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

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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

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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

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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 Polisher

KKE100985 : KKE 300 : Basic Car Wash System 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

28,09,100.00

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

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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 PCs 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

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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

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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

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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

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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
charges. Would be buying a generator too. We would start bike washing services soon. There would be service to pick and drop facility but for extra

Institute of Management, Nirma University

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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:
Balance Sheet Beginning Year 1 Asset Cash Bank Balance Plant Property Equipment Machine Equipment Software Water Tank Building Soak Pit Television Furniture Printer Almira Desktop Total Depreciation Accumulated Liscence Amortization Total Assets 3030000 100000 35000 70000 1200000 800000 10000 15000 4000 20000 13000 5297000 0 100000 0 100000 200000 Capital Retained Earning 603000 Loan 5297000 Long Term Debt Liability 3500000 0

2700000

6200000

Total Liabilities

6200000

Institute of Management, Nirma University

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Balance Sheet Ending 1st Year Asset Cash Bank Balance Plant Property Equipment 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 200000 Capital Retained Earning 1235561 Loan 4862367 Long Term Debt Liability 3500000 189594.4

2700000

5297000

Depreciation Accumulated 434633.3 Liscence Amortization Total Assets 100000 91666.67 8333.333 6389594 Total Liabilities 6389594

Institute of Management, Nirma University

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Balance Sheet Ending 2nd Year Asset Cash Bank Balance Plant Property Equipment 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 200000 Capital Retained Earning 1299598 Loan 4862367 Long Term Debt Liability 3500000 253631.5

2700000

5297000

Depreciation Accumulated 434633.3 Liscence Amortization Total Assets 100000 91666.67 8333.333 6453631 Total Liabilities 6453631

Institute of Management, Nirma University

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Balance Sheet Ending 3rd Year Asset Cash Bank Balance Plant Property Equipment 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 200000 Capital Retained Earning 1370039 Loan 4862367 Long Term Debt Liability 3500000 324072.3

2700000

5297000

Depreciation Accumulated 434633.3 Liscence Amortization Total Assets 100000 91666.67 8333.333 6524072 Total Liabilities 6524072

Institute of Management, Nirma University

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Income Statements:
Year End 1st Year Revenue from Operations Operating Expense Total Soap Coast Machine Maintanence Salary Electricity Lease Cofee /Tea Miscellanious Total Operating Expense Operating Profit Income From Other Source ATM Non Operating Income EBITDA Depreciation Amortization EBIT Interest EBT Tax PAT 434633.3 8333.333 567849.1 297000 270849.1 81254.74 189594.4 5834400

4433684 72000 65500 240000 48000 30400 30000 4919584 914815.8

96000 96000 1010816

Institute of Management, Nirma University

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Year End 2nd Year Revenue from Operations Operating Expense Total Soap Coast Machine Maintanence Salary Electricity Lease Cofee /Tea Miscellanious Total Operating Expense Operating Profit Income From Other Source ATM Non Operating Income EBITDA Depreciation Amortization EBIT Interest EBT Tax PAT 434633.3333 8333.333333 659330.7018 297000 362330.7018 108699.2105 253631.4912 6417840

4877052.632 79200 72050 264000 52800 33440 33000 5411542.632 1006297.368

96000 96000 1102297.368

Institute of Management, Nirma University

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Year End 3rd Year Revenue from Operations Operating Expense Total Soap Coast Machine Maintanence Salary Electricity Lease Cofee /Tea Miscellanious Total Operating Expense Operating Profit Income From Other Source ATM Non Operating Income EBITDA Depreciation Amortization EBIT Interest EBT Tax PAT 434633.3333 8333.333333 759960.4386 297000 462960.4386 138888.1316 324072.307 7059624

5364757.895 87120 79255 290400 58080 36784 36300 5952696.895 1106927.105

96000 96000 1202927.105

Institute of Management, Nirma University

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ACTIVITY DIAGRAM

Institute of Management, Nirma University

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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 owners 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

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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-SingleSeater-Sofa-With-Coffee-Table%29-13471.html http://www.ebay.in/itm/Teak-Wood-Sofa-Set/261265753618?pt=IN_Furniture&hash=item3cd4a70612

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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-NCRW0QQAdIdZ125934503 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

Institute of Management, Nirma University

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