center focuses in providing qualitative service to our valuable customers in terms of: Reliability: our service will be reliable in sense that customers will get same kind of service consistently. Responsiveness: Our Company responds to the customer and their problem as soon as possible. If they face problem in any roads of the Kathmandu, we try our best to provide service if they call us. Competence: Our competence level is good since we are hiring mechanics that are good at their work and has experience in related field. Access: Since our company is situated in DhobiKhola, the place is easily accessible and customer can contact through online booking facility and through telephone. Courtesy: Being service industry, we are courteous to our customer since they are valuable to us. Our employees from receptionist, mechanics to managers they respect customers and are polite to them. Communication: our service industry tries to inform our customers about the services they had done so far to their cars through historic data and at the same time can do online booking to get service too. Tangible: The service will be tangible due to its physical existence in the Dhobikhola.

4.3 Process and capacity design Use of technology in service: Using technology in service industry gives additional advantage. The company website provides the data entry which customers can log in to see the services they had done with their car so far and at the same time they can do online booking if they want car servicing. Similarly, if our customers want to sell their cars then they can contact to us and we will place the cars on the online from where buyers can see and if they like, they can buy it. This use of technology acts as added benefits to us. Capacity: According to the space and manpower availability, our company will have capacity of servicing not more than 20 vehicles per day. 4.4 Location strategy: 4.4.1 Selecting the site Since the site location has a large influence on the success of the garage, careful consideration must be given to the selection of site location. 4.4.2 Items considered for selecting the site: Preferably, It should face a main road (or be close to a main road) It should be on a level ground. Preferably, It should be a location where there are no traffic delays, etc. It should be a location with room for expansion. It should be a location where public facilities can be used. It should be a location without legal restrictions.

Preferably, these items are required for appropriate site location for car service center. But finding all these characteristics in a single location is very difficult. However, majority of these characteristics are found on the site that I have selected which is DholiKhola. Shape of the site is also very important. Basically rectangular and square shape of the site is best. The site which I have selected is of rectangular type. 4.5 Layout strategy: Our workshop layout consists of following areas:

Service managers office

Customer waiting room Reception room Watchmans room Parts office Parts warehouse

Inspection and General Service bay(s): The general service bay serves the garage s principle role. Bay is just like ramp. The service bays, related passageways, tool benches, etc. must be given careful consideration for space layout. Inspection bay(s) is the place where incoming vehicle checks, after-servicing Checks, etc. are conducted. There are two types, differing according to inspection methods. In one, mainly visual method is used. In the latter, oil leaks, tigness of parts, and wear and loss of various parts are checked for by means of a pit, so the area is the same as the general service bay. Onefifth of the general service bay should be of this type. They can be used for both general service and lubrication. Lubrication bay(s): This is the place where grease-jobs, engine and gear oil exchanges, etc. are conducted. In this connection storage space for various oils and greases is necessary near the vehicles. Considering the nature of the operations, installation of a pit or large -size lift is desirable. The bay size is the same as the general bay. However, it is necessary to install storage areas for oils and greases very near. Engine repair shop: This is where engine overhauls and corresponding repairs like cleaning are conducted. Electric service shop : This is where overhaul and repair of various single units (excepting the engine) such as the transmission, transfer, differential, steering gear box, brake valve, etc. are conducted. Tool room: This is where common tools, large-size common tools, special tools, measuring devices, etc. are stored. One person will be in charge of the tool room. He should keep a record of all tools issued to the mechanics and should order new tools to replace those that wear out. Air compressor room: It is a room which consists of air compressor with water separator. It is used for different pneumatic purpose in workshop. Generator room: It is a room that consists of generator that is used as a power backup. Service parking area: It is the place where vehicles that enter the service center will be kept. Stock yard: It is warehouse for the spare parts. Layout partition is shown on annex with cost of approximately 10,000 .

The actual layout design will be:

Figure no. 2: Layout design

4.6 HR PERSONNEL:

Total numbers of staffs with their salary are: Position Number of staffs Service Manager 1 Engineer 1 Supervisor 1 Senior technician 1 Technician 1 Junior technician 1 Helper 8 Customer care officer 1 Receptionist 1 Account department officer 1 Administrative officer 1 Spare Parts Officer 1 Spare Parts Executive 1 Office Boy/girl 1 Driver 1 Total 22 Table no. 11: staffs and salary 4.7 JOB DESCRIPTION:

Expected salary 45,000 20,000 8500 14,000 9000 7000 5,000* 8= 40,000 5500 5000 9500 7500 9500 6000 4650 5000 1,96,150

Service manager: The service manager evaluates the overall department performance. He/she has to report to the managing director. Engineer: Engineer deals with day to day operation of the workshop. Supervisor: Supervisor receives each and every incoming car to the workshop and identifies the problem and reports it to technical department. Finally, he/ she have to ensure whether the work has been completed or not. Technician: Technician basically deals with identifying problem of the car that comes to workshop which is the most important job. Technician can be junior and senior technician. Junior technician has to report to senior technician. Helper: Helper are usually more in number i.e. 8 helpers. They have to assist technician in rectifying the identified problem by technician.

Customer care officer: Customer care officer receives the customer, greets the customer and courteously responds to the customer. The first moment of truth occurs here. So, the job of officer is to receive customer and responds quickly and promptly. Receptionist: Basically, receptionist deals with receiving customer phones and responding queries of customers. Account department officer: Account department officer deals with financial plan and making financial statements like income statement, balance sheet. Administrator: Administrator deals with handling administrative aspects like salary, rent, electricity, water, communication etc. Spare part officer: Spare parts officer plans the ordering of the parts necessary or required in workshop. He/she has to report to spare part executive. Spare part executive: Spare part executive deals with handling and maintenance of spare parts. Office boy/girl: Office boy/ girls job is cleaning tables of the respective senior, bringing water and other necessary item to them as per the order of seniors. Driver: Drivers are permanently hired by workshop for providing pick up and drop facility to customers as well as helping his seniors to reach to particular destination as demanded by them.

4.8 Inventory management: Inventory should be managed properly in such a way that neither it will be left idle in warehouse nor it will be shortage in the market. Basically, inventory is categorized in three parts on the basis of their use as: 1. Fast moving inventory: This category include those inventories which are used on regular pattern like lubricants, engine oil filter, air filter etc. 2. Medium moving inventory: This category includes those inventories which are used frequently or in short interval but not on regular pattern like brake pad, clutch pad etc. 3. Slow moving inventory: This category includes those inventories which are not used even frequently like interior parts of engine etc. Local dealers, Indian dealers or other foreign dealers can be used for this purpose.

CHAPTER 5: FINANCIAL ANALYSIS Pre-operating expenses Title Feasibility Registration Transportation Telephone Line Total Amount 5000 10000 3000 10000 28,000

Table no.12: Pre- operating expenses FIXED CAPITAL REQUIRED (INITIAL INVESTMENT) Particulars Office Building, Shade and Truss Tools and Equipment Electric wire and setup Tools and Equipment installation cost Office equipment Computer Furniture and fixture Vehicles/Bikes Generator Miscellaneous Total Amount (Rs) 30,00,000 20,00,000 4,75,000 3,00,000 1,65,000 1,50,000 1,78,000 1,84,000 7,00,000 4,00,000 75,52,000

Working capital Total capital requirement

10,000 7562000

Table no.13: initial investment

OPERATING\ ADMINISTRATIVE EXPENSES DETAILS SALARY SECURITY GUARD FOOD FUEL WATER RENT ELECTRICITY INTERNET COMMUNICATION PRINTING & STATIONARY OVERTIME MISCLENIOUS SALARY(13TH MONTH) Total (per year) Year 1 1,96,150 22,600 25,000 15,000 2,200 25,000 10,000 2,400 4,000 1,500 15,000 3,000 1,96,150 43,76,225 41,04,550 Table no. 14: operating expenses Salary has been increased by 10%. Food and fuel has been increased by 5%. Rent, overtime, communication and printing stationary has been done small increment which is quiet natural in these objects. 47,58,774 51,52,180 56,08,680 16,000 4,000 21,57,65 17,000 5,000 237342 18,000 6,000 26,1076 19,000 7,000 287184 15,750 2,310 25,000 10,000 2,400 4,000 15,00 16,538 2,426 27500 10,000 3,000 4,000 15,00 17,365 2,547 27500 10,000 3,000 5,000 2,000 18,233 2,674 30,250 10,000 3,000 5,000 2,000 23,730 26,250 24,917 27,563 26,163 28,941 28,779 30,388 Year2 21,57,65 Year 3 23,73,42 Year4 261076 Year5 287184

Profit and Loss Account Projected Income Statement for 5 Years

Particulars

Year-1 Year-2 Year-3 Year-4 Year-5 Sales 13,526,250 14,878,875 16,366,763 18,003,439 19,803,783

less: Variable costs(appx 55% of sales)

7,439,438

8,183,381

9,001,720

9,901,891 10,892,081

Depreciation (10% of assets and machine tools)

300,000

300,000 4,376,225

300,000 4,758,774

300,000 5,152,180

300,000 5,608,680

Administration expenses

4,104,550 950,000

760,000

650,000

600,000

500,000

marketing expenses EBT less: Tax@25% EAT

732,262 183065.5 549196.5

1,259,269

1,656,269

2,049,368

2,503,022

314817.25 414067.25 944451.75 1242201.75

512342 625755.5 1537026 1,877266.5

Table no 15: Income statement Analysis: The above income statement shows that the profit has been increased from Rs.549196.5 to Rs. 944451.75 at second year and finally to Rs. 1877266.5 at the fifth year.

Statement of retained earnings: Year 1 Beginning Balance Net profit Ending Balance 0 549196.5 549196.5 Year 2 549196.5 944451.75 1493648.25 Year 3 1493648.25 1242201.75 2735850 Year 4 2,735850 1537026 4272876 Year 5 4272876 1,877266.5 6150142.5

Add

Table no. 16: Statement of retained earnings

Projected cash flow for 5 years Particulars Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Receipt Beginning Balance 0 10000 784197 1653649 2820851 4282877 Equity 75,62,000 Bank loan 0 Sales Revenue 13,526,250 14,878,875 16,366,763 18,003,439 19,803,783 Total Receipt 75,62,000 13,536,250 15,663,072 18020412 20824290 24086660 Disbursement Fixed Assets Operating Expenses Marketing Expenses tax Paid Total Disbursement Surplus/Deficit (A-B)

75,52,000 43,76,225 41,04,550 950000 0 0 75,52,000 158,066 5,212,616 760000 289,817 5,426,042 47,58,774 650000 389,067 5797841 51,52,180 500000 487,342 6139522 56,08,680 500000 600,756 6709436

10,000

8,323,634 10,237,030 12,222,571

14,684,768 17,377,224

Table no. 17: projected cash flow Analysis: From this pro-forma cash budget, we can see that there is surplus cash at the end of the every year .

Projected balance sheet for 5 years: Assets Year 1 Current assets: Bank Cash Total Current assets Fixed assets Less Depreciation Net Fixed Assets Total Assets 3329453.6 4994180.4 8,323,634 75,52,000 300,000 7,252,000 15575634

Year 2

Year 3

Year 4

Year 5

4094812 6142218 10,237,030 75,52,000 300,000 7,252,000 17489030

4889028.4 7333542.6 12,222,571 75,52,000 300,000 7,252,000 19474571

5873907.2 8810860.8 14,684,768 75,52,000 300,000 7,252,000 21936768

6950890.5 10426334.4 17,377,224 75,52,000 300,000 7,252,000 24629224

Liabilities and Equity Accounts payable Equity Retained Earnings Total Liabilities and Equity

Year 1 Year 2 7464437.5 8433381.75 7,562,000 549196.5 15575634 7,562,000 1493648.25 17489030

Year 3 9176721 7,562,000 2735850 19474571

Year 4 10101892 7,562,000 4272876 21936768

Year 5 10917081.5 7,562,000 6150142.5 24629224

Table no. 18: Projected balance sheet Analysis: Here, 40% of surplus amount of cash flow is kept in bank while remaining is held on cash to buy inventory whenever required. Similarly, accounts payable has been increased because we have no any other form of stock and thus since sales are also increasing each year accounts payable has been increased accordingly.

BREAK EVEN ANALYSIS Year Total Revenue Less: Variable expense Contribution Margin Contribution margin ratio Fixedcost(operating expenses) Break Even (Sales in Rs.) Per Month Sales for BEP Daily Sales For BEP 1ST 13,526,250 7,439,438 60,86,812 0.340 41,04,550 1,20,72,205 1,28,71,250 1,39,96,394 10,06,017 35,533 10,72,604 35,753 11,66,366 38,878 2ND 14,878,875 7,811,409 7067466 0.340 43,76,225 3RD 16,366,763 8,201,980 8164783 0.340 47,58,774

Table no. 19: Break even analysis Analysis: From above BEP analysis, it can be seen that the car service center requires daily sales revenue of 35,533 for at least to break even at first year and 35,753 and 38,878 for at least to break even in second and third year respectively.

CHAPTER 6 6.1 Critical risks and contingencies Each and every business is associated with risk. There exists internal risk as well as external risk. 1) Internal risks: Service center are usually labor intensive. Labor intensive may create problem regarding salary and others. Service center needs huge water. During dry season, shortage of water may create problem. Water has to be bought which means additional costs. Load shedding is usually a problem in Nepal. So, the service that needs electricity will be delayed. The center has to bear additional cost for generator. Consistent quality servicing is necessary. Once the car service center loses faith of customer due to inconsistent quality, then the reputation gets worsen.

2) External risks: There may be risk from the political instability due to which it will hamper the business operation. The economic slowdown hampers this business as well. In case liquidity chrunch occurs, people may not get auto loan and thus car service center business will be hampered.

6.2 Exit strategy: Competition in the market forces this car service center to think of alternative plans as it will not be able to attract the customers. So, exit strategy has to be planned for such worse situation. In this condition we can give it as lease to other authorized service center or we might as well sell the overall service center to others that helps to minimize our loss.

APPENDIX: CONSTRUCTION EQUIPMENTS REQUIRED:

S.N.

Description Water Boring (with filter) Electric Line (NEA) Electric line wiring Water Tank (Plastic) for Kithcen) Water Plumbing Air Compressor line for R/M and Dent Paint (Plumbing) Construction Shed (Truss and Almunium Sheet) Floor (PCC) Office Construction Partition

Capacity 2 inch pipe 3 Phase (above 10KVA) 1000 ltr

Qty. 1

Require Office Furniture and Fixtures S.No. Item 1 EPABX with telephone set 2 Telephone line 3 Fax Machine 4 Telephone set 5 Internet Line 6 Computer 7 Laser Printer 8 Working Table set 9 Chairs 10 Sofa set (with table) 11 Steel Drawer 12 Wooden or Steel rack 13 Locker for Technician 14 Bicycle 15 Motorcycle 16 Kitchen Goods

Qty 1 3 1 10 1 5 2 12 10 2 3 6 1 1 2

Remarks 22,000 54000 14000 5000 16500 175000 30000 72000 15000 30000 21000 30000 10000 4000 180000 70000 748,500 with 1 direct line

(with chair) Customer lounge

Require Tools and Equipments for New Service Center 1. Facility Support S.N.

Item Air Compressor Fire Extinguisher First Aid Cabinet

Capacity 10 HP, 35 c.f.m with air cooled after cooler

Qty. 1 1 1

2. Lifting Equipment S.N.

Item 2 Post vehicle lift Floor jacks Safety stands Engine lift Engine stand Item Hydraulic lift Pressure gun Water pump Item Workbench with vise Bench grinder Hand drill-electric Drill bit set Hydraulic press Fender cover Seat Protector Air blow gun Vaccum Cleaner

Capacity 1.5 ton

Qty. 2 3 10 1 1 Qty. 2 2 1 Qty. 1 1 1 1 1 10 10 2 1

3. Servicing S.N.

Capacity

4. General Service S.N.

Capacity

5. Measuring and Testing S.N.

Item Vernier Calipers Dial indicator with stand Torque wrench set Compression gauge Oil pressure gauge

Capacity 200 mm 0.5-3.5, 3-14 kg-m 20 kg/cm2

Qty. 1 1 1 1 1

Fuel pressure gauge Fuel consumption testor Industrial thermometer Test light Diode tester 6. Electrical and Engine Tune-up S.N.

1 1 1 2 2

Item Computerized Diagnostic tool Battery Hydrometer Battery charger Digital Multimeter Spark plug gap gauge Timing light Injector cleaner Item Oil funnel Waste oil tank Grease gun Oil funnel Parts cleaning tank Pressure washer Item Piston ring expander Piston ring compressor Item Digital Tire Pressure gauge Wheel alignment equipment Tire Tread gauge Wheel balancer Tire changer

Capacity

Qty. 1 1 1 1 2 1 1 Qty. 1 1 1 4 2 1 Qty. 1 1 Qty. 1 1 1 1 1

7. Lube and Wash S.N.

Capacity

8. Engine Overhaul S.N.

Capacity

9. Brakes/Tires S.N.

Capacity

10. Air conditioning equipment S.N.

Item A/C Leak Detector A/C Recycling Equipment

Capacity

Qty. 1 1

11. Technician Hand Tools S.N.

Description Socket - 8-32mm : (32 nos.) set Rachet Handle Reversible

Capacity

Qty. 4 4

Spinner handle Speeder handle Extension Bar - 5" & 10" Universal joint Adapter Female/Male Hexagon Wrench Offset ring spanners - 12 nos. Open End spanners - 12 nos. Combination Wrench - 12 nos. Adjustable Wrench - 12" Pipe Wrench - 12" Vice Grip Wrench - 10" Combination Plier - 8" Long nose plier - 6" Cutting plier Spark plug socket All purpose scissors Snap ring plier Wire cutter Screw Driver-flathead/phillips head. Ball peen hammer - 500 gms Wooden hammer Plastic hammer Rubber hammer Chisel and punch - 200 mm Thickness gauge Tool Box Tyre Hatta

4 4 4 4 4 4 set 4 set 4 set 4 set 4 set 4 set 4 set 4 set 4 set 4 set 4 set 4 set 4 set 4 set 15 pc 4 set 4 set 4 set 4 set 4 set 4 set 4 set 2 pc

LAYOUT /DECORATION S.No. 1 2 3 4 5 6 7

Description Sofas 3 seater Sofas 2 seater Sofa side tables Pilar designs Centre display table Reception table Low ht cabinet

Size

21"x21" 3'x3' 5'x30"x42" 5'x15"x30"

Qty Rate Amount 1 19200 2 12800/each 25600 2 11300 4 6544/each 26176 1 11048 1 31540 1 14536

8 9 10 11 12 13 14 15 16 17 18 19

Gypsum, veneer design New glass / flush doors Partition with veneer panels on wooden frame Partition with veneer and glass panels on wooden frame Gypsum partition with vaneer panels on both sides Executive table Low ht cabinet Ceiling with false 6"x6" veneer beams (above waiting area only) Ceiling with panels in directors room and confernce room Laminated flooring Pinewood skirting Blinds (director and conference room only)

7'x8'8" 7'x3' 18'9"x8'8" 12'x8'8" 11'9"x8'8" 11'2"x8'8" 6'x30"x30" 12'x15"x30" 13'x6"x6" 10'x12" 857sft 202sft 173sft Total Vat 13% Grand Total

1 5 1 1 1 1 1 1 6 12

14529/each

33066 72645 92991 88684 86749 73459 26816 34590 55362 56256

116/sft

99412 16160 22490 898080 116750 1014830