Automotive Dealership Report

CHANDABHOY & JASSOOBHOY
CHARTERED ACCOUNTANTS
PARSOLI MOTOR WORKS PRIVATE LIMITED

MANAGEMENT AUDIT REPORT FOR THE PERIOD
TO
1.
1ST OCTOBER, 2013
31ST MARCH, 2014
COMPLIANCE WITH BMW, PARSOLI AND STATUTORY

NORMS
A.
Demo Cars :
As per RTO rules, no car should be delivered before CRTEM (Certificate of Temporary
Registration) passing is done from RTO. A temporary number has to be obtained from
RTO which is valid only for one month. If a car is delivered before CRTEM passing, and
the car meets with an accident or is damaged/stolen post delivery, the liability for loss of
the same has to be borne by Parsoli. If the customer is not ready to wait for delivery till
the CRTEM passing is done, a liability /indemnity form should be signed by the
customer to the effect that the customer shall be liable for any mishap occurring after
delivery till the CRTEM passing is done.
We observed that in sporadic cases, cars had been delivered during our audit period
without CRTEM passing at Ahmedabad, Surat and Rajkot divisions. We believe that the
practice of delivery of car before CRTEM passing should be stopped completely to avoid
the possibility of any unforeseen loss caused to Parsoli due to any mishap.
When a car is taken for test drive, a liability form should be signed by the potential
customer taking the test drive to the effect that he shall be liable for any accident/
damage done to the demo car or for injury to any person during the test drive. This form
should bear details like the customers driving license number, his contact number, his
address, the time and date of test drive, starting and ending kilometers etc. and should be
duly signed by the customer. Although Parsoli has commenced obtaining liability form
at the time of test drive, we observed the following deficiencies in the same:
Page 1 of 43

Ahmedabad Division :
We observed that the practice of signing of liability form has not been followed in
several cases. However from 23rd June, 2014 the new Enquiry Tracking Form and
Test drive feedback form cum liability form has been put into practice. After the
sales consultant submits this form to the reception, Ms. Nikita and Ms. Richa
Joseph checks the form regarding its completeness. New liability form bears
serial number and unique opportunity number. We further observed that the copy
of the driving licence of the participants in most of the cases have been kept on
record.
Overall, we feel that there is a significant improvement in liability form
maintenance and a proper document control is being maintained.
Surat Division:
Test Drive Feedback form cum liability form at Surat are generally completely
filled up. We further observed that copy of driving license of participants is kept
on record in majority of the cases. However, in some cases, the customers name
mentioned on test drive feedback form does not match with the name in driving
license.
Rajkot Division:
As the operationalisation of the new showroom is under process, we shall check

this area once showroom becomes fully operational.
We have noticed that many times employees uses demo car or loaner car within
Ahmedabad or out of Ahmedabad for personal or leisure visits, which needs to be
controlled on a priority basis.
Ahmedabad Division:
The logbooks had not been adequately filled up. This needs to be addressed on a priority
basis.
On our test check of the logbook of various demo cars, we found the following lapses:
Sr
Demo
car Starting
Ending
Total Kms Dates From which
Page 2 of 43
no

No
model no
X120d
X 247
line
Total Kms
520d White 102
233
359
382
408
1121
1136
1374
2202
3181
3252
3328
3664
4900
4970
Total Kms
Total of
[1 to 2] kms
Kms [A]
Kms [B]
558
214
345
369
391
466
1128
1141
2170
2245
3191
3265
3374
3739
4961
4981
without
record of demo car usage
any record found
[B A]]
311
01/02/2014 to 04/02/2014
311
112
112
10
9
58
7
5
796
43
10
13
46
75
61
11
1368
1679
22/10/2013
24/10/2013
25/10/2013
26/10/2013
27/10/2013
31/10/2013
01/11/2013
04/11/2013
22/11/2013
27/11/2013
29/11/2013
02/12/2013
04/12/2013
09/12/2013
10/12/2013
Further we observed that as logbook is filled up by security personnel from gate pass,
the signature of the user and the official person was not found in all the logbooks.
From the above table, it is clear that logbook maintenance continues to be a very
weak area.
Surat Division:
Sr
No
Demo car Starting

model no
Kms [A]
Ending
Kms [B]
118d
Total Kms
10062
10055
Total Kms Dates on which no record of

without
demo car usage found
any record
[B A]]
7
12/04/2014
7
We observed that in majority of the cases, the signature of user in the log book is
missing. Further we have observed that demo cars are extensively used for personal as
well as official work. In logbook the purpose of visit has not been mentioned. Only
customer meet is being mentioned and that too without mentioning the customer name.
Page 3 of 43

Usage of demo car other than demo purpose needs to be strictly avoided. We appreciate
Surat division for maintaining logbooks inside the demo cars.
As per BMW standards, sales consultant should drive for all test drives and a test drive in
general should not exceed 40 minutes. Moreover, a route map should be drawn for test
drives and any deviation from the route map should be approved by GM.
As informed to us, BMW has instructed Parsoli that driver may not accompany a sales
consultant on a test drive. Logbooks are often inadequately filled up so duration of the
test drive sometimes cannot be known. No route map is specified and hence any
deviation from the same is not reported or approved. Test drive feedback form has been
filled up at the time of test drive and maintained at the reception. To resolve this core
issue having sales potentiality, we recommend the following actions:
A brief route map be drawn up for test drives.
Deviation from the same be pre-approved by GM.
Duration of test drives be entered in log book
The sales consultant must fill all the details in the log book
Surat Division :
As informed to us, BMW has instructed Parsoli that driver may not accompany a sales
consultant on a test drive. Also there are no adequate drivers to accompany each and
every test drive with sales consultant. However it is ensured that in test drives outside
Surat city, the driver accompanies the sales consultant. Now route map has been
specified and copy of the same has been kept in all the demo cars. Test drive is being
given to customers as per specified route map only. This is a step in the right direction.
Verification of physical condition of the demo car:
Page 4 of 43

Many times in the past, instances have happened where the car had got damaged and the
person responsible could not be identified and in cases where identified, no actions for
the same had been taken. A formal procedure at the time of test drive has been laid down
to ensure the physical condition of the cars daily. As per the set procedure, every sales
consultant has to fill up the condition of the demo car at the time of test drive in Test
drive checklist and feedback form. In case of any negative reporting, the CRM has to
inform Mr. Habib, who shall take requisite action.
Surat Division :
Formal procedure named Demo car checklist has been laid down from 1st July, 2013 to
ensure the physical condition of the cars. Ms. Nainita Patel daily checks various aspects
of demo cars such as dents, scratches, tyre cuts, overall cleanliness, fuel, CD, magazines,
routemap, fragrance etc. and maintain physical copy of demo car checklist. This is once
again a step in the right direction.
We observed significant lacunas in the procedure of test drives and maintenance of gate
passes as under :
Parsoli follows the system of maintenance of test drive feedback form.
A system of gate pass for demo cars has been put into practice at the showroom
basement as per which no car is allowed to go out without a gate pass. Gate pass for the
period under audit is not available / traceable for verification. Our certain specific
observations from April to June, 2014 regarding this system are as under:
Sr.
No
Date of
Gatepass /
Gatepass
Sr. No.
Observations
17/04/2014
13689
BMW 3 series GT demo car used by Mr. Sadikbhai from Ahmedabad

to Baroda. The purpose of usage of demo car was not mentioned.
17/04/2014
13690
BMW 320d white demo car used by Mr. Ajitbhai. The purpose of
usage of demo car was not mentioned.
18/04/2014
19/04/2014
BMW 3 series GT demo car used for test drive but customers name
is not mentioned. Two dates mentioned on the gate pass.
Page 5 of 43

12501
4
19/04/2014
12512
BMW demo car used for test drive but customers name is not
mentioned.
19/04/2014
12514
BMW demo car used for test drive by Ms. Richa Shah. Time
mentioned is 9.40 to 9.50 but kms of the same 7881 to 9784.
19/04/2014
12522
BMW X3 demo car used by Mr Jahidbhai to Rajkot. Purpose and

time in and ending kms are not mentioned.
21/04/2014
12531
Mr Rustambhai used X1 demo car at Baroda but the purpose of the

same is not mentioned.
21/04/2014
12534
BMW 320d demo car used at Baroda for test drive but customers
name is not mentioned.
09/05/2014
15035
BMW X3 demo car used at Nadiad but the purpose is not mentioned.
10
18/06/2014
16672
BMW 118d car used for test drive but customers details are not
mentioned.
11
19/06/2014
16694
BMW 530d used by Mr Farid Khan but

mentioned.
12
19/06/2014
16805
BMW 3 series GT used by Mr Sirin Panchal. The customers details

and time in details are not mentioned.
time in detail are not
In majority of the gate passes, customers detail has not been mentioned.
Our suggestion of using serially numbered gatepass has been put into practice.
However, instead of using month to month serial numbered gate pass booklets,
random gate pass books are being used.
From the gate pass / logbook of demo cars maintained by security at showroom
basement, we observed that demo cars had been sent for test drive out of Ahmedabad
at the following centres:
Place
Model no.
Dates on which test drive given
Baroda
X3
19/04/2014
5 series
19/04/2014
320d
21/04/2014, 21/04/2014
3 series GT
20/05/2014
Page 6 of 43

118d
02/06/2014
3 series GT
18/04/2014
X3
02/06/2014
118d
18/06/2014
520d
16/05/2014
730d
13/06/2014
118d
20/03/2014
X1
29/05/2014, 03/06/2014
Bharuch
X1
29/05/2014
Patan
X3
19/05/2014
Rajkot
Gandhinagar
Palanpur
Surendranagar 530d
16/04/2014
Further on random verification of demo car on 21st June, 2014, we observed that none of
the demo cars contained CD and magazines as required by BMW.
X1 demo car had gone for test drive to Palanpur 2 times i.e. on 29 th May, 2014 and 3rd
June, 2014. The demo car has a maximum life of 10000 kms. Parsoli has sold X1 demo
car to Mr. Ritesh Rameshlal Lulla at a loss of Rs 7.12 lakhs which works out to be Rs
71.20 per km. in depreciation cost alone. The aggregate kms. run by X1 demo car for
Palanpur visits during the month of May & June, 2014 comes to 800 kms. Total cost of
using the demo car during one month comes to Rs 56,960 (800 kms. x Rs 71.20) in
depreciation cost alone and that too excluding fuel, employees and maintenance costs,
which sounds prohibitively high.
We feel that a proper planning of usage of demo car can always be done, which can work
as a significant cost reduction tool.
Surat Division :
A system of gate pass for demo cars has been put into practice at the showroom with
security as per which no car is allowed to go out without a gate pass.
In majority of the gate passes, the model of the car used for test drive as well as the
customers name, address, time in and time out etc. has not been mentioned. We suggest
that gate pass details should be properly filled to know the purpose and usage of demo
cars and other vehicles.
Page 7 of 43

From the gate pass / logbook of demo cars maintained by security at showroom, we
observed that demo cars had been sent for test drive out of Surat at the following centres:
Place
Model no.
Dates on which test drive given
Bardoli
X1 -20d
28/03/2014
Bharuch
520d
01/04/2014
Vapi
520d
03/04/2014
Gate pass do not mention the place of visit in majority of the cases. As a result, it is not
possible to trace the exact location where demo cars have been sent out of Surat.
In order to achieve cost reduction, we suggest the following:
When a telephonic inquiry is received from a customer located out of Ahmedabad or

Surat, proper details about the customer should be tactfully obtained. An effort
should be made to make him visit the showroom so that he can have a look at all
possible models and their features and he can be given a test-drive on his chosen
model at the showroom itself.
If the customer is reluctant to come down to the showroom for a test drive and his
economic bonafides cannot be clearly established, the sales consultant should visit
him in a regular office car with all the necessary brochures and pricelist, assess his
genuineness and fix up a time for test drive.
The consultant should try to fix up time for test drives with various potential
customers residing in nearby areas on the same day.
A proper record should be kept by each sales consultant about the inquiries
generated, the response received from the customers, the schedule for test drives etc.
Moreover all sales consultants should co-ordinate the inquiries amongst themselves,
so that multiple inquiries of a particular area be covered by one sales consultant.
We suggest that usage of demo car out of Ahmedabad and Surat be monitored
strictly and record of subsequent conversion into sales of such out of city inquiries be
maintained.
Page 8 of 43

We have noted that the fuel cost, which is mainly for demo cars on an average is about
Rs. 4,44,000 per month. The detailed month-wise break-up of fuel costs of demo cars is
as under:
Fuel cost (Rs)

Month
Ahmedabad Ahmedabad Surat
Showroom
Workshop
Division
Division
Division
October, 2013
1,91,119
6,030
1,47,853
November, 2013
1,16,297
1,83,801
1,55,974
December, 2013
2,35,616
77,112
75,566
January, 2014
1,95,368
90,544
90,013
February, 2014
1,71,294
1,08,993
58,023
March, 2014
2,41,680
92,106
2,63,597
Total 11,51,374
5,58,586
7,91,026
Rajkot
Division
33,305
17,093
26,102
23,000
21,920
40,105
1,61,525
Total Fuel
cost (Rs)
3,78,307
4,73,165
4,14,396
3,98,925
3,60,230
6,37,488
26,62,511
We feel that Parsoli can achieve a significant reduction in fuel costs if certain
procedural changes, as recommended in the earlier portion of our report, are worked
out and operationalised. We suggest that efficient fuel policy be implemented for
monitoring usage of fuel for demo cars.
B.
Loaner Cars
Loaner car is given to customer in the event when customers car comes at workshop
for service or repairs and the customer demands a temporary car against the car which
is being serviced / repaired.
Page 9 of 43

The current declaration form is inadequate in respect of details mentioned therein. We

suggest that when a loaner car is given to a customer, a broad declaration form
containing details of name, model of car, reasons, date, kms., physical condition of the
car, legal liability in case any accident occurred during the period the car is with
customer etc. should be duly signed by the customer. It has to be clearly mentioned that
if any damage is done or accident occurred to the car while in possession of the
customer, the customer has to indemnify and reimburse to Parsoli any monetary loss or
legal liability.
A new revised format of declaration form as suggested by us has been implemented
from 3rd June, 2013. We also suggest that log books be maintained for loaner cars,
primarily for knowing whether loaner car has been used for any other purpose. There is
an improvement in maintaining of loaner car register and declaration form as compared
to our earlier audit period.
C. Display Cars
The BMW norms require that each display car should have the BMW magazine, CD and
specification sheet.
It was observed on 23rd June, 2014 that out of 10 display cars checked, only 5 display cars
contained CD and magazines.
Surat Division :
It was observed on 11th July, 2014 that all the display cars contained the CD, magazines
and specification sheet except in 2 demo cars namely X5 and 320d where magazines were
not found.
D. Delivery of cars :
Page 10 of 43

Customers who purchase cars in the premium segment have a rightful expectation that
the experience should be special and unforgettable. When a car is brought from the
workshop for delivery, Ms. Nikita and concern sales consultant have the responsibility
to handle the delivery process and ensure that the car is delivered in a satisfactory
condition to the customer. The car brought is generally not properly cleaned from within
as well as outside. Though there are five cleaners at showroom who generally cleans the
car before the delivery of the car, they dont have the proper equipments to clean the car.
For example, if car is soiled from inside, then the car should be properly vacummised
and polished before being delivered. However, there is no vacuum cleaner at the
showroom. This is necessary to maintain the brand image in the perception of the
customers.
BMW has suggested the following delivery initiatives to improve the overall delivery
experience of the customers:
The Delivery handover area should be carefully planned as the customer will spend
at least 1 hour there. It should have:
-
A lounge area with a coffee table or table and chairs
Prepared lighting to make the car look at its best
Soft music
A car cover for a formal reveal
A play area for children should be nearby so that customers can listen to all
the information without distraction
Clear separation from the rest of the showroom (if possible)
Lay down a red carpet (runner) from the seating area to the car (red carpet
treatment it really works)
A Music selection C.D. rack to be installed in every dealership for customers to

choose a new CD upon delivery.
All deliveries to be photographed camera to be on a tripod for effect.
Print photos straight away and give to customer in a frame at delivery!
All customers to be emailed copies of delivery photos.
Dealership to keep record of deliveries photos for end of year calendars.
A BMW key ring to be provided with every delivery.
Page 11 of 43

An announcement board (similar to ones used in hotels) can be placed at the

entrance to the dealership (or at the delivery area) with a note of congratulations for
people taking delivery on that day.
Owner handbooks and keys to be presented to customers from a special tray or box.
Consider a waiter service during delivery serving refreshments.
Use a genuine BMW pen for all documents signing and let the customer keep it.
Remember to schedule delivery with a representative from the Service Department

every customer should be allocated their own personal service contact (Service
Advisor) who they can contact for future needs. Make sure they get a business
card.
Consider making up a dealership welcome pack similar to the ones in hotels a

dealership folder which shows all the features and benefits of the dealership with
stationery inside (notebook, writing paper, pen and envelopes). It is an inexpensive
way to spread the good news about your dealership to the friends of the customer as
they will use the contents to contact friends and relatives.
Customer loyalty is earned after the sale and starting with the delivery experience. It
lets the customer know that they are still important to you after the deal has been
done. It is a major event in the customers life and one which they are sure to talk
about make sure that it is an experience to boast about. It is also an investment in
the dealerships reputation.
Parsoli should think about some special / innovative system as suggested above for
delivery process.
There is a system of monitoring daily delivery schedule and a system that CRM be
informed about the delivery schedule at least 24 hours in advance. However we
observed that in many delivery cases, CRM was informed about the delivery schedule at
a very short notice. So we feel that there is scope of improvement in delivery process
system.
Surat Division :
There is one personnel Ms. Nainita Patel designated at the showroom to ensure that the
car is delivered in a satisfactory condition to the customers. Here, the cars are being
delivered with ribbon at front and at doors and efforts are made to make it a special
occasion for the customer. We have been informed that there is no dissatisfaction
amongst the customers regarding delivery process of cars at Surat.
Page 12 of 43

E. Security at the showroom :

There were a few anomalies observed in the security measures at the showroom. Our
observations regarding the same are as under:
Ahmedabad Division:
o The demo car keys are being kept by the security guard at the entrance. The
showroom car and stock car keys are kept at the reception.
o The sprinkler system has been installed at the showroom. A smoke alarm and fire
alarm has been installed.
Surat Division :
o The demo car keys are being kept at the reception and other set with Mr. Dev
Banerjee. The showroom car and stock car keys are kept with receptionist and
Mr. Dev Banerjee.
o There is fire extinguisher with fire alarm installed at the showroom. A smoke
alarm has also been installed.
F. Security at the workshop :

We found a few lapses in the workshop security. Our observations and suggestions
regarding the same are as under:
o The main light of the entrance gate, at the back side and around the workshop
was off during the night. During the test check verification of CCTVs back up
data, we observed that during night-time, the clarity of recordings of CCTV
camera when lights were off is very poor.
Page 13 of 43

o Burglar alarms are not installed at the workshop. We suggest that efficient burglar
alarm system be installed and activated at an early date.
o There are speakers installed on the compound wall of the building but no public
address system is installed. A public address system should be made available
with the CRM so that informing any staff member or passing any instructions
becomes speedier, easier and time-efficient.
Surat Division :
o Burglar alarms are not installed at the workshop. We suggest that efficient burglar
alarm system be installed and activated at an early date.
o There is effective CCTVs in workshop division. But there is only one CCTV in
the stores and spares section. We suggest that another CCTV be fitted in the
service area as well as stores and spares section so that total overview on the
happenings at the workshop can be monitored. It would also serve as an in-built
check on the possible pilferage or work inefficiency of the employees or theft.
Recently, a second CCTV has been installed in the parts area as per our
suggestion.
o The back-up of CCTV data is being stored upto 14 days only. We suggest that it
should be stored for at least 6 months.
G. Reception and Customer welcome :

o After appointment of Ms. Kiran and Ms. Heena as receptionist and greeter, we have
observed that the front desk is normally attended by them most of the times. But we
have also observed that both the persons occasionally comes late as per the punching
report.
Surat Division:
Page 14 of 43

o We did not observe any material discrepancies in reception and customer

welcome at Surat division.
H. Lifestyle Products :
The showroom displays a wide range of lifestyle products that are sold, given free
to customers or used as free gifts at promotional events. The lifestyle products as well
as promotional items including flyers and brochures have to be purchased from BMW.
Often certain items like calendars, diaries, books etc. are sent directly by BMW and
billed to Parsoli. No proper records are maintained for the promotional items that are
distributed, gifted or given away to customers.
There were certain items like BMW brochures, covers, printing papers, t-shirts,
magnet box, delivery bags, flyers, welcome kits, etc of lifestyle and promotional items
which are physically available at the showroom basement without having any record.
As informed to us, since most of these items are only for office use, no records have
been maintained. At the time of shifting of showroom to new premises, these items are
disposed off or scrapped.
The workshop has sent following accessories items to showroom on the request of
Mr. Akshat Shukla. These items were neither invoiced out nor physically found in the
showroom.
Sr.
No
1
2
3
4
5
6
Item No
Item Name
Qty
65122160229
65122160479
51952183854
51952293656
51952183853
51952183855
DVD system
Headphone
Coat hanger
Holder i-Pad
Folding table
Hook
Total
1
1
1
1
1
3
Total
(Rs)
32479
4435
6013
13662
9728
6555
72872
The workshop had sent these items vide material gate pass number 1211 dated 8 th May,
2012. The above mentioned accessories items have been missing since 8th May, 2012.
Till date, these items have been reflected in accessories stock in DMS. This is a pretty
serious lapse designating weak internal control system. Proper responsibility of this
incident needs to be fixed after due investigation.
Page 15 of 43

Even after two years, these items have not been traced and are still reflected in DMS.
However as per a decision taken recently, these items are being stocked out from the
DMS system.
Apart from the above, the following items of lifestyle or accessories have been
missing since a long period of time :
Sr.
No
1
2
3
4
5
6
7
8
9
10
Item No
Item Name
Qty
83122298516
51952183852
71100415035
51472336795
51472240910
51952183852
83122298516
80142166743
80262220013
80330393066
Starter kit
Base support
Tire mobility
Floor mats
All weather
Base support
Starter kit
T-shirt
Watch
Golf ball
Total
5
2
1
1
1
2
4
1
1
4
Total
(Rs)
10365
3200
10177
2313
4359
3200
8293
2291
21480
552
66230
However as per a recent decision taken, these items are being stocked out from the
DMS system.
Ms. Feny is maintaining lifestyle stock register of Ahmedabad showroom division

in excel sheet. She has been assigned the sole duty of managing lifestyle related items.
I.
Inquiry capturing and follow-up :

Month
October, 2013
November, 2013
December, 2013
January, 2014
No. of inquiries No of cars sold

Inquiries
captured at the as per sales register* Conversion
reception*
Sales ratio
(%)
224
39
17.41
163
11
6.75
227
27
11.89
143
27
18.88
Page 16 of 43
into

February, 2014
March, 2014
Total
192
187
1136
12
36
152
6.25
19.25
13.38
* Including Baroda inquiries and sales
Rajkot Division :
Month
October, 2013
November, 2013
December, 2013
January, 2014
February, 2014
March, 2014
Total
No.
of
inquiries
captured at
the reception
43
14
38
12
10
29
146
No of cars sold
as per sales register
6
4
1
13
3
9
36
Inquiries
Conversion into
Sales ratio
(%)
13.95
28.57
2.63
108.33
30.00
31.03
24.66
Surat Division :
Month
No. of inquiries No of cars sold

Inquiries
captured at the as
per
sales Conversion into
reception
register
Sales ratio
(%)
October, 2013
86
27
31.40
November, 2013 47
12
25.53
December, 2013 105
4
3.81
January, 2014
81
10
12.35
February, 2014
84
7
8.33
March, 2014
120
28
23.33
Total
523
88
16.83
Parsoli has started the practice of filing of Enquiry Tracking Form for gathering
various source of inquiry. Based on that sale consultants were asked to follow
up with the customers. This is a step in the right direction.
Ideal inquiries conversion to sales ratio is 10% as per BMW standard. Inquiries
conversion into sales ratio at Ahmedabad division is 13%, at Rajkot division it
is 25% and at Surat division it is 17%.
Page 17 of 43

We still feel that conversion ratio of potential inquiries into sales can be further
improved by rigorous follow up of the inquiries generated by the sales team.
J.
Employees leave record analysis:

SHOWROOM
On verification of muster data for the month of March, 2014 on test check
basis, we observed the following :
Sr.
no
Employee's name
No of days
punched
late from
muster
punch
Division
No of days
not at all
punched
ANUP SINHA *
2
3
FENY SAFI
KIRAN KAUR BUNAIT
6
6
0
0
HEENA VASHIST
RICHA JOSEPH
Ahmedaba
d
Ahmedaba
d
Ahmedaba
d
Ahmedaba
d
Ahmedaba
d
* Outgoing time is not at all punched

HR Policy suggests that if an employee comes late i.e. after 10.00 a.m. but before
12.00 noon, then it would be counted as late mark. If an employee comes late for
3 days in a month, then an aggregate half day salary deduction would be made. If
an employee comes late for 6 days in a month, then an aggregate full day salary
deduction would be made. This means that if an employee comes late for 5 days
in a month, then also only half day salary deduction would be made. Such relaxed
provisions may give employees cushion to come late. As a result, certain
employees are regularly irregular in their reporting timings.
We have observed that employees are not being granted set off of leave against
extra working day or working on holiday or Sunday for official purpose We
suggest that policy of granting set off against leave balance for working on
Sunday or holiday for official work can be framed after due discussion. We
Page 18 of 43

suggest that policy of half day should also be framed regarding early outgoing
punching say before 3.00 pm.
We suggest that HR policy be reviewed to rectify the above deficiencies.
WORKSHOP
On verification of muster data for the month of March, 2014 on test check basis,
we observed the following :
Sr.
no
Employee's
name
No of days
punched late
from muster
punch
No of days
not at all
punched
Division
1
2
FAIZAL MUNSHI*
PRASHANT RAUT
0
8
7
0
SHRENIKA
FRANCIS
SANGITA RAHA
Ahmedaba
d
Ahmedaba
d
Surat
Surat
* Outgoing time is not punched regularly on daily basis

HR Policy suggests that if an employee comes late i.e. after 9.30 a.m. but before
12 noon, then it would be counted as late mark. If an employee comes late for 3
days in a month, then an aggregate half day salary deduction would be made. If
an employee comes late for 6 days in a month, then an aggregate full day salary
deduction would be made. This means that if an employee comes late for 5 days
in a month, then also only half day salary deduction would be made. Such relaxed
provisions give employees cushion to come late.
We suggest that HR policy be reviewed to rectify the above deficiencies and

punching be made mandatory for all the employees irrespective of their
designation.
K. Employees attire and working habits :
Many times we observe that some employees come without uniform. Uniform
is mandatory to wear except on some specified occasion.
Page 19 of 43

L.
At the old showroom, a register was being maintained on the reception wherein
the staff members were required to make entries before leaving the office
premises (for personal or official work) and subsequently on return. At the new
showroom, no such register is being maintained.
Employees performance evaluation and incentive :
Current criterion for Incentive at showroom

Incentive to back office and administrative staff of showroom is 2% of total sales
allowance received from BMW India during October, 2013 to March, 2014.
Incentive to Mr Anup Sinha - Business Head is 1% of total sales allowance received
from BMW India during October, 2013 to March, 2014.
Incentive to sales staff is as per car sold and target achieved. The latest structure of
incentive is as under :
Incentive Eligible Amount for
Minimum 2 Cars per Month
No.
No. of
Per
of
Per
cars
car
cars
car
0-2
The
as
Nil
3 to
5
6 to 9
7500
10 +
Ref - Email of Akshat
dated 03.05.2013
5000
1000
0
CBU
2000
0
incentive to sales staff is mandatory

per BMW norms.
Incentive on finance at Rs. 1500 per case to two employees and Rs 1000 to one
employee and renewal of insurance and secure also at Rs. 500 and Rs. 500 per case
respectively thereof to Ms. Feny Safi and Mr. Shyam Patel in the ratio of 30:70.
Page 20 of 43

Incentive on sale of lifestyle items at the rate of 7.5% of total sales at Ahmedabad
during October, 2013 to March, 2014 to Ms. Feny and at the same rate to Ms. Nainita
Patel at Surat.
Our observations on the same are as under:

Currently, there is no proper and effective objective system of performance
evaluation of the staff in place. Non performing staff gets the incentive sometimes
more than performing staff. We suggest that proper incentive policy should be framed
to avoid dissatisfaction among the staff.
Incentive on sale of lifestyle product at rate of 7.5% of sales is paid, though Ms. Feny
and Ms. Nainita Patel at Surat do not make any extra efforts to sell the same.
On an average, Parsoli pays incentive at 65% of six months gross salary to
Ahmedabad showroom employees, which, we feel, is at a high level.
The incentive sharing policy is under review at present.
Current criterion for Incentive at workshop

General incentive to all staff of workshop is 1 % of total parts turnover and of labour
income excluding all taxes.
Incentive of team leaders, service advisors, technicians, denters and painters is based
on FRU target achievement. Minimum 1000 FRU is to be done in a month to qualify
for incentive. For every additional 50 FRU over and above 1000 FRU, Rs 1000
incentive is distributed among all the team members in a proportionate manner as
decided by the management.
Administrative, back office and support staff is given incentive on a half yearly basis.
Our observations on the same are as under:
Page 21 of 43

We suggest that the top management should prepare KRA (Key Responsibilities
Areas) of each employee and performance should be assessed based on this KRAs on
a half yearly basis. It will create healthy competition amongst the employees to
perform better. It would also help the Company in retaining efficient employees.
On an average, Parsoli pays incentive at 55% of six months gross salary to

Ahmedabad workshop employees, which, we feel, is at a high level.
Average FRU achieved by workshop division in the last six months ended March,
2014 was more than 2100 FRU. We suggest that FRU target at Ahmedabad
Workshop should be revised upward to 1500 from 1000 FRU due to increase of work
at workshop.
The incentive sharing policy is under review at present.
M. Compliance with various after sale BMW standards :
As per BMW report for half year ended as on 31st March, 2014, the various
performance targets and achievements are as under :
Performance / October, 2013
target
parameters
Achieve Qualified
ment
incentive
(%)
(%)
Parts purchase 112
100
performance
A&L purchase 124
198
performance
Warranty
3
100
rejection rate
compliance
Training
100
100
Compliance
rate
November, 2013
December, 2013
Achieve
ment (%)
Achieve
ment (%)
111
Qualified
incentive
(%)
100
113
Qualified
incentive
(%)
100
125
199
127
200
2.8
100
2.5
100
100
100
100
100
Page 22 of 43

BSI
Campaign
completion
rate
Complaints
Weighted
qualified
incentive
42
85.7
100
80
41
84
100
54
37
86.8
100
98
0.1
100
119
0.1
100
118
0.2
100
120
Performance / January, 2014

target
parameters
Achieve Qualified
ment
incentive
(%)
(%)
Parts purchase 97
77
performance
A&L purchase 932
200
performance
Warranty
1.4
100
rejection rate
compliance
Training
100
100
Compliance
rate
BSI
233
100
Campaign
87.9
100
completion
rate
Complaints
0.3
100
Weighted
113
qualified
incentive
February, 2014
March, 2014
Achieve
ment (%)
Achieve
ment (%)
105
Qualified
incentive
(%)
100
96
Qualified
incentive
(%)
66
717
200
259
200
1.3
100
1.6
100
100
100
100
100
105
86.6
100
94
62
87.3
100
100
0.2
100
120
0.2
100
110
From the above, we can observe that all the performance parameters except
campaign completion rate has been fully achieved. Further, it can be noticed that
Parsoli has over achieved in case of parts purchase performance and A&L
purchase performance. However, this over achievement has resulted in
overstocking of parts at workshop which we have pointed out in subsequent
portion of our report.
Page 23 of 43

The campaign completion rate has not been achieved as targeted in the month of
October, November, December and February. Due emphasis needs to be given for
achieving campaign completion target.
Page 24 of 43

2.
MARKETING AND ADVERTISEMENT :

Enquiries generated are being entered in to CRM dynamic portal Lead Management
as provided by the BMW. Each sales consultant has been provided with a separate
login id and password on this portal. Sales consultant needs to entered daily inquiry
into this portal and portal will remind him about daily due follow up and status of
inquiry. CRM has been provided with master login id and password wherein anyone
can look into overall Ahmedabad and Surat sales consultants inquiries and follow
ups.
New sales consultant-wise report containing enquiries, test drives, booking, invoice,
delivery, lost and forecast details has been prepared and maintained from January,
2014 onwards by CRM department. Sales consultant-wise assignment of inquiries and
subsequent conversion of inquiry into sales is given in Annexure -1
Month
Division
January, 2014
February, 2014
March, 2014
Inquiries to Test
drive ratio (Ideal
80%)
Ahmedabad Surat
78%
72%
81%
82%
85%
88%
Inquiries
ratio
to
Ahmedabad
19%
8%
9%
sales Test drive to Sales

ratio (Ideal 20%)
Surat
14%
14%
12%
Ahmedabad
25%
9%
11%
Surat
20%
17%
14%
We observed that on an average Parsoli achieve inquiries to test drive ideal ratio but
fall short for test drive to sales ratio. Thus, there is a wide scope of improvement in
this area.
We observe that at Parsoli only walk in, telephonic and lead provided by BMW is
entered in to DMS inquiry portal. As per a system recently put in place, even
potential inquiries generated during the events held by Parsoli are entered in to
DMS portal and follow up has been done by the sales team.
As a part of recently commenced system, for every advertisement campaign done, a

systematic database in excel sheet is being prepared by the sales consultant and
provided to CRM. CRM enters the filtered inquiries into DMS and follow up is
being done by the sales team. This is a vast improvement from the previously
followed procedures. We suggest that there should be a system in place to ensure
Page 25 of 43

that the next campaign is based on the feedback received from the previous
campaign.
The detail of marketing activities carried during the quarter is as under :

1. Marketing activities during the month of October, 2013
Nature of marketing activities
Advertisements in print media

Total Inquiries generated
Events
1. Mobile Showroom at Baroda
Actual
expenditure
incurred as
per accounts
Ahmedabad
Rs 41,77,241
Actual
expenditure
incurred
as
per accounts
Surat
Rs 1,56,667
Actual
expenditure
incurred as
per accounts
Rajkot
Rs 3,88,240
224
27
43
Rs 9,14,265
2. BMW M Performance event Rs.4,31,078

and 5 series launch event
Rs 76,031
Rs 2,32,698
Rs 3,88,240
Total inquiries generated

Total Rs 55,22,584
2. Marketing activities during the month of November, 2013


Total Inquiries generated
Events
1. BMW 3 series event at GMDC
2. Event at Reliance
Jamnagar
camp
Actual
expenditure
incurred as
per accounts
Ahmedabad
Rs 17,63,314
Actual
expenditure
incurred
as
per accounts
Surat
Rs Nil
Actual
expenditure
incurred as
per accounts
Rajkot
Rs 1,56,000
163
12
14
Rs 1,26,150
Total Rs 18,89,464
Page 26 of 43
Rs Nil
Rs 5,000
Rs 1,61,000

3. Marketing activities during the month of December, 2013


Events
1. BMW car display at Baroda
Actual
expenditure
incurred as
per accounts
Ahmedabad
Rs 26,16,589
Actual
expenditure
incurred
as
per accounts
Surat
Rs Nil
Actual
expenditure
incurred as
per accounts
Rajkot
Rs 1,56,000
227
38
Rs 1,41,760

Total Rs 27,58,349
Rs Nil
Rs 1,56,000
4. Marketing activities during the month of January, 2014

Actual
expenditure
incurred as
per accounts
Ahmedabad
Rs 26,23,584

143
Events
1. BMW Event at Orthodontic Rs 1,00,000
Conference
Actual
expenditure
incurred
as
per accounts
Surat
Rs 21,551
Actual
expenditure
incurred as
per accounts
Rajkot
Rs 1,71,120
10
12
-

Total Rs 27,23,584
Rs 21,551
5. Marketing activities during the month of February, 2014
Page 27 of 43
Rs 1,71,120

Actual
expenditure
incurred as
per accounts
Ahmedabad
Rs 34,41,508

192
Total Rs 34,41,508
Actual
expenditure
incurred
as
per accounts
Surat
Rs 12,600
Actual
expenditure
incurred as
per accounts
Rajkot
Rs 1,01,000
7
Rs 12,600
10
Rs 1,01,000
6. Marketing activities during the month of March, 2014


Events
1. BMW
Ummat
event
Sabarmati Riverfront
Actual
expenditure
incurred as
per accounts
Ahmedabad
Rs 12,98,124
Actual
expenditure
incurred
as
per accounts
Surat
Rs 2,520
Actual
expenditure
incurred as
per accounts
Rajkot
Rs 1,01,000
187
28
29
at Rs 12,36,789
2. Doctors Event with IMA
Rs 15,000
3. BMW Car display at Infocity, Rs 1,52,187

Gandhinagar
4. BMW car display at Aakash Rs 1,61,850
Party Plot Ahmedabad
5. BMW 3 Series GT launch event
6. BMW X5 launch event
Rs 3,65,628
Rs 1,33,760
7. Event at Morbi
8. Event at HDFC Bank at Vapi
Rs 5,947
Rs 15,000
Rs 8,467
Rs 1,16,000

Total Rs 33,63,338
Page 28 of 43

The total number of cars sold during the month of February, 2014 is 12, whereas
the total inquiries generated as per daily inquiry sheet for February, 2014 is 192 at
Ahmedabad division. It translates to 6% sales achieved against inquiries generated.
We once again reiterate that proper follow up of inquiry captured needs to be done.
The comparative figures of actual marketing spending are as under :
Division
1.4.2013 to 30.9.2013
Advertisement Various
in print media events
Ahmedabad 107.83
13.82
Surat
9.57
6.47
Rajkot
2.88
10.64
Total
120.28
30.93
Total
121.65
16.04
13.52
151.21
(Rs in lakhs)
1.10.2013 to 31.3.2014
Total
Advertisement Various
in print media events
159.20
37.78
196.98
1.93
0.82
2.75
10.73
0.20
10.93
171.86
38.80
210.66
For this huge sum spent, there should be material analysis done regarding the
mediawise business generated from these activities, future viability of similar
events, followup of inquiries generated etc. We believe that marketing expenditure
should be aimed at increasing the business and not merely meeting up of BMWs
marketing expenditure norms.
The budgeted marketing expenditure for the accounting year 2014 has been
prepared on a quarterly basis and finalized. Total budgeted marketing expenditure
is Rs 3.21 crore. We shall comment about the actual spent and variance with the
budgeted expenditure during our next audit report.
Page 29 of 43

3.
VOICE (VERBATIM
ONLINE INFORMATION ABOUT CUSTOMER EXPERIENCE):
VOICE could be a very effective tool for getting the customer feedbacks and help
Parsoli immensely in rectifying the lacunas in marketing, sales and service. We
studied the VOICE responses of customers for the months of October, 2013 to
March, 2014. These responses included both the sales and the service customers.
Sr
No
Month
1
2
3
4
5
6
October, 2013
November, 2013
December, 2013
January, 2014
February, 2014
March, 2014
Total
Total
number of
responses
of
Ahmedabad
and Surat
Sales
12
11
11
7
15
9
65
Total
number of
responses
of
Ahmedabad
After sales
Total
number of
responses of
Surat After
After sales
17
19
31
42
30
44
183
3
0
5
12
13
6
39
Out of these responses, we made specific observations are given in Annexure -2
VOICE results May YTD 2014 are as under:

Parsoli
results
Achieved Group
CSI of average
Parsoli
of CSI
Sales
After sales
85.8
87.8
91.5
87.5
National Parsolis
Target of qualification for
CSI
incentive based
on voice
89
No
79
Yes
For getting incentive, Parsoli has to achieve either group average or national target.
In sales CSI, Parsoli has neither achieved national target nor group target. In after
sales CSI, Parsoli has achieved national target as well as group target. Steps should
be taken to improve CSI in Sales.
4.
INSURANCE
:
Page 30 of 43

Ahmedabad Division:
Money Insurance Policy for showroom and workshop division for transit of cash from
bank to showroom/workshop and vice versa has been taken from The New India
Assurance Company Limited. The risk covered under this policy has a single carrying
limit of Rs 50,00,000 and annual aggregate carrying limit of Rs. 2,50,00,000.
Surat Division:
Money insurance policy has not been taken for Surat division.
We observed that Parsoli has deposited high quantum of cash in bank as under . We
suggest that money insurance policy for Surat division be taken at an early date :
Sr.
No
Date
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
27/09/2013
12/10/2013
14/10/2013
15/11/2013
15/11/2013
25/11/2013
26/12/2013
26/12/2013
27/12/2013
31/12/2013
07/01/2014
07/01/2014
17/02/2014
22/02/2014
08/03/2014
19/03/2014
24/03/2014
Cash of Rs. 5,00,000 or

more deposited in bank
(Rs)
7,76,120
7,27,685
6,50,000
9,00,000
9,00,000
5,90,000
9,00,000
9,00,000
6,85,000
9,75,000
9,05,000
9,00,000
6,00,000
6,53,000
9,85,000
8,65,000
9,00,000
Page 31 of 43

5.
INVENTORY ANALYSIS:
A. ABC Analysis :
Ahmedabad Division:
Average 35% of the total stock value is lying in the form of Class C, whereas
the average of Class A stock is 27% and Class B stock is 27% from October,
2013 to March, 2014. This shows that a significant part of inventory has been
blocked in Class C slow moving and rather obsolete inventory causing carrying
cost. In our last report average total stock lying in the form of Class C was
36%.So there is no significant change in C- category stock from 36% to 35% as
on 31st March, 2014.
The average stock and sales figure comparison : (Rs in crore)

Average
Stock
(1.4.2013
to
30.9.2013)
3.30
Average
Stock
(1.10.2013
to
31.3.2014)
3.54
Average
Sales
(1.4.2013
to
30.9.2013)
1.86
Average
Sales
(1.10.2013
to
31.3.2014)
3.11
Increase
in
average
stock
(%)
7%
Increase
in
average
sales
(%)
67%
During the last audit report the average sale has increased with growth of 12%
whereas the average stock value has increased 8%. Now during period under
audit the average sale has increased with growth of 67%, but the average stock
value increased 7%.
Surat Division:
Page 32 of 43

Average 57% of the total stock value is lying in the form of Class C, whereas
the average of Class A stock is 20% and Class B stock is 18% from October,
2013 to March, 2014. This shows that a significant chunk of inventory has been
blocked in Class C Slow moving and obsolete inventory causing carrying cost.
The average stock value lying from April, 2013 to September, 2013 was about
Rs. 90 lakhs and during the period from October, 2013 to March, 2014 it is about
Rs 109 lakhs out of which a significant chunk is non moving. We suggest that
non moving stock items be closely monitored by the parts manager.
Detailed ABC analysis is given in Annexure-3.
B.
Order Analysis :
Orders are divided into 3 category:
1) Stock Order
2) Rush Order
3) Vehicle Off the Road(VOR) Order
Ahmedabad Division
For the period from October, 2013 to March, 2014, we observed that the
percentage of stock order was 74%, rush order 9% and VOR order 17%. Parsoli
earns maximum margin in stock orders and minimum in VOR orders. Ideally, the
ratio of rush and VOR orders should not exceed aggregate 25%. At present,
Parsoli is operating at 26%, which is slightly high from the ideal level.
Surat Division:
For the period from October, 2013 to March, 2014, we observed that the
percentage of stock order was 69%, rush order 12% and VOR order 19%. Ideally,
the ratio of rush and VOR orders should not exceed aggregate 25%. At present,
Parsoli is operating at 31%, which is considerably higher than the ideal level.
Detailed Order Analysis is given in Annexure 4.
Page 33 of 43

6.
OVERVIEW OF I.T. SYSTEM ANALYSIS :

Ahmedabad Division:
We have reviewed the overall I.T. system of Ahmedabad division. A system has been
setup whereby customer data as well as other data is not freely copyable on pen drive
and other removable devices.
We have observed that various social networking sites which were earlier blocked have
now once again been made freely accessible to employees. We suggest that all such sites,
social sites as well as unwanted sites be blocked as decided by the management.
We suggest that recording of CCTVs be stored at least upto 6 months.
The server room where primary data as well as back-ups are stored is not fire proof.
Looking to the cost effectiveness, fire proofing of the server room can be considered.
We suggest that broad documented IT policy be framed to address IT related issues.
Surat Division :
We have reviewed the overall I.T. system of Surat division and found that customer data
as well as other data is not freely copyable on pen drive and other removable devices.
Data back-ups are taken either on daily basis or weekly basis but stored near the server
room. We suggest that data back-ups be stored off-site.
We have observed that recording of CCTVs footage storage is being stored only upto 14
days. We suggest that recording be stored at least upto 6 months.
The server room where primary data as well as back-ups are stored is not fire proof. We
suggest that fire proofing of the server room be considered.
Page 34 of 43

7.
DEBTORS ANALYSIS:
Summary of debtors movement of Ahmedabad workshop division from October, 2013 to
March, 2014 is as under :
Month
October,2013
November,2013
December,2013
January,2014
February,2014
March,2014
Opening
balance(Rs)
99,48,492
1,39,05,511
1,50,66,517
1,74,19,690
1,91,95,935
1,98,88,081
Increase in
debtors(Rs)
3,57,93,488
2,03,77,454
2,75,40,206
2,28,43,356
2,45,45,238
2,93,86,759
Decrease in
debtors(Rs)
3,18,36,470
1,92,16,448
2,51,87,033
2,10,67,111
2,38,53,092
4,21,54,897
Closing
balance(Rs)
1,39,05,511
1,50,66,517
1,74,19,690
1,91,95,935
1,98,88,080
71,19,943
From the above, we can observe that the debtors of workshop division have gone
significantly down from Rs. 99.48 lakhs to Rs. 71.20 lakhs as on 31 st March, 2014. We
believe that recovery process for debtors still needs to be strengthened and needs
continuous monitoring by the management.
At present, there is no documented fixed policy for grant of credit to workshop

customers. As informed to us, the credit is being granted to customer verbally without
any written documentation. We suggest that a policy of granting credit to workshop
customers be properly framed in order to keep the balance of such debtors under check.
A policy for charging interest on delayed payments may also be framed.
The Chart of Authority and Internal Control Policy is under preparation. The aforesaid
policy shall be included in that. We suggest that the Chart of Authority and Internal
Control policy, which has been under preparation since the last few years be prepared
and implemented at an early date.
Page 35 of 43

8.
WORKSHOP PROFITABILITY ANALYSIS
Month
Sale of parts Labour

(Rs)
income
(Rs)
Oct,2013
Nov,2013
Dec,2013
Jan,2014
Feb,2014
March,2014
Total
2,66,19,836
1,63,70,860
2,15,70,389
1,63,55,511
1,92,43,000
1,97,73,705
11,99,33,301
Cost of
goods sold
(Rs)
48,92,019
31,27,791
39,72,397
32,94,692
37,84,985
38,52,170
2,29,24,054
2,20,75,883
1,08,33,769
1,75,13,123
1,01,06,291
1,71,64,488
1,43,87,273
9,20,80,827
Direct
expenses
(Rs)
6,08,404
5,63,671
4,28,681
5,39,910
3,24,322
8,69,554
33,34,542
Gross
profit (Rs)
88,27,568
81,01,211
76,00,982
90,04,002
55,39,175
83,69,048
4,74,41,986
Throu
ghput
/
month
467
370
486
438
457
432
2,650
Profit
per
car
(Rs)
18,903
21,895
15,640
20,557
12,121
19,373
17,903
Throu
ghput
/
month
156
106
149
153
169
174
907
Profit
per
car
(Rs)
7,171
4,927
3,119
31,331
12,322
12,029
12,210
AHMEDABAD DIVISION
Profit per car for the period October, 2013 to March, 2014 is Rs 17,903
SURAT DIVISION
Month
Oct,2013
Nov,2013
Dec,2013
Jan,2014
Feb,2014
March,2014
Total
Sale of parts Labour

(Rs)
income
(Rs)
63,05,448
31,07,300
27,93,345
68,82,404
55,11,645
45,80,396
2,91,80,538
Cost of
goods sold
(Rs)
10,95,136
4,91,306
4,84,001
9,10,664
10,39,064
7,93,426
48,13,597
62,52,592
30,76,018
27,93,282
29,86,762
44,68,345
32,59,142
2,28,36,141
Direct
expenses
(Rs)
29,250
300
19,350
12,650
0
21,700
83,250
Gross
profit (Rs)
11,18,742
5,22,288
4,64,714
47,93,656
20,82,364
20,92,980
1,10,74,744
Profit per car for the period October, 2013 to March, 2014 is Rs 12,210.
Page 36 of 43

9.
WARRANTY / BSI AND INSURANCE CLAIMS ANALYSIS :
The month wise breakup of warranty claims receivables at Ahmedabad Workshop

division is as under :
Month
October,2013
November,2013
December,2013
January,2014
February,2014
March,2014
Opening
Increase in
balance(Rs) warranty
claims(Rs)
54,79,330
47,31,344
41,40,493
47,27,160
31,22,357
66,81,186
2,63,437
37,04,556
(7,29,902)
47,71,551
(85,258)
42,14,740
Decrease in
warranty
claims(Rs)
60,70,181
57,45,296
95,40,106
46,97,895
41,26,907
46,10,485
Closing
balance(Rs)
41,40,493
31,22,357
2,63,437
(7,29,902)
(85,258)
(4,81,003)
From the above, we can observe that the outstanding warranty claims have gone down
significantly from October, 2013 to March, 2014 from Rs 54.79 lakhs to Rs.(-) 4,81
lakhs.
The month wise breakup of warranty claims receivables at Surat Workshop division is
as under :
Month
October,2013
November,2013
December,2013
January,2014
February,2014
March,2014
Opening
Increase in
balance(Rs) warranty
claims(Rs)
9,10,340
5,08,308
2,18,833
4,14,944
(1,66,174)
15,90,682
(7,34,386)
14,20,231
3,15,309
14,00,273
3,54,198
13,44,586
Decrease in
warranty
claims(Rs)
11,99,815
7,99,951
21,58,894
3,70,536
13,61,384
19,48,087
Closing
balance(Rs)
2,18,833
(1,66,174)
(7,34,386)
3,15,309
3,54,198
(2,49,303)
From the above, we can observe that the outstanding warranty claims have gone up
significantly from October, 2013 to March, 2014 from Rs 9.10 lakhs to Rs (-) 2.49 lakhs.
Page 37 of 43

The month wise breakup of insurance claims receivables from various insurance
companies at Ahmedabad Workshop division is as under :
Month
October,2013
November,2013
December,2013
January,2014
February,2014
March,2014
Opening
Increase in
balance(Rs) insurance
claims(Rs)
82,62,136
92,85,497
1,08,95,882 54,48,172
1,28,18,462 68,97,096
1,07,70,462 44,08,655
72,83,124
97,34,325
85,85,215
73,72,532
Decrease in
insurance
claims(Rs)
66,51,751
35,25,592
89,45,096
78,95,993
84,32,234
97,14,198
Closing
balance(Rs)
1,08,95,882
1,28,18,462
1,07,70,462
72,83,124
85,85,215
62,43,549
Steps should be taken to ensure speedy recovery of dues from the insurance companies
to smoothen the working capital cycle.
Insurance claims of substantial amount are liable to be written off in the books of
account out of the aforesaid outstanding claims since the insurance company does not
accept these claims. Such insurance claims are created in the books of account by the
sales advisor without considering final liability from the insurance company. Process of
insurance claims approval and balance amount recovery from customers needs to be
streamlined and the service advisor should be held liable in case of short recovery from
insurance companies or customers.
The ageing analysis of warranty / BSI claims receivables, insurance claims receivables
and parts payable of Ahmedabad workshop division are given in Annexure 5.
The ageing analysis of warranty / BSI claims receivables, insurance claims receivables
and parts payable of Surat workshop division are given in Annexure 6.
During the audit, we observed that there are some cases of rejected warranty / BSI claims
primarily because of inadvertence and negligence on part of the employees. We suggest
that concerned staff member should be drilled regarding the reasons for rejection in the
Page 38 of 43

past so that the same mistake does not recur. We observed 2 cases aggregating Rs. 29,426
permanently rejected during October, 2013 to March, 2014, the detailed working
whereof is given in Annexure 7.
BMW claim analysis:

We observe the following differences in various types of claims as claimed by Parsoli
and subsequently approved by BMW:
Mon
th
Nov13
Nov13
Dec13
Dec13
Dec13
Dec13
Dec13
VIN
Model
Claim Head
As per
Dealer(
Rs)
WBAVN97060VV10774
X1 20d X Line
Model incentive
150000
WBAVN970X0VV10941
Model Incentive
X1 20d Base
175000
WBA3F37030NP0996
2
WBA3F37050NP1042
0
WBA3F37010NP1043
2
WBA3F37000NP1043
7
WBA3F37000NP1028
9
Model
Incentive
Model
Incentive
Model
Incentive
Model
Incentive
Model
Incentive
320d Base
WBAYG47010DZ28
Jan-14
921
Model
Incentive
As
per
BMW
(Rs)
Differe
nce
0
15000
0
150000
125000
90000
35000
320d Base
125000
90000
35000
320d Base
125000
90000
35000
320d Base
125000
90000
35000
320d Base
125000
90000
35000
300000
125000
0
20000
0
80000
0
730Ld LCI
Total
25000
100000
450000
Further we have observed that all the corporate claims for the month of February, 2014 have not
been received by Parsoli till the date of audit. Mr. Akshat Shukla informed that this was due to
non-timely submission of the claims. The value of corporate claims not received for the month
of February, 2014 is approximately between Rs. 10 to Rs. 12 lakhs. Being a direct revenue loss,
an urgent analysis needs to be made into reasons for non receipt of claims from BMW. Efforts
need to be put in for recovery of these claims to the extent possible.
Page 39 of 43

10.
MECHANIC PERFORMANCE :
Average efficiency of mechanics for October, 2013 to March, 2014 is 104.96% and the
average productivity is 74.15%.
Average productivity of mechanics has decreased from 76.38% for the half year ended
30th September, 2013 to 74.15%.
Detailed mechanic wise performance analysis is given in Annexure 8.
Page 40 of 43

11.
WORKING CAPITAL MANAGEMENT :
Aggregate interest payment as per books of account is as below:

Interest Payee
BMW India Private Limited - Stock cars
BMW Financial Services Private Limited - Stock cars
BMW India Private Limited - Parts purchase
HDFC Bank Limited - Inventory funding
ICICI Bank Limited - Demo funding
Axis Bank Limited - Cash credit facility
Total
(Amount in Rs)
October,2013 to April,2013
to
March,2014
September,2013
75,34,971
86,17,316
1,60,86,512
1,08,34,261
31,60,582
7,08,682
25,83,408
16,96,840
26,91,500
25,77,715
15,67,103
12,85,352
3,36,24,076
2,57,20,166
There has been rise of 31% in interest payments from October, 2013 to March, 2014
compared to April, 2013 to September, 2013.
Total 254 cars have been purchased during the half year ended 31st March, 2014. Thus,
interest per car purchased comes to Rs. 1,32,378. The corresponding figure for the firsthalf year was Rs. 1,07,560. BMW grants 30 days interest-free credit from the day of
purchase of car. On an average, during the year Parsoli has paid after 90 days of purchase
of car, thus paying interest for 60 days. This is one area where significant cost savings is
possible.
Looking to the gross profit margins of Parsoli, the aggregate interest expense is
considerably high. There is an urgent need for proper working capital management so
that the Company can reduce its interest burden.
Page 41 of 43

12.
OTHER ISSUES:
Total Sales discount and Goodwill gesture discount as per accounting record at
Ahmedabad division is as under :
Month
October, 2013
November, 2013
December, 2013
January, 2014
February, 2014
March, 2014
Total
Sales
discount
1,34,376
16,457
3,99,281
1,58,050
1,82,891
4,13,512
13,04,567
Goodwill gesture
discount
1,98,166
18,289
1,06,126
31,020
4,54,623
69,193
8,77,417
Total
3,32,542
34,746
5,05,407
1,89,070
6,37,514
4,82,705
21,81,984
As informed to us by Mr. Faizal Munshi, the goodwill gesture discount budget for the
accounting year 2014 is Rs 15,00,000. Parsoli either incurs this expense or returns the
unexpensed balance amount back to BMW. On the other hand, Parsoli has incurred sales
discount of Rs 13.04 lakhs. A proper policy for apportionment of discount between sales
discount and goodwill gesture discount needs to be framed.
Commission to Direct Selling Agent (DSA) analysis

Division
Ahmedabad
Surat
Rajkot
Total
Commission
expenses
as
per accounts
F.Y. 2012-13
(Rs)
6,30,000
3,26,426
1,60,000
11,16,426
Commission
expenses as
per accounts
F.Y. 2013-14
(Rs)
10,02,500
10,17,875
3,87,500
24,07,875
% rise in
commission
expenses
YoY basis
59%
212%
142%
116%
No
of
cars sold
during
F.Y.
2012-13
397
167
43
607
No of cars
sold
during
F.Y. 201314
282
161
82
525
There is no valid basis, proper documentation, or uniformity in giving DSA commission.

We have already suggested detailed steps and policy to streamline the DSA commission
We suggest that the new DSA commission policy be implemented at the earliest.
Page 42 of 43

We thank the management and the staff of the Company for the co-operation extended to us
during the course of our audit.
For Chandabhoy & Jassoobhoy
Place: Ahmedabad
Partner
Date: 19th July, 2014
Chartered Accountants
Membership No. 100932
Firm Regn. No. 101648W
Page 43 of 43

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CHANDABHOY & JASSOOBHOY

PARSOLI MOTOR WORKS PRIVATE LIMITED

1ST OCTOBER, 2013

31ST MARCH, 2014

COMPLIANCE WITH BMW, PARSOLI AND STATUTORY

CHANDABHOY & JASSOOBHOY

As the operationalisation of the new showroom is under process, we shall check

Total Kms Dates From which

CHANDABHOY & JASSOOBHOY

Demo car Starting

Total Kms Dates on which no record of

CHANDABHOY & JASSOOBHOY

A brief route map be drawn up for test drives.

Deviation from the same be pre-approved by GM.

Duration of test drives be entered in log book

Verification of physical condition of the demo car:

CHANDABHOY & JASSOOBHOY

BMW 3 series GT demo car used by Mr. Sadikbhai from Ahmedabad

CHANDABHOY & JASSOOBHOY

BMW X3 demo car used by Mr Jahidbhai to Rajkot. Purpose and

Mr Rustambhai used X1 demo car at Baroda but the purpose of the

BMW 530d used by Mr Farid Khan but

BMW 3 series GT used by Mr Sirin Panchal. The customers details

time in detail are not

Dates on which test drive given

CHANDABHOY & JASSOOBHOY

CHANDABHOY & JASSOOBHOY

Dates on which test drive given

When a telephonic inquiry is received from a customer located out of Ahmedabad or

CHANDABHOY & JASSOOBHOY

Fuel cost (Rs)

CHANDABHOY & JASSOOBHOY

The current declaration form is inadequate in respect of details mentioned therein. We

CHANDABHOY & JASSOOBHOY

A lounge area with a coffee table or table and chairs

Prepared lighting to make the car look at its best

A car cover for a formal reveal

Clear separation from the rest of the showroom (if possible)

A Music selection C.D. rack to be installed in every dealership for customers to

All deliveries to be photographed camera to be on a tripod for effect.

Print photos straight away and give to customer in a frame at delivery!

All customers to be emailed copies of delivery photos.

Dealership to keep record of deliveries photos for end of year calendars.

A BMW key ring to be provided with every delivery.

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An announcement board (similar to ones used in hotels) can be placed at the

Consider a waiter service during delivery serving refreshments.

Remember to schedule delivery with a representative from the Service Department

Consider making up a dealership welcome pack similar to the ones in hotels a

CHANDABHOY & JASSOOBHOY

E. Security at the showroom :

F. Security at the workshop :

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G. Reception and Customer welcome :

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o We did not observe any material discrepancies in reception and customer

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Ms. Feny is maintaining lifestyle stock register of Ahmedabad showroom division

Inquiry capturing and follow-up :

No. of inquiries No of cars sold

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* Including Baroda inquiries and sales

No. of inquiries No of cars sold

CHANDABHOY & JASSOOBHOY