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Rewinding Business Case
Executive Summary
This recommends to pursue the acquisition of Rewinding
Equipment as an additional Services that Monark can offer to its
customers given the following positive indicators:
• ROI 2.6 years assuming 5 years depreciation
• GP 60% for revenue jobs and 35% for Interdept,
equivalent to an annual average of Php 4.2M in at
least the next 5 years
• Continuous demand for the service given the healthy engine
population of Monark in the market
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Rewinding Business Case
Background
• Monark Rewinding job requirements grew by 38% and 72% in
the past 3 years, in volume units and peso value terms
respectively.
• Surge in Rewinding jobs may
be attributed to:
– Growth in engine sales
from 2000 – 2002
– Growth of Rental
Power Business
6. Seed
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Rewinding Business Case
Background
• Presently, all Monark rewinding jobs are coursed through 3
subcontractors.
– 2012 rewinding jobs per subcontractor
Powerasia Php 2,436,298.67
Direct Electrix Php 3,476,520.53
Megamaster Php 13,723,526.86
• Moisture and dirt accumulation triggers the need for rewinding.
• It will usually takes about 10 years before an engine will need
rewinding; lesser years if it is located near bodies of water.
• Space heaters may be installed on generator sets to prolong the
need for rewinding.
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Rewinding Business Case
Projected Opportunity
Year Estd # of units Estd Rev Estd GP(60%)
for rewinding in Php in Php
2014 80 9,000,000.00 4,275,000.00
2015 80 9,000,000.00 4,275,000.00
2016 80 9,000,000.00 4,275,000.00
2017 80 9,000,000.00 4,275,000.00
2018 80 9,000,000.00 4,275,000.00
Volume Assumptions:
based on capacity of manpower and equipment
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Rewinding Business Case
Proposed Selling Price
Equipment Min Max
Equipment Cost 9,605,000.00 11,728,000.00
Manpower
Foreman 260,000.00 260,000.00
Technician(5-7) 780,000.00 1,092,000.00
Manpower Cost 1,040,000.00 1,352,000.00
Others
Utilities Cost(Water and Electricity) 168,000.00 180,000.00
Rent(600-800sqm) 306,144.00 408,192.00
Materials Cost per job(Average) 60,000.00 70,000.00
Estimated Cost for Year 1(Equipment Dep 5yrs) 8,235,144.00 9,885,792.00
Estimated Cost for Year 2(Equipment Dep 5yrs) 8,235,144.00 9,885,792.00
Estimated Cost for Year 3(Equipment Dep 5yrs) 8,235,144.00 9,885,792.00
Estimated Cost for Year 4(Equipment Dep 5yrs) 8,235,144.00 9,885,792.00
Estimated Cost for Year 5(Equipment Dep 5yrs) 8,235,144.00 9,885,792.00
Estimated cost per job 102,939.30 123,572.40
Gross Profit(60%) 61,763.58 74,143.44
Total Selling Price 164,702.88 197,715.84
vs
Subcontractors selling price + Monark GP 168,750.00 168,750.00
Variance 0.02 (0.17)
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Rewinding Business Case
ROI
• 40 units interdept at 40% GP
Equipment Average Price Php 12,000,000
Average Rewinding Selling Price Php 120,000
GP at 60% Php 72,000
Number of Rewindng jobs needed to break-even in units 166.67
Estimated Peso Value Php 12,000,000
Target units Forecast for Year 1 in units 80
Estimated Peso Value Php 4,560,000
ROI 2.63
10. Seed
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Rewinding Business Case
Appendix: Rewinding Equipment
Min Max
Surge Comparison Tester 1,000,000.00 1,300,000.00
Thermal Imaging Temperature Scanner 300,000.00 400,000.00
Multi Tester & clamp Meter 25,000.00 30,000.00
Digital Low Resistance Ohmeter 500,000.00 600,000.00
Digital Insulation Tester 300,000.00 400,000.00
Dynamic Balancing Equipment 800,000.00 900,000.00
Lathe Machine 4,000,000.00 5,000,000.00
Oven(4-6 Alternator) 200,000.00 300,000.00
Dipping tank for Varnishing 50,000.00 60,000.00
Overhead Crane for lifting 1,600,000.00 1,800,000.00
A Frame for manual lifting 25,000.00 30,000.00
Used Boom Truck(>=3 tons) 800,000.00 900,000.00
Safety Provision 5,000.00 8,000.00
Total 9,605,000.00 11,728,000.00
11. Seed
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Rewinding Business Case
Appendix: Engine Population
Year
Machine
Pop Year
Machine
Pop
1965-1992 1664 2003 277
1993 425 2004 215
1994 139 2005 291
1995 282 2006 162
1996 246 2007 235
1997 328 2008 473
1998 189 2009 185
1999 191 2010 296
2000 86 2011 445
2001 92 2012 278
2002 295
Editor's Notes
80 rewinding jobs for Year 1 = 6 to 7 rewinding jobs per month
