Business Plan on Renting of Auto-Rickshaw

Promoter- Mithilesh Shukla

6/28/2011

Business Plan on Renting of Auto-Rickshaw

Business Plan:

Contents
Company Overview....3 Surat Transport Services3 Scope of Auto-Rickshaw Business....3 Current Situation in Auto-Rickshaw Sector....4 Auto-Rickshaw Market Characteristics..5 Modus Operandi.6 Basis & Assumptions...6 Projected Cash Flow ...7 Capex & Loan Repayment Schedule8

Mithilesh Shukla

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Business Plan on Renting of Auto-Rickshaw

Company Overview:
The company is into renting Auto-rickshaws. It will purchase 10 Auto-rickshaws and rent them to drivers in Surat. The population of Surat city is approximately 33 Lacs whereas there are only 60000 Auto-rickshaws in the city. Total investment will of 15 lacs out of which 10 lacs will take as loan from bank. I have chosen Surat as Companys operation point because of the following:

Surat Transports and convenience:

People of Surat prefer to travel by Auto-rickshaws. The main means of transport of Surat city is Auto Rickshaw. You can see everywhere in the city Auto Rickshaw. Though recently city bus was launched and was thought that city bus will throw the auto rickshaw out of business but it was wrong. Main reason of preferring Auto rickshaw to business is that no one wants to wait for bus. Also fare of rickshaw in Surat is less as compared to other cities of India. The most preferred mode of transportation in Surat is the auto-rickshaw. Auto-rickshaws can be hired from one place to another. To the residents of the city, this is the most convenient and easily available mode of transport.

Scope of Auto-rickshaw Business:

Low cost mobility for lower income group, elderly and disabled population Low cost mobility for school children in absence of school buses Low cost alternative in case of poor city bus services as in Surat Commonly used mode for transporting victims from accident sites to hospitals Diamond and textile workers not having their own vehicle prefer to travel by rickshaw instead of bus in Surat

Mithilesh Shukla

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Business Plan on Renting of Auto-Rickshaw

Current Situation in the Auto-rickshaw sector:

Issue Governance

Specifics Lack of multi modal governing body Inadequate involvement of key stakeholders in policy making (city government; manufacturers; unions; citizens; civil society) Many cities have restricted the nos. of Autos in the city but are unable to restrict the growth of personalized vehicles Lack of employment benefits Poor inspection/maintenance Lack of brand image and poor driver behavioral practices Problems with financing Lack of provision of adequate stands Inadequate servicing centers for 4-stroke engines Problems with design (comfort, rain) 2-stroke engines still prevalent in many cities Significant empty trip making

Regulation Unorganized sector

Infrastructure Vehicles Operational inefficiencies

Ref.- EMBARQ Network article

Mithilesh Shukla

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Business Plan on Renting of Auto-Rickshaw

Auto-rickshaw Market Characteristics:

City

Delhi

Population Market (in Size millions) 13.5 55000

Permit Policy Closed

Engine

Fuel

Driver Profile

4 stroke (90-95%)

CNG (100%)

Mumbai

18

120000

Closed

2&4 stroke (50%) 2-stroke (80-90% )

Rajkot

1.5

15500

Open

Pune

5.5

60000

Closed

2-stroke (90-95%)

Surat

3.3

60000

Open

2-stroke (90-95%)

Jaipur

3.2

18500

Closed

4-stroke (90%)

Around 60 -70% rental drivers CNG Around (100%) 50% rental drivers 95% CNG Around 75% ownerdrivers 90% Petrol Around (10% CNG) 65% renterdrivers 100% CNG Around 50% ownerdrivers 90% diesel More than (10% LPG) 75% renterdrivers

Source: EMBARQ Survey, August 2010

Mithilesh Shukla

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Business Plan on Renting of Auto-Rickshaw

Modus Operandi:
The company will purchase 10 Auto-rickshaw and give them on rent to trustworthy drivers. Drivers full information will be kept with the company. All the drivers will have to report daily to the company office. The company will give Auto-rickshaw on daily rental basis so all the drivers will have to pay rent daily on a predetermined time period. The driver should have experience of at least 3 years and should have driving license. The Company will investigate trustworthiness of the driver from other rickshaw driver in the market.

Basis & Assumptions:

I have arrived on various figures & projections on the basis of following assumptions: 1) Rs.200 per Day per Rickshaw will be realized for next 5 Years. Generally Rent per Day decrease with the age of Auto-rickshaw. 2) On road cost of Auto-rickshaw is assumed to be Rs.135000 (including permit). 3) Rs.15000 will be expended on the decoration of it. 4) Permit is assumed to be of five years. 5) Loan will be repaid in 5 years and Rate of interest on bank loan is assumed to be 10%.

Mithilesh Shukla

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Business Plan on Renting of Auto-Rickshaw

Projected Cash Flows:

Years of Operation No. of Days in Year Days lost in year Effective no. of days Rate per Day No. of Rickshaws

1 365 48 317 220 10

2 365 48 317 220 10 2200 697400

3 365 48 317 210 10 2100 665700

(INR Denomination) 4 5 365 48 317 210 10 2100 665700 365 48 317 200 10 2000 634000

Total amount per 2200 day Total Cash Inflow 697400 per year (A) Cash Outflow per 255000 year (EMIRs.2125*12*10) Maintenance Cost 60000 per year (Rs.500*12*10) Total Cash Outflow 315000 per year (B) Net Surplus (A-B) 382400

255000

255000

255000

255000

60000

60000

60000

60000

315000

315000

315000

315000

382400

350700

350700

319000

Mithilesh Shukla

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Business Plan on Renting of Auto-Rickshaw

Capex & Loan Repayment Schedule:

Total On Road Cost of Auto-rickshaw

Total No. of Auto-rickshaws Total On Road Cost Of Auto-rickshaws Down Payment Bank Loan 10 1500000 500000 1000000

Rs. 500000 will be invested by the company owner and Rs.1000000 has to be taken as Bank Loan. Bank Loan will be repaid within 5 years i.e. 60 months. Loan repayment schedule will be as follows:

Loan Repayment Schedule:

No. of Opening Loan EMI Years Balance 1 2 3 4 5 1000000 837730 658430 460440 241680 255000 255000 255000 255000 255000 Interest Loan Repaid Closing Loan Balance 837730 658430 460440 241680 0

92730 75700 57010 36240 13320

162270 179300 197990 218760 241680

Mithilesh Shukla

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