Surjeet Singh is your typical sardarji driving a taxi for yet another typical sardarji- Giani Singh. Gianiji has a fleet of around 40-45 cabs that are doing decent business (if fleet expansion rate is any indicator).This has been largely due to the fact that Giani enjoys access to a captive audience – he is the only “reliable” cab operator in my area.
So here’s the maths around the taxi business:
Giani pays a salary of Rs 4000/- to Surjeet and all other drivers with an additional incentive of Rs 40/- per round trip. Surjeet manages to do 3 trips daily on an average – making his total monthly income around=Rs7600/-.
Assuming each trip is for an average 20kms- it would give Giani a revenue of Rs 300/- with fuel costs of Rs 75/- , this gives a per trip margin of Rs 150/- (keeping scope for other expenses).So on an average Giani Singh takes home Rs 18000/- per day.
Surjeet wants to be independent start his own taxi operations. I hope Surjeet knows what he is aspiring to do:
– A new Indica or other vehicle will cost a minimum of Rs 350K on road. With little credit history, its tough for Surjeet to finance the vehicle acquisition at a competitive rate
– Giani gets some steady business because we can rely on him. People would not “trust”- a single cab service as the availability will definitely become a constraint. So even if Surjeet gets the car- how will he get customers? Will this mean less than 100% utilization or marketing overheads?
– Delhi doesn’t have a healthy number of Black Yellow cabs plying within the city- which means that most Delhiites are not used to hailing a cab on the road. The only places that you get into a BY cab is at the airport/station etc. So Surjeet can hope to do routes to/from such places. Had he been in Mumbai- he could have gone solo overnight after getting the vehicle.
– Airport pre-paid cabs have to wait for 2 hours typically before getting a customer- here the ticket size is Rs 250/- and they can rarely manage a round trip. They pay-up Rs 10/- per trip to the Pre-Paid manager. At this rate Surjeet will be able to do 2-3 trips in a day earning him revenues of Rs 650/-.His take home after fuel etc would be Rs 450/-. which transaltes to Rs 13.5K per month- almost double of what he currently makes.BUT with the EMI’s that he would have to pay- this could be eroded to less than Rs 7K levels. Also with this – he would earn only on days that he is making trips. If he has no back-up, he doesnt earn the days he is not well or on vacation.
So how does Surjeet let the entrepenur bug bite him in Delhi? How does he get finance at an affordable rate? Should he wait for the “Nano” That will surely change the dynamics in his favor.
My suggestion to Surjeet was to go to Mumbai- but with Raj Thackeray picking up morcha against Northern outsiders, Surjeet declined that option rightaway. He wants to be in the city of Dilwalas i guess 🙂