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 Market Research Report : Radio cabs in India 2012
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Market Research Report : Radio cabs in India 2012

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For the complete report, get in touch with us at : info@netscribes.com …

For the complete report, get in touch with us at : info@netscribes.com


Taxi transportation system in India has long been characterized by paucity of well-maintained vehicles, tampered meters and unruly behavior of drivers. The need for a hassle-free and smooth ride has long been on the anvil for the Indian transport authority. Though Government did not harp on the same tune, but private operators could fathom the potential lying with a new and improved means of communication through radio cabs. Demand for radio cabs have been soaring in the metros and large cities as MNC executives, tourists, IT sector executives as also affluent Indians opt for a faster and smoother means of transportation through well maintained radio cabs. Today, radio cabs capitalize on its comfort quotient and availability quotient to attract people even though fares are comparatively higher than normal cabs.

The report begins with an introduction section which throws some light on the concept of radio cabs. It speaks about the difference between radio cabs and ordinary cabs as well as deliberates on the growth potential of radio cabs in future across India. A brief flowchart in the functional framework is also shown. It then moves towards a description of the Indian radio cab market stating its market size and growth. The next part throws some light on the business model adopted by the operators in the country along with examples. This is immediately followed by the revenue model wherein the components making up the revenues earned are discussed in detail. The section gets concluded with a Porter’s Five Forces Analysis for the sector.

Brief descriptions of the drivers that help the sector to prosper include increase in disposable income and transportation spending, influx of tourists, demand from corporate sector and change in mindset. Fares of radio cabs are more than ordinary cabs which term them under the category of luxury services. For any kind of luxury item of consumption, MAD (Money, Authority and Desire) is required. Though desire gets registered matter-of-factly, money and authority constitute the primary ingredients that drive demand. Increase in disposable income translates into heightened spending power at the hands of people, thereby acting as a potential driver for radio cabs’ sector. Another factor that has led to the growth of radio cabs is that of influx of tourists. Tourists travel to unknown lands where they are not well conversant with the place. In a country where cabs have earned a name of cheats and tricksters, radio cabs cater to the security and safety aspects. Places like airports or railway stations are more populated by radio cabs since they register a high percentage of footfalls. Radio cabs derive succor from increasing number of tourists, inclusive of FTAs, who generally ask for such mode of transport owing to its ease of booking, accurate meters and quality service.

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  • 1. Radio Cabs Market ‐Radio Cabs Market IndiaJune 2012
  • 2. Executive Summary  Radio cab market is slated top grow at a rate of z1% per annum Market  Business model can be differentiated into ‐ different fleet – z2 and z3  Revenues garnered for this particular sector occurs through 2 significant heads such as z4 and z5 g p g g Drivers Challenges Drivers &  – Increase in disposable income and  p p transportation spending g – High fares Challenges – Influx of tourists – TRAI regulation on SMS cap – Demand from corporate sector – Unavailability of parking space – Change in mindset  Hard and soft skills’ training for cab drivers  Collaborations with other service providers  marking the sector  Increasing entertainment options inside radio  cabs   PE investments in the sector Trends   Radio cabs with Wi‐Fi service  Technological advancements in radio cabs  Exclusive radio cabs for women Exclusive radio cabs for women Major PlayersCompetition Company 1 Company 2 Company 3 Company 4 Company 5 Company 6 RADIO CAB MARKET IN INDIA 2012.PPT 2
  • 3. •Introduction•Market Overview M k tO i•Business Model•Revenue Model•Revenue Model•Drivers & Challenges•Government Participation •Government Participation•Trends•Competition•Strategic Recommendations Appendix•Appendix RADIO CAB MARKET IN INDIA 2012.PPT 3
  • 4. Ease of booking and quality customer service work towards shaping growth for radio cabs in the country   SAMPLE Radio Cab Market – Overview   • Radio cabs business have emerged as one of the fastest growing businesses in India • Demand for radio cabs is soaring in the Indian soil especially in large cities including metros where people have  enough spending power to avail of such services  • Governments across different states are also encouraging growth of this sector as they believe that efficient  transport service is essential for any province to grow • Another facet in this sector is the generation of revenues through advertisements which has developed as a  h f h h f h h d h hh d l d major component in the a1 category Radio Cab Market – Growth Unit no x1 0 2011 2012e 2013e 2014e 2015e 2016e RADIO CAB MARKET IN INDIA 2012.PPT 4
  • 5. Radio Cabs – Business Model (1/2) SAMPLE  • Radio cabs operate in a unique business model wherein the driver is known as a2 at  times • He does a3, a4, a5 and a6 Radio cab hiring procedure • For the subscriber, the  business looks lucrative as the driver or subscriber has to pay  `INR ‐per day and the rest of the income is completely his • A9 a7 • A10 • A11 Radio Cab  Company • A12 a8 • A13 RADIO CAB MARKET IN INDIA 2012.PPT 5
  • 6. Fares in radio cabs differ across cities in the country as decided by the State GovernmentsPricing  Price Rise in non‐AC Radio Cabs (2011)•Radio cabs are have fares higher as compared to normal cabs owing to the  SAMPLE  SAMPLE greater cost of operation of radio cabs INR/km x2•There has been hikes in fuel prices for over a considerable period of time but it  h h b hik i f l i f id bl i d f i b i did not reflect any increase in radio cab fares•However, the UT Government has drafted certain alterations and spelled an  increase in cab farePricing in a Radio Cab in IndiaPricing in a Radio Cab in India CITY DAY TIME NIGHT TIME 0 Before Aug 2011 After Aug 2011 Price Rise in AC Radio Cabs (2011)  Price Rise in AC Radio Cabs (2011) INR/km x3 0 Before Aug 2011 After Aug 2011 RADIO CAB MARKET IN INDIA 2012.PPT 6
  • 7. Drivers & Challenges – Summary   Challenges Drivers High fares Increase in disposable income and  transportation spending  TRAI regulation on SMS cap Influx of tourists Unavailability of parking space Demand from corporate sector Change in mindset RADIO CAB MARKET IN INDIA 2012.PPT 7
  • 8. BPO sector has emerged as the torchbearer for radio cabs as they constitute a fair percentage of revenue share  Demand from corporate sector Impact• ‐ and ‐ concerns who have pick up and drop facility require a constant supply of cabs at their  disposal• F th f Further, for companies that have work shifts especially for night shifts, it becomes mandatory for  i th t h k hift i ll f i ht hift it b d t f them to ply cars to pick up and drop employees• Radio cabs derive a fair amount of revenues from this facet of supplying cabs to these concerns• Revenues get translated into a fixed income in this aspect wherein demand for radio cabs are  always constant  always constant IT/BPO Sector – India  IT/BPO  IT/BPO – Exports IT/BPO  IT/BPO – Domestic INR bn INR bn x4 x6 0 0 2008 2009 2010 2011 2008 2009 2010 2011 RADIO CAB MARKET IN INDIA 2012.PPT 8
  • 9. Despite of popularity, high fares surface as a major setback for this sector to grow High fares Impact• Fares of radio cabs are much higher than its counterparts of ordinary cabs• Owing to their high tariffs, common people do not avail of their services• Further, radio cabs operate in urban areas primarily in metros which limits its consumer base  even more• As a product, radio cabs are positioned for a few section of consumers who have the spending  power as well as the urge to spend in such products• Restrictions in brand positioning as well as pricing works against the sector to a certain extent as Restrictions in brand positioning as well as pricing works against the sector to a certain extent as  most plebians in the country look at affordable mode of transportation• Lowering of fares is not possible for the players as they need a bare minimum to maintain their  quality of service   Ordinary Cabs v/s Radio Cabs – Fares  Ordinary Cabs Radio Cabs Taxi Fares  Radio Cab Fares Higher fares compared  Higher fares compared D1 to ordinary cabs aided  D4 with different charge  during night time adds  D2 D5 to more woes for this  sector D3 D6 RADIO CAB MARKET IN INDIA 2012.PPT 9
  • 10. Government Policies (3/4) Haryana  SAMPLE  • Grants of permits to prospective operators of radio cabs are  considered in b10, b11 and b13 wherein cabs will operate within b14  kms of these towns Radio Cab Scheme‐Government of Haryana Radio Cab Scheme Government of HaryanaB1B2B3B4B5B6B7B8B9 RADIO CAB MARKET IN INDIA 2012.PPT 10
  • 11. Trends – Summary  Hard and soft skills’ training for cab drivers Increasing entertainment options inside radio cabs  Radio cabs with Wi‐Fi service ` Key Trends Collaborations with other service providers marking the sector PE investments in the sector  Technological advancements in radio cabs Exclusive radio cabs for women RADIO CAB MARKET IN INDIA 2012.PPT 11
  • 12. Players have started to provide training encompassing both  SAMPLE hard and soft skills to the cab driversHard and soft skills’ training for cab drivers  • Players have initiated the process of training cab drivers lest they misbehave with commuters  resulting in tampering with the brand image of the player resulting in tampering with the brand image of the player • Incidents of unruly manners including indecent behaviour gestured at women have forced radio cab  owners to harp on the lines of  proper training and educating drivers • Training include both inter‐personal skills as well as technical knowledge in driving cabs thereby  moulding them into an efficient brand representative of the brand • P1 • P2 • P3 • P4 Cab drivers at IGI Airport were given training by airport management through means of special workshops for drivers of both  regular cab as well as radio cab drivers wherein they were taught about various aspects of hospitality services as follows Y1 Y2 Y3 Y4 Y5 RADIO CAB MARKET IN INDIA 2012.PPT 12
  • 13. Private: Domestic Company – Company 1 (1/3)Company Information SAMPLE  Offices and Centres – India Registered AddressTel No.Fax No. Place   WebsiteYear of Incorporation Registered  AddressProducts and ServicesProducts and Services Category Products/Services Key PeopleCar Rental Name Designation RADIO CAB MARKET IN INDIA 2012.PPT 13
  • 14. Private: Domestic Company – Company 1 (2/3)Financial Snapshot i i lS h SAMPLE  Key Ratios K i y‐o‐y change  Particulars  2011 2010 2009 2008Total Income Total Income Profit (2011‐10) INR mn INR mn  Profitability Ratios Profit / Loss Operating Margin 3.15 28.58% 25.43% 25.68% 22.41% S Net Margin 1.54 18.90% 17.36% 20.30% 14.25% Q R Profit Before Tax Margin 3.15 28.58% 25.43% 25.68% 22.41% Return on Equity 3.81 19.44% 15.63% 17.45% 9.63% P Return on Capital Employed 7.40 47.56% 40.16% 40.08% 27.11% Return on Working Capital 4.80 24.99% 20.19% 21.88% 11.98% Return on Assets 3.87 19.44% 15.57% 17.36% 9.55% Return on Fixed Assets 25.87 98.22% 72.35% 91.83% 47.83% 0 0 Cost Ratios 2008 2009 2010 2011 Operating costs (% of Sales) ‐3.15 71.42% 74.57% 74.32% 77.59% Administration costs (% of  N.A. N.A. N.A. N.A. N.A.Financial Summary  Sales) Interest costs (% of Sales) Interest costs (% of Sales) N.A. NA N.A. NA N.A. NA N.A. NA N.A. NA• Company incurred a net profit of INR ‐ mn in FY 2011, as  Liquidity Ratios compared to net profit of INR ‐ mn in FY 2010 Current Ratio 9.03% 3.04 2.78 2.76 2.79 Cash Ratio 30.19% 2.09 1.61 1.83 1.94• It reported total Income of  INR ‐ mn in FY 2011,  Leverage Ratios registering an increase of ‐ over FY 2010 Debt to Equity Ratio N.A. N.A. N.A. N.A. N.A. Debt to Capital Ratio N.A. N.A. N.A. N.A. N.A.• Earned an operating margin of ‐ in FY 2011,  an increase  Interest Coverage Ratio N.A. N.A. N.A. N.A. N.A. of ‐ percentage points over FY 2010 Efficiency Ratios• The company did not report any debt to equity ratio both  Fixed Asset Turnover 24.68% 5.20 4.17 4.52 3.36 in FY 2011 and FY 2010 Asset Turnover 14.67% 1.03 0.90 0.86 0.67 Current Asset Turnover Current Asset Turnover 18.97% 18 97% 0.89 0 89 0.75 0 75 0.69 0 69 0.54 0 54 Working Capital Turnover 13.69% 1.32 1.16 1.08 0.84 Capital Employed Turnover 14.21% 1.03 0.90 0.86 0.68 Improved Decline RADIO CAB MARKET IN INDIA 2012.PPT 14
  • 15. Private: Domestic Company – Company 1 (3/3)Key Recent Developments (1/2) SAMPLE  Description  News • Has a presence in cities such as c1 c2 c3 and c4 wherein on a daily basis ~c5 passengers Has a presence in cities such as c1, c2, c3 and c4 wherein on a daily basis  c5 passengers  receive services by the companyOverview • Has future plans of expanding in other cities as well • Its fleet includes cars such as c6, c7, c8, c9 and c10 • Boasts of an unique amalgamation of –In‐taxi deals  • ‐ is available in around c11 cabs in c12 itself • ‐ works through c13 • Has announced the acquisition of c14Acquisition  • Both ‐ and ‐ will be working together to introduce new product offeringsTechnological add‐ons • Has introduced c15 RADIO CAB MARKET IN INDIA 2012.PPT 15
  • 16. Thank you for the attentionThe Radio Cab Market – India 2012 report is a part of Netscribes Business Services’ Industry Series.For more detailed information or customized research requirements please contact:Phone: +91 33 4064 6214E‐Mail: sales@netscribes.comFollow us on:About NetscribesNetscribes is a knowledge‐consulting and solutions firm with clientele across the globe. The company’s expertise spans areas of investment & business research, business & corporate intelligence, content‐management services, and knowledge‐software services. At its core lies a true value proposition that draws upon a vast knowledge base. Netscribes is a one‐stop shop designed to fulfil clients’ profitability and growth objectives.Disclaimer: This report is published for general information only. Although high standards have been used in the preparation of this report,Netscribes is not responsible for any loss or damage arising from use of this document. This document is the sole property of Netscribes. and Netscribes is not responsible for any loss or damage arising from use of this document This document is the sole property of Netscribes andprior permission is required for guidelines on reproduction. RADIO CAB MARKET IN INDIA 2012.PPT 16