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Business Proposal ppt on a Motor Cycle based Adventure Company by students of Era Business School, New Delhi (PGDM 12-14 batch)
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Era Business School, New Delhi AJ; Ajay K Raina1
Part 1 - Executive Summary
McG McG
Executive Summary….
• McGypsies India Pvt Ltd (McG) offers off beat motorcycle based travel services.
• Our clients are those who dare to be different.
• Motorcycle (MC) based travel is fast catching up in India even though we are way behind the West.
• Many companies have started offering MC rides but no one has yet ventured into hard-core off-roading.
….Executive Summary….
• Our strategy revolves around exploring uncharted areas and offer unusual experience to our clients.
• Company owned MCs and a unique ‘Participative Concept’.
• The management made up of three MC enthusiasts with a plethora of experience in the field.
• The capital requirement to the tune of 01.10 Crore.
…..Executive Summary
• Qualitative method used for forecasting: lack of figures as well as accurate precedence.
• Conservative estimates used for calculations.
• Scope for expansion after two or three years.
• Break Even expected by 6th or 10th year depending on the expansion plans and model.
Part 2 – Business Plan
Sub Part - Industry
The Industry : An Overview… • Size of Indian travel industry - $ US 20 Billion.
• Likely to grow @ 2.0% to 2.5% of GDP (1900=47) by 2018.
• Size of Indian MC travel industry – approx 0.7%.
• Major players – Aboriginal (Ind MC Tours), Ind Backpack MC, 60 KPH, Royal Bike Riders, Blazing Trails, Extreme Bike Tours, Vintage Rides and so on.
…The Industry : An Overview…
• Sectorial Focus : Ladakh, Goa, Rajasthan.
• Packaging : Pure rentals to variety of package(s) (MC+ Accommodation+ Guidance + Backup cover).
• Issues:-
– Great Indian Jugaad : Rented bikes.
– No niche-specific outlook.
– Unscientific conduct.
– Lack of personal touch.
…The Industry : An Overview…
• Trends :-
– International Footfall in India
• Improved infrastructure is a magnet;
• Now at less than 0.6%, aspiring to hit 1.0% soon.
– National : Changing Trends
• Youngest country;
• Higher disposable income;
• Gen## looking to be different;
• Quest for unseen beyond media.
….The Industry : An Overview
• Growth Curve:-
– No confirmed data; street operators; lack of regulations.
– Indians tend to mix n match.
– @ 0.7% = $ US 14 Million.
– On ground data, eg 30,000 (2013) v/s 1000 (2008) = @ 100%.
– Even@ 20% = healthy LT growth prospect.
Position in Industry… • Our Services:-
– MC + Backup.
– Participative Accommodation & Food.
– Guidance.
– Permit handling.
– Thematic travel – photo-tours/ Lakes of Ladakh/ Camel Fair/ Rural Olympics/ Elephants of India/ Majestic Tigers/ Holi Chaos/ Sacred Rivers/ Hornbill Kick/Haunted Spaces/ Kite Fiesta/ Dandiya Special……..!
…..Position in Industry…
• Our USP:-
– Company owned fleet.
– Participative – big family feel.
– High degree of customisation on demand.
– Knowledge bank – terrain/customs/relationships.
…..Position in Industry…
• Barriers to Entry – very low.
• Competitors – As mentioned; however, nil as per niche.
• Expected Market Share - @ 10% of overall MC travel market (T/O = $ 0.7 Million = ₹45 Lac); First Movers!
• Niche market of enthusiasts : Foreigners, HNI, NRIs.
• Relationship based reach into hinterland; need to preserve relationships with locals – difficult to replicate.
Part 2 – Business Plan (contd)
Sub Part – Market & Competitive Analysis
Market Analysis….
• Target Segments:-
– Upper middle class and HNI.
– Foreigners and domestic.
– Age & Gender no bar; physical fitness would be the key.
– Adventure seeking/ bored with rut/ very busy jobs/ urban centric/ informed class/ self-challengers.
….Market Analysis…. • Market Size:-
– World travellers – Approx 01 Billion.
– India’s share – 0.5 % = 05 Million (M:F = 66:34).
– Percentage of young arrivals in India = 30% = 15 Lac.
(UK, USA, Canada, France, Japan, Australia, Singapore, SL)
– Size @ 0.5% = 7500 + domestic (follows).
– 66% of Indians below 35 = 925 Million.
– Total travellers =700 million.
….Market Analysis….
– Youth component = 425 Million approx.
– Conservative 0.5% = 2.1 million.
– Mix n Match = 99.5% = 2.09 million.
– Balance = 10,000.
• Looking at = 7.5K+10K=17.5K or 17,000 Approx.
• @10% = 1700 or 1500/year
– Group size of 20 (average).
– No of groups = 75 (details later).
Competitive Analysis….
• A mixed bag in the real sense:-
– Many in the field.
– Commonality of services and reputation.
– General market coverage.
– No niche specialist except 60kph but area of operations narrow.
• Possible to carve out a niche market.
• Human relationship based local contacts- forte!
….Competitive Analysis
• Our niche:-
– HNI and foreigners looking for out of the rut experience.
– Participative model that is unique.
– Areas that have remained out of bounds to outsiders for decades.
– Goodwill among locals; self contained and ecologically savvy.
Part 3 – Business Plan (contd)
Sub Part – Marketing Plan/Strategy
Marketing Plan • USP – as mentioned.
• Pricing Strategy. – The general trend - ₹ 4000-5000 per head per day.
– The rough actual breakup:- • Driving approx 100 Kms/day @ 25kmpl=4 litres@75=300.
• Maintenance and depreciation costs (2000/month)= 100.
• Food n accommodation (participative)= 500; Organised= 1000; average= 750.
• Services including 12.5% tax = 700. (Total Say 1800)
– Our Offer = 3500 per person per day.
Communications
• Foundation exists:- – IronButtsItchySoles.
– Membership of BCMT; bhp; 60 Kph.
– Word of mouth reputation in the environment.
• Tie ups with Banjara Campers India on mutual benefit basis.
• Own site, Page 3, Social sites, channel partners sites.
• BBC Magazine, Discovery and TLC.
• Travel fairs
Sales and Distribution
• A combination of:-
– Direct; online.
– Offshore contacts on commission basis.
– Yatra, Travelmart, makemytrip, Govt Tourism Departments of concerned states, Airlines and so on as channel partners.
– Competitive rates to suppliers; discounts to sponsors.
– Corporate selling.
Services Offered
• Travel experience based on motorcycles.
• Guidance, consultations, handling of travel formalities.
• Travel Café – place to meet and plan travel.
• Camping, community living and participative trip.
• Special thematic trips.
• Customisation.
• All inclusive canvas excluding only drinks and calls.
Part 4 – Business Plan (contd)
Sub Part – Management Plan
Ownership
• Partnership – 3*33.33%.
• Debt model through bank/ pvt funding.
• Debt not to exceed 40% of capital outlay.
• Plans afoot to generate ST funding through attractive business proposal like pay today and earn vouchers for two or three years at half of the commercial costs.
Internal Management Structure
• Broad Supervisory Roles:-
– Manoj – Sales, Marketing and communications.
– AJ– Administration , HR & Finance.
– Navdeep – Field operations, ground liaison, fleet management.
• Initially, the management will follow ‘Lean & Thin’ profile with multi-tasking being the model.
• Each department will have one/two assistants.
External Management Services
• Professional Services to be hired:-
– CA, IT, Sales & Service Tax consultants.
– Medical and Mechanical backup (on need basis).
– Camp site / accommodation liaison personnel.
• Advisory Services:-
– Retired professional(s).
– Travel reporter(s).
HR Needs
• Lean & Thin Mantra; on payroll:-
– Three partners.
– Three Assistants.
– Ministerial staff and helpers – 03.
– Web Administrator.
– Mutli-vehicle driver – 01.
• All other needs would be met through outsourcing.
HRM
• Initial model bound to expand as business grows.
• At the trigger, a monthly outgo of ₹1.50 Lac on staff expected.
• Partners @40K =120 (Total outgo of ₹ 2.70 Lac).
• No training expenses visualised initially.
• PF and Insurance costs + outsourcing= 30K.
• Cost of HR to company = 3.0 Lac PM.
Part 5 – Operations Plan
Sub Part - General
Location
• NCR; Vasant Kunj (convenience and reputation).
• Travel Café Mode:- – Self-service coffee machine.
– Free wi-fi.
– Travel library.
– Brochures and leaflets.
– Travel memorabilia.
– Lazy day attitude.
• Informal office set up based on internet, few machines.
Inventory & Stocking • No major recurring expenses on inventory beyond
maintenance.
• One time Investments:-
– 20 MCs along with complete riding gear.
– One Truck – hired v/s need to modify.
– One SUV.
– Camping equipment.
– Climbing ropes, carabineers and safety equipment.
Capital & Expense
• The Initial K, 01.10 Crore:- – Office set up (including IT ware) – 05 Lacs. – MCs and equipment – 25 Lacs. – Vehicles – 25 Lacs. – Camping equipment and misc – 05 Lacs. – Leasing costs – 15 Lacs. – Communications – 05 Lacs. – Website – 10 Lacs. – Misc (licenses, clearances etc) – 10 Lacs. – Working Capital – 10 Lacs.
Running Monthly Expenses
• HR costs (first 24 months) – 3.0 Lacs.
• Maintenance of inventory – 10K.
• Café – 20K.
• Web and communications – 10K.
• Loan Service–50K (Initially, only Interest component)
• Misc – 10K
• Total Per Month (approximately) – 4.0 Lacs.
As on Date
• License and permits applied for.
• Member of IATA, ITTA, IBF, 60kph, BCMT.
• Loans applied for; detailed Business Plan submitted.
• Have been participating in seminars and meetings.
• A thorough networking with local populace as also the local administration in place through personal interactions and rapport built over years.
Risk-Identification • Natural calamities and weather.
• Terrorist activities and strikes.
• Reliance on foreigners; travel advisories.
• China factor.
• MoD issues.
• ‘Down Wala’ syndrome.
• Road accidents, health hazards and mishaps.
Risk Management
• Indemnity bonds.
• Life and medical insurance.
• Weather and disaster mapping.
• Close liaison with MoD and troops.
• Respect for local traditions and sentiments.
• Employment to natives and meaningful CSR.
• Detailed briefings prior to and during the conduct.
Part 6 – Operations Plan (Contd)
Sub Part – The Process of Delivery
General
• A seasonal business, hedged through geographical expansion/coverage.
• Season specific focus regions.
• Day-to-day office : 08 hours.
• Time zone free net based business interactions.
• Six days a week; 24x7 otherwise.
• Project approach towards geographical segments.
The Café: Layout
ENTRY
Locker Room
Wall adorned with Travel Memorabilia and Collectibles
20
Ft
Wall adorned with Travel Memorabilia and Collectibles
Coffee &
Cookies
Wo
rk Station
& R
ecord
s
Loo
Seating
40 Ft
Books
Equipment
A Typical Calendar Year
• April- May : Garhwal/Kumaon Region.
• June-August : Ladakh, Lahaul-Spiti.
• September: Himachal.
• October: Gujarat.
• Nov-Dec : Deserts, Northeast.
• Jan- Feb : Goa, Kerala.
• March : Break.
A Typical Month in Operations • Pre-trip Period (Reception, RV, Briefings) – 02 Days.
• Trip No 1 – 10 days on average.
• Post trip and pre-next trip – 05 Days.
• Trip No 2 – 10 Days.
• Reserve – 03 Days.
Revenue Generation • Eleven months operations (minimum); 22 trips
(capacity utilisation = 22/75= 30% (realistic).
• Each trip = 15-25 (average 20 persons).
• Per trip expense (for 20 pax)=20x1800x10= 3,60,000.
• Per trip(projected)revenue = 20x3500x10=7,00,000.
• Total estimated profit (yr)= 3,40,000x22 = 75,00,000 approx.
Making Two Ends Meet • First Two Years:-
– Projected outflows @4.0Lac/month= 48 Lacs.
– Projected Inflows = 75 Lacs.
– Projected Savings = ₹ 27 Lacs/year.
• Third Year Onwards, additional burden:- – Expansion – coverage & services.
– Principal component of loan.
– Ageing fleet.
• Break-Even expected – 06 years/ 10 years.
Some Loud Thinking
• All estimation based on present pricing model.
• 27 Lac annual return on 60 Lacs , esp on conservative estimates - not bad for beginners.
• Debt service can be broadened from 2nd year.
• Overseas expansion.
• Going public at some point in future.
Our Dream…..How Realistic?
Question Time!!
Thank You!