PROJECT REPORT ON TYRE

FRANCHISE BUSINESS

Mr.

PUNJAI PULIAMPATTI,
ERODE(DT) – 638459.
MOBILE:

PREPARED BY

R2K PROJECT WORKS

AND CONSULTANT SERVICE
35, KAMATCHI AMMAN KOVIL STREET,
P.PULIAMPATTI – 638 459.
MOBILE: 9095061404
 PROJECT PROFILE ON TYRE FRANCHISE
BUSINESS

1. INTRODUCTION
In India, the number of vehicles on the road keeps increasing year
after year. A lot of people either want to or already own a car so that they can
live a life of convenience. Car is one of the necessary things for all people.
Every family member travels in the car. But cars are not cheap. Not only is
there a significant amount of money required to buy a car, but it also takes a lot
of time and maintenance to make sure that it runs for years to come. These
vehicles travel on the roads with the confidence they have in the tires which is
moving part of cars attached to the axle. One of the essential parts of a car is the
tyre. Car safety depends a lot on the tyres. Mostly all the car tires life is 2-3
years. So, it’s one of the best businesses in the automobile sector

According to a recent study by the International Energy Agency,

passenger car ownership is expected to grow 7 times for the next 25 years. The
forecast means that car maintenance businesses including tire store franchises
will be in ever-growing demand. The best tyre franchise opportunities in India
offer their franchisees marketing support, established brand name & logo and a
proven business model for success.

MRF is one of the top most brands of tyres in India. While majority of
the percentage of vehicles run on MRF the faith that the brand has built in
millions of people across India is immeasurable. As mentioned earlier, cars
which were considered as a luxury component have now become a necessity of
life.
2. MARKET DEMAND
Being an MRF franchisee has a lot of advantages.The other factor that
would strongly contribute to the success of a Franchise is every man’s dream to
own a car. With so much of scope for the purchase of cars, the scope for tyre
business becomes imminent. When it comes to tyres, not all brands earn the
high levels of faith that MRF has earned over decades now

MRF is so much of an established tyre brand in India that anyone who

becomes a Franchise need not put in even small amounts of effort and time in
any type of branding or marketing activities. Customers automatically ask for
MRF tyres when they go in for new vehicles or service of vehicles. This makes
it viable for the Franchise to sell MRF brand tyres with ease in large volumes.

Be it the long life that its tyres offer to its users or managing to run on
roads that are in pathetic conditions, MRF is the unbeatable leader on the Indian
roads. The brand is such a powerful one that the power of competition is almost
zero when it comes to business and performance.

Having an extremely amazing track record of business and performance

for more than few decades, MRF tyres have been a forerunner in many aspects
to other brand tyres in India. The strengths of the brand speak volumes about
the performance and quality making it a superior brand undoubtedly. This acts
as the selling point for the Franchisees who cannot have an iota of doubt in
succeeding as a MRF Franchise.
3. SPACE REQUIREMENT, COST OF INVESTMENT AND
DOCUMENTATION PROCESS
While the initial investment to obtain a dealership is around 10 Lakhs, 23
Lakhs will be the maximum investment which is more so towards equipment
and machinery cost. MRF recommends a built in area of 370 square meters
which translates to 4000 Square feet of total space.

Official websites of MRF has clearly stated that in order to help their
Franchise succeed extensive trainings and follow up sessions would provided
from time to time. MRF focuses on the Franchise not only during the start up
phase but also guides through the sustenance phase at least till the minimum
breakeven point are achieved.

The Business opportunities page in the MRF official website asks for
important personal and official details of a potential Franchise. If the online
application is shortlisted for further discussions, the candidate who is a potential
Franchise is called for a personal discussion after which the complete process is
taken forward. MRF Franchise can be applied for directly through their contact
office in Chennai also.
4. ABOUT THE PROMOTER
Name :

Sex : Male

Permanent Address : , Punjai Puliampatti,

Sathy Tk, Erode (Dt)-638459.
Nationality : Indian

5. FINANCIAL ASPECTS
(A) FIXED CAPITAL
(i) LAND & BUILDING

1 Covered area Sq.ft. 300

2 Front office Sq.ft. 100

3 Store room Sq.ft. 600

4 Total area Sq.ft. 1000

5 Whether constructed or Rented Rented

6 If Rented, Rental value (per month) Rs. 10,000

(ii) MACHINERY AND EQUIPMENT
Sl.
Description Rate Qty. Value
No.

Tyre removing machine

1. 6,00,000 1 set 6,00,000
with compressor and fittings

Total 6,00,000

(iii) OTHER FIXED ASSETS

Sl.No. Description Qty. Value

1. Electrical fittings - 10,000

2. Office Table with Chair 1 set 15,000

3. Pre operative expenses 15,000

Total 40,000

TOTAL FIXED COST 6,40,000

(B) WORKING CAPITAL (per month)

(i) Staff & Labour (Per Month):

Sl. Rate Amount

Personnel No.
No. (In Rs.) (In Rs.)

1. Supervisor/Proprietor 1 10,000 10,000

2. Skilled Workers 1 8,000 8,000
3. Unskilled Workers 1 7,000 7,000
Total: 25,000
Perquisites @ 20% on the total salary 5,000
Grand Total 30,000

(ii) Raw Material (Per month):

1. Various tyres for Trucks, LCV’s, Cars and Bikes 13,00,000

Total: - 13,00,000

(iii) Utilities: (Per Month)

1. Electricity 4,000
2. Water charges 2,000
Total: - 6,000
(iv) Other Contingent Expense (Per Month):

1. Rent 11,000

2. Postage & Stationery 500

3. Repair and maintenance 2,000

4. Transport /Travelling charges 1,500

5. Telephone Bills 1,000

6. Miscellaneous Expenses 1,000

Total: 18,000

(v) Total Recurring expenses (Per Month):

i. Staff & Labour 30,000

ii. Raw material 13,00,000

iii. Utilities 6,000

iv. Other contingent expenses 18,000

Total: 13,54,000
(C) TOTAL CAPITAL INVESTMENT:

1. Machinery & Equipment 6,40,000

2. Working Capital per month 13,54,000

Total: 19,94,000

(D) MEANS OF FINANCE:

Total Project Cost 19,94,000

Promoter contribution 10,44,000
Finance required from the Bank 9,50,000

6. INCOME ASSESSMENT
(1) Cost of Production (Per Annum)

1. Recurring Expenses 1,62,48,000

2. Depreciation on Machinery @ 10% 60,000

Depreciation on Office Furniture &
3. 3,000
other fixed assets @ 20%
4. Interest on Total Investment @ 12.0% 2,39,280

Total: 1,65,50,280

Total: (Say) 1,65,50,300

(2) Income (per year) by Sales

Purchase
Products Average Margin Value (Rs.)
Value
Various tyres for
Trucks, LCV’s, Cars 1,56,00,000 10% 1,71,60,000
and Bikes

(3) Net Profit (per year)

Sales Value (-) Cost of Production

1,71,60,000 (-) 1,65,50,300 = Rs.6,09,700

(4) Net Profit Ratio:

Net profit X 100 6,09,700 X 100 = 3.55%

Turn Over/Annum 1,71,60,000

(5) Rate of Return on Investment:

(Net Profit/Total Capital Investment)

Annual Profit X 100 6,09,700 X 100 = 30.58%

Total Capital Investment 19,94,000
(6) Break Even Point/Analysis:

Fixed Cost (Per Annum):

1. Rent Rs. 1,32,000

2. Depreciation Rs. 63,000

3. Interest on Capital Investment Rs. 2,39,280

4. 40% of Wages of Staff & Labour Rs. 1,44,000

5. 40% of other contingent expenses Rs. 62,400

Total Fixed Cost: Rs. 6,40,680

Total Fixed Cost: (Say) Rs. 6,40,700

Break Even Point:

Fixed Cost X 100 6,40,700 X 100 = 51.24%

Fixed Cost + Annual Profit 6,40,700 + 6,09,700
7. REPAYMENT SCHEDULE
Repayment of loan Rs.9.50 lakh will be in 5years with 60instalments.
The rate of interest has been calculated @ 12.00% per annum however the rate
of interest may vary while implementing the project.

(Rs. in lakhs)

Total Total
Year Months Principle Instalment Interest
Interest repayment

1 12 1.47 2.53 1.06 1.06 1.47

2 12 1.66 2.53 0.87 1.93 3.13

3 12 1.88 2.53 0.65 2.58 5.01

4 12 2.11 2.53 0.42 3.00 7.12

5 12 2.38 2.53 0.15 3.15 9.50