CASE STUDY

CSM NAME :
RCCM NAME:
DATE :
START TIME :
END TIME:

TURNAROUND

Rahul, one of the CSMs for the south region, was in a fix. One of his dealerships, Superfast Cars, had
and maintaining relationships, it had always irked Rahul that he could not build a rapport with the D

Mr. Narendra Kumar hails from Calcutta but is now settled in Chennai. His father Mr. Sriram Kumar
into warehousing and real estate business. Mr. Kumar post some family dispute moved to Chennai i
furniture manufacturing business. Mr. Sriram Kumar leveraged the profits from the existing busines
and one TML dealership in 2008

Narendra didn’t intend to be in the family business initially. He planned to go to Europe or America
business immediately after he completed his B.Com in 2003. Narendra loved automobiles so he pre
Narendra took a lot of initiatives and the automobile business grew well under him. Narendra is an
visited dealerships across different countries and keeps proposing various ways to the OEMs to ena

Superfast Cars has one 3 S facility at Chennai. The dealership has been able to retain many of the em
outsourced Bodyshop operations. Last few years had been tough for the dealership and FY 2018 wa
failed to meet the OEM expectation in terms of targets. In last few years, Narendra had consistently
both sales and service departments with TML across hierarchies.

Post a recent meeting of Narendra with TML top management, a clear decision was made that the T
the guidance of his RCCM was given the task to understand the profitability concerns of the dealers
a lot of data from the dealreship on both costs and revenues for FY18 . The data provided by the de
summary is pertaining to only after-sales business.

a Expense Summary- After sales

b Revenue and Working Capital
c Salary register

Having undergone the training in Operational Excellence, Rahul understands the need of the hour b
to chart out a clear action plan to be submitted to the top management and the dealer owner Nare
1.Prepare a monthly P&L for FY18 based on the data provided. The format for the same is provide
any assumptions made for making the same

2.Calculate the critical financial KPIs

3.Compare the financial KPIs with benchmarks to assess the gaps in peformance and data validati

4. Analyze the gaps to identify probable root-causes

5. Recommend corrective actions

KEY INSTRUCTIONS
1 The duration of the test is 2 hours. The test time for this case study will start 5 minutes post
2 This file including case study solution should be submitted within 2 hours post receipt to op
3 The P&L preparation is mandatory. The P&L inputs should be linked to the data provided u
4 The KPI analysis is also mandatory. The identification of KPIs along with specification of the b
 TURNAROUND OF A WORKSHOP

erships, Superfast Cars, had always been problematic since the day he was posted in the region a year ago. E
t build a rapport with the DP, Narendra Kumar, at Superfast Cars.

s father Mr. Sriram Kumar along with his brothers started a family business in leather trading in 1950s. The b
dispute moved to Chennai in 1980s. He dabbled in multiple businesses before establishing a highly successful
s from the existing business to open a few new businesses across years including two auto dealerships- one t

o go to Europe or America for his MBA. Unfortunately, his father’s deteriorating health pushed Narendra sud
oved automobiles so he preferred to take charge of the auto dealerships to start with. While still new to the a
under him. Narendra is an avid reader and is updated with the latest industry trends not just in the country
s ways to the OEMs to enable the dealers to manage their business independently and profitably.

ble to retain many of the employees who joined them during the early years of Superfast Cars. The delership
dealership and FY 2018 was particularly difficult. While the sales volumes have steadily gone up, the dealers
Narendra had consistently taken a strong stand regarding profitability of his dealership. He had raised the pr

ecision was made that the TML regional team will work extensively with the dealership to improve the profita
lity concerns of the dealership and recommend a way forward to improve it. Rahul has his task cut-out now. H
he data provided by the dealership accounts manager Navrang is as given below. Further, Navrang had assur
nds the need of the hour better than ever before. He has made a list of things to be done as shown below. P
and the dealer owner Narendra
mat for the same is provided in the Solution sheet. Link the inputs to the P&L template with the data provi

ormance and data validation

dy will start 5 minutes post the completion of the Online test

2 hours post receipt to [email protected]
ked to the data provided using formulas
g with specification of the benchmarks is required.
n the region a year ago. Excellent at building

er trading in 1950s. The brothers later moved

ishing a highly successful marble retailing and
o auto dealerships- one two wheeler in 1998

lth pushed Narendra suddenly into the

h. While still new to the automobile business,
ds not just in the country but globally. He has
and profitably.

erfast Cars. The delership has completely

dily gone up, the dealership has consistently
ship. He had raised the profitability concern for

hip to improve the profitability. Rahul under

has his task cut-out now. He has got finally got
urther, Navrang had assured that the Expense
 done as shown below. Please work with Rahul

plate with the data provided. Please list down

Expenses Summary
The annual figures have been provided below
Cost particulars Value (in Rs)
Electricity, Power & Fuel 1,004,596
Rep & Maint-Plants & Machinery 282,672
Rep & Maint-Office & equipment 240,294
Rep & Maint-Electric Fitting & furniture 68,409
Housekeeping 1,012,973
Travelling & Conveyance Expenses 450,453
Legal & Professional Charges 1,200
Vehicle Running & Maintenance 96,446
Postage, Telephone & Telex 438,613
Printing & Stationery 225,391
Freight Octroi & others 265,335
Security Service 442,615
Insurance Expenses 9,705
Filing Fees 53,328
Auditors Remuneration 115,000
Working capital interest 1,029,776 85,814.70
Event 63,269
Advertisement and other marketing 303,984
Rent 3000000
Depreciation 2,094,466 174,538.83
Term Loan Interest 668,369 55,697.42
55,697.42 4,641.45
Revenue & Direct Cost
The annual figures have been provided below

Workshop Inflow for FY18 9,720

Bodyshop Inflow for FY18 960

Parts-Revenue Value in Rs
PARTS-BODYSHOP 12,185,173 12,185,173.00
PARTS-AMC 2,367,871 17,604,767
PARTS-WORKSHOP 15,236,896

Lubricants - Revenue Value in Rs

LUBRICANT-AMC 1,534,267 3,779,314
LUBRICANT 2,245,047

VAS - Revenue Value in Rs

LABOUR-VAS 7,696,757 792

Labour-Revenue Value in Rs
LABOUR-BODYSHOP 7,684,088 8004.2583333333
LABOUR-FREE SERVICE 1,552,800 12,074,396
LABOUR-WARRANTY 1,498,782 1242.2218106996
LABOUR-AMC 2,119,269
LABOUR-PAID & RUNNING REPAIR 6,903,545

Cost of labour Value in Rs

JOBWORK-BODYSHOP 2,259,506 3,401,794
MATERIAL-BODYSHOP 1,142,288 0.4427062782
JOBWORK-VAS 2,890,793 38%
JOBWORK-Mechanical Outsourced 1,452,096 2,150,122
JOBWORK-Mechanical Washing 698,026 0.1780728411
The consummables for Mechanical are billed to the customer

Average Income per

Service Marketing Total No. of Cases Case (in Rs)
EW 97 450
24*7 399 75
AMC 544 250
Insurance Renewal 700 950

Other Income Annual Income (in Rs)

Black Oil Barrels 25,000
Scrap Value
Battery 10,000
Tyre 0
Others -

OEM & VENDOR Incentives for FY18 Amount ( in Rs )

Parts Incentive 623987 51998.9166666667
DEEP Incentive 0.0
Vendor Incentive 0.0

Working Capital
Parts Amount in Rs
Opening Stock 8,045,666
Purchase for FY18 22,768,588
Closing Stock as on 31st March, 2018 5,558,798 2,486,868.00

Lubes Amount in Rs
Opening Stock 2,405,300
Purchase for FY18 1,150,000
Closing Stock as on 31st March, 2018 905,230

Receivables & Payables as on 31st March 2018 Amount ( in Rs)

Receivables 1,500,000
Payables 700,000
12692.88854167
1811.190020576

388.82

3,401,794
283,482.83 240,899.42

2150122
179176.8333333

1%
4%
6%
7%
Salary Expenses
This sheet shows the total manpower expenditure in the year 2017-18.

SNO NAME DESIGNATION DOJ BASIC

9 Arshad CRM CUSTOMER CARE 1-Jul-12 20,000
12 Ramakanta CRO CUSTOMER CARE 21-Jul-14 9,000
13 Ponnan CRO CUSTOMER CARE 21-Jul-14 9,000
21 Pathik CRO CUSTOMER CARE 1-Aug-14 10,022

SNO NAME DESIGNATION DOJ BASIC

1 Kushal ADMINISTRATIVE OFFICER 9-Sep-09 12,000
2 Navrang SR.MGR ACCOUNTS 10-Feb-08 23,000
3 Jivitesh SR. EXC. ACCOUNTS 1-Oct-15 9,000
4 Shantimay SR.EXECUTIVE 1-Sep-09 15,601
5 Jaganmay ASST.MANAGER ADMIN 8-Jul-08 18,365
6 Vajramani EXECUTIVE ADMINISTRATION 4-Oct-15 9,500
7 Utkarsha ACCOUNTANT 10-Apr-18 18,332
8 Balamani ASST. MANAGER HR 1-May-18 12,400
Total 118,198

SNO NAME DESIGNATION DOJ BASIC

1 Narendra DIRECTOR 1-Jan-08 50,000
HRA SPL including PF Salary TOTAL ESI-EXP Admin Bonus Gratuity
10,000 4,100 34,100 - 18 1,493
4,500 3,420 16,920 804 11 1,493
4,500 3,420 16,920 804 11 1,493
5,011 3,809 18,842 895 12 1,493

838788
HRA SPL TOTAL ESI-EXP Admin Bonus Gratuity
7,254 5,513 24,767 - 17 1,493 698
21,836 11,398 56,234 - 18 - 2,100
5,000 6,225 20,225 - 18 1,493 772
7,801 6,000 29,402 - 18 1,493 750
9,183 7,382 34,930 - 18 1,493 883
4,750 3,610 17,860 848 11 1,493
8,468 - 26,800 - 18 1,493
6,200 10,912 29,512 - 15 1,493
70,492 51,040 239,730 848 134 10,451 5,202

HRA SPL TOTAL ESI-EXP Admin Bonus Gratuity

50,000 - 100,000 -
 Total DEPARTMENT Category
35,611 service CRM 34,118
19,228 service CRE 17,735
19,228 service Receptionist 17,735
21,242 service CRE 19,749

Total DEPARTMENT
26,975 Common HR 25,482
58,352 Common Accounts 58,352
22,508 Common Accounts 21,015
31,663 Common IT 30,170
37,324 Common Administration 35,831
20,213 Common Legal 18,720
28,311 Common Accounts 26,818
31,020 Common HR 29,527
256,365 245,914
-
Total DEPARTMENT
100,000 Management Director 100,000

13.69
164.28
SOLUTION
I. FY 18 MONTHLY AVERAGE - P&L

FY18- monthly average

Particulars ( values in Lacs)
Workshop RO numbers 625 2.3148148148
Bodyshop RO Numbers 50
Total Turnover 29.2 Per JC
Workshop labor 7.5 1200
Bodyshop labor 3.2 6300
Spare Parts- Workshop 12.5 2000
Spare Parts- Bodyshop 5.0 17153
Lubricants 1.0 123
VAS 0
Total Direct Cost 17.6
Workshop labor 0.4
Bodyshop labor 1.9
Lubes 0.5
Spare Parts 14.9
VAS
Net Retained Income (NRI) 11.5
Workshop labor margin 7.1
Bodyshop labor margin 1.3
Spare parts margin 2.6
Lubricants 0.5
VAS 0.0
Service Marketing- EW, AMC, RSA
and Insurance Renewal
Other income (Black oil, scrap, tyre,
battery, Pollution etc.)
OEM & Vendor Incentives % 0f NRI
Total Overheads 13.5 117%
Employee cost 6.5 56%
Fixed costs 2.5 22%
Variable cost 2.5 22%
Marketing Cost 2.0 17%
Operating profit (EBIDTA) -2.0
Total Interest cost 0%
Profit before tax & depreciation -2.0
Depreciation
PBT -2.0
II. Key assumptions made for arriving at the P&L
- Considered 3 productivity & 9 Bays & 30 Working days - Capicity fully utilized
- Training cost not given considering zero cost invested
- Consider 500/month Vehicle Sales & Deep highest slab 5000

III. KPI Analysis & Way forward

KPI (name of the KPI) Value Benchmark

Maximuse Revenue & Margines 8000 10000-12000

Maximuse Revenue & 1810 2500-5000

Margines - 389
Spares Workshop & Lubes 700-1300

Staff Cost 66% of NRI 35% of NRI

No Focus oin DEEP 30 Lacs

Scrap 0 2.5laksh Per annum

Sale of Tyres& Battery 0 10 Per month

EW - 1%
RSA _ 4.1% EW - 10%
AMC - 5.6% RSA _ 7%
Servcie Marketing
Insurance Ren - 7.2% AMC - 12%
Insurance Ren - 41%
 0.2572016461

Benchmark
1500-2000
10000-12000
2500-5000
150000-20000
700-1300
150-300

Benchmark
45-55%
25-35%
10-15%
5-10%
5-10%

5-10%
List down probable root causes Recommended actions

- Tie up with towing agencies, police

stations, surveyor meet to increase major
repair vehicles
- Considering JC/Vehicle major panel - Service 2 Bodyshop conversion need to be
vehicle are very less improved & incentive the manpower based
- Inflow is not as per benchmark of 12% of on panel conversions
Mechnical Inflow - Inhouse manpower can be developed for
- No control on Outsourcing 100% improving quality or shifts to increase the
- TMI Renewals penetration is very less inflow
- TMI penetration need to be improved
- Paint consumption need to be controlled

- Manpower availability (Only 4 Sas,13 - Trainees need to be recruited & trained

tech) - Check list need to be used for imrovement
- Process in workshop of parts consumption & Lubes (As schedules)
- - Training need to be done on regular basis
- MD salary need to be bifuricated to both -&Salaries need to be bifuricated to be sales
service for necessary dept
sales & service - Incentive scheme need to be introduced
- Accountants/administration for both based on particular KPI performance at each
sales & service level by reducing the fixed salary

-Review on regular basis & both sales,service

- Poor Focus on the DEEP parameters and hence dept head need to be reviewed on reglar
loosing huge incentive basis on DEEP parameters & same need to
linked head incentive on DEEP score
 -scrap need to be sold on monthly basis
Scrap is not sold by dealer managament which improves hygeine of workshop and
income

- need to have tie Up with Battery and tyre

NO initiatves taken on selling of tyres and battery vendor, and SA need to promote customer as
and when required

- Need to focus & review on regular basis on

- No such incentive scheme available as per data
calling status & penetration
- Incentive scheme need to be implemented
based on performance