MARKET REASEARCH ON CAR RENTAL INDUSTRY IN KOLKATA & Comparative FINANCIAL ANALYSIS OF RUIA CAR RENTALS

SUMMER INTERNSHIP PROJECT report On

MARKET REASEARCH ON CAR RENTAL INDUSTRY IN
KOLKATA & Comparative FINANCIAL ANALYSIS OF
RUIA CAR RENTALS

Undertaken At

Submitted For Partial Fulfilment of Award of Post Graduate Program in
Management

SUBMITTED BY

DEBASISH DUTTA (Enrolment No: 010110095)

of

Acknowledgement

With immense pleasure, I would like to present this project report for Market Research on
Car Rental Industry in Kolkata & Comparative Financial Analysis of Ruia Car Rentals. It
has been an enriching experience for me to undergo my summer training at RUIA CAR
RENTALS, which would not have possible without the goodwill and support of the people
around. As a student of GLOBSYN BUSINESS SCHOOL, KOLKATA I would like to express my
sincere thanks to all those who helped me during my summer internship program.

Words are insufficient to express my gratitude toward Mr ABHISHEK RUIA, the Managing
Director, RUIA CAR RENTALS, Kolkata for giving me the opportunity to do my project work
in the organization. I would like to give my heartily gratitude to the organization guide, Mr
DIGVIJAY SINGH, the Marketing Manager, RUIA CAR RENTALS, Kolkata for enlightening my
way of progress with his guidance.

Special thanks to Mr AVIK MUKHERJEE, Assistant Professor of Finance, Mr PRITHIRAJ
BANERJEE, Assistant Professor of Finance, Mr DEBRAJ DUTTA, Assistant Professor of
Marketing and all faculty members of GLOBSYN BUSINESS SCHOOL, KOLKATA for all the
guidance given in executing the project as per requirements.

However, I accept the sole responsibility for any possible error of omission and would be
extremely grateful to the readers of this project report if they bring such mistakes to my
notice.

Debasish Dutta

6th July, 2012

Approval of Industry Guide

This is to certify that Mr Debasish Dutta, a student of GLOBSYN BUSINESS SCHOOL,
Kolkata, bearing Enrolment No. 010110095 was a summer trainee at our organization for
a period of eleven weeks starting from 9th April, 2012 to 23rd June, 2012.

His project entitled “Market Research on Car Rental Industry in Kolkata & Comparative
Financial Analysis of Ruia Car Rentals” was done under my guidance.

The project is submitted in partial fulfilment of the requirements for the award of the degree
of POST GRADUATE PROGRAM IN MANAGEMENT to GLOBSYN BUSINESS SCHOOL,
Kolkata is a record of bona-fide training carried out by him.

Signature:
Seal of the company:

Mr Digvijay Singh

Marketing Manager

Ruia Car Rentals, Kolkata

Approval of Academic Mentor

This is to certify that Mr Debasish Dutta, bearing enrolment No. 010110095, has carried
out the project work presented in this project report entitled “Market Research on Car
Rental Industry in Kolkata & Comparative Financial Analysis of Ruia Car Rentals” for the
award of Post Graduate Program in Management from GLOBSYN BUSINESS SCHOOL,
Kolkata under my supervision.

The project report embodies results of original work and studies carried out by student
himself and the contents of the project report do not form the basis for the award of any other
degree to the candidate or to anybody else.

Signature:

Mr Avik Mukherjee

Assistant Professor, Finance

Globsyn Business School, Kolkata

Declaration

I do hereby declare that this project entitled with “Market Research on Car Rental Industry
in Kolkata & Comparative Financial Analysis of Ruia Car Rentals” is my own and original
work. This is for fulfilling the requirement of Post Graduate Program in Management as a
summer internship project. It has never been submitted nor been published elsewhere.

Signature:

Debasish Dutta

Globsyn Business School, Kolkata

PGPM-10, Enrolment No: 010110071

Table of Contents
INTRODUCTION .......................................................................................................................................................... 2

CAR RENTAL INDUSTRY IN INDIA............................................................................................................................................. 2
COMPANY PROFILE .............................................................................................................................................................. 3
OBJECTIVES OF THE PROJECT ................................................................................................................................................. 5

MARKET RESEARCH .................................................................................................................................................... 6

RESEARCH DESIGN ............................................................................................................................................................... 6
PRESENTATION & ANALYSIS OF DATA ...................................................................................................................................... 7
SUMMARY OF THE PRIMARY RESEARCH ................................................................................................................................. 23
FINDINGS OF PRIMARY RESEARCH ......................................................................................................................................... 25
RUIA CAR RENTALS IN THE LIGHT OF PORTER’S FIVE FORCES ..................................................................................................... 28
SWOT MATRIX FOR RUIA CAR RENTALS ............................................................................................................................... 30

COMPARATIVE FINANCIAL ANALYSIS.........................................................................................................................37

RATIO ANALYSIS ................................................................................................................................................................ 37
FREE CASH FLOW .............................................................................................................................................................. 50
DU-PONT ANALYSIS ........................................................................................................................................................... 51
COMPARATIVE FINANCIAL STATEMENTS ................................................................................................................................. 53
COMMON SIZE FINANCIAL STATEMENTS ................................................................................................................................ 63

RECOMMENDATIONS ................................................................................................................................................68

IMPROVING VISIBILITY ON THE WEB ..................................................................................................................................... 68
BETTER CONTROL OVER FINANCIAL SITUATIONS ...................................................................................................................... 69
GARAGE IN SALT LAKE SECTOR V OR RAJARHAT ...................................................................................................................... 70
MAINTAINING INDUSTRY STANDARDS OF CAR-CHAUFFEURS RATIO ............................................................................................. 70
EXPLORING NEW AVENUES FOR EXPANDING .......................................................................................................................... 70

KEY LEARNINGS FROM THE PROJECT .........................................................................................................................71

LIMITATIONS OF THE PROJECT...................................................................................................................................72

BIBLIOGRAPHY ..........................................................................................................................................................73

APPENDIX ..................................................................................................................................................................74

QUESTIONNAIRE FOR MARKET RESEARCH .............................................................................................................................. 74
FINANCIAL STATEMENTS OF RUIA CAR RENTALS ...................................................................................................................... 82
FINANCIAL STATEMENTS OF INTERNATIONAL TRAVEL HOUSE ..................................................................................................... 84
FINANCIAL STATEMENTS OF AVIS BUDGET GROUP INC.............................................................................................................. 87

Page |1

Introduction

Car Rental Industry In India

“The booming economy has led to a considerable growth of corporate business. Also, there
has been an increase in the number of overseas visitors to India for both leisure and work,
which has boosted business.’’

-------Jehangir J. Ghadiali, Managing Director, International Travel House (ITH)

Huge infrastructure development, rigorous effort from Ministry of Tourism to project India as
travel destination and emergence of BPO industry has given a huge push to the car rental
industry in India. Unorganized operators dominate about 85% of the market. But growth
figures are impressive. The car rental industry grew from Rs. 3000 crore in 2003 to Rs. 10,000
crore (US$ 2.10 billion) in 2007 notching up an annual average growth of 30%. Big name in
this industry includes Avis, Hertz India (Carzonrent, the master franchisee for Hertz in India).
Carzonrent was initially launched in 2000 as the master licensee for Hertz for India — but
Hertz pulled out of the country in 2008. Carzonrent has grown from being a single service
company catering to just corporate chauffeur-driven cars with a fleet of 30 cars and a
turnover of Rs 20 lakh per month in Delhi/Mumbai/Pune, into a complete mobility solutions
company operating out of 34 locations in 13 cities. Carzonrent zips around with over 6,400
cars through the country, while the other big players include Avis with its 1,400 cars, ITH with
a fleet of 600 and ECO Rent A Car with another 800. Till now the normal protocol for almost
all the car rental companies in India had been to rent cars with chauffeurs. Related
diversification could be wedding car rental services (foreigners love to get married in an
Indian style), car rental services for NRI tourists, self-drive car rental services. People are
willing to shell out anything in the range of Rs 1,300 to Rs 1,400 for a Swift daily. And none
winces to pay over Rs 5,000 for a Ford Endeavour or a robust Rs 10,000 to Rs 15,000 for a
Mercedes Benz for just eight hours of self-drive. Most of the major car rental companies of are
working on setting up self-drive offices in major cities and on setting up desks in airports and
hotels of India. They are also trying to set up fleet management and chauffeur driven cars for
corporate. They have even gone to the extent of offering holiday packages to their customers
as they have tie ups with hotels throughout the country. The organized car rental industry,
which is just 20% of the total rental market in India, constitutes a mere 3% or a fleet size of
6,000 cars and contributes to about 7% or Rs 400 crore to the total revenue. Of this, a mere
10% is currently contributed by the self-drive business, 20-25% by leasing of cars and the
rest come from chauffeur-driven cars that are largely used by corporate houses. Moreover,
legislation that mandate a minimum of 75 cars and a presence in at least five cities for getting
a license to offer self-drive services is also restricting growth of this segment. However, the
entry of new players like SIXT, Euro car, Thrifty and Dollar over the last one-and-a-half years
is expected to bring about a further consolidation in the organized segment.

Page |2

Company Profile

Ruia Car Rental is an ISO 9001:2000 certified company which comes under Narayani Group.
Narayani Group was started by Mr. Pasupati Ruia 16 long years back. It is mainly in to two
businesses: Car Rental Services in the name of Ruia Car Rentals (Jodpur Park, Kolkata) and a 3
star hotel business in the name of Hotel Narayani Enclave (Kasba, Kolkata).

Company Introduction:
This is a venture by a team of professionals from the car rental industry having over 16
years of experience in the industry. They have understood the requirements of corporate
world; have an in-depth knowledge of the operation and a wide exposure to the working of
global car rental brands, products and professional practices. Courteous service and
punctuality has earned them the respect of a very reliable car rental company in India. The
team of Ruia Car Rentals has worked in the branded car rental industry since its inception in
India. The organization mission is “To provide world class Branded Car On Rental Basis
consistently.” To facilitate its corporate clients, they offer instant reservation at the cost of a
local call for all their network locations with the facility of centralized billing. They are
accessible to clients 24 Hours 365 Days.

Company Hierarchy:

Service Coverage:
Ruia Car Rental is aggressively expanding themselves as a Pan India player. In Kolkata they
have been in Car Rental Business for more than 16 long years. They have already expanded
business to Delhi. There they have their own office and own fleet. Right now they are also
operating in Mumbai, Bangalore, Pune, Hyderabad, Ahmadabad, Chennai, Cochin, Jaipur,
Vadodara, Patna, Bhubaneswar and Goa through their associates.

Fleet:
In Kolkata they have very large fleet of 117 self-owned cars and in Delhi they have a fleet of 50
self-owned cars. The fleet mix comprises of Tata Indigo, Maruti Dzire, Toyota Innova, Ford
Icon, Ford Fiesta, Maruti SX4, Honda City, Toyota Corolla, Honda Civic, Toyota Altis, Toyota

Page |3

Fortuner, Honda Accord, Toyota Camry, Mercedes Benz E Class and BMW 5 Series. The fleet
mix however may vary at each location. To cater more efficiently to their clients this year they
have introduced new generation cars of Ford Fiestas, Maruti SX4, Hyundai Verna, Honda Civic,
Toyota Camry, instead of same old Mitsubishi Lancer, Honda City to our valuable Clients.

Technological Initiatives:
They are using software to ensure front end and back end integrated operations. This would
ensure timely and accurate billing and generation of client account statements.

Corporate Fleet Management:
Fleet management is a service which takes care of the entire organizations’
transportation needs and has options of administration, maintenance and chauffeur services
in addition to use and lease of the cars. Monthly MIS is provided which facilitates analyses
for better cost control, optimum utilization and corporate transportation planning. They
have developed their work culture perfectly from point of receiving a booking from a client to
final bill settlement, they have complete group of efficient staffs who do their work very
sincerely.

Garage:
In Kolkata, they have garages in two strategic locations (1) near Ruby Hospital & (2) Jodhpur
Park (South Kolkata), so having 2 different locations they can cater to clients more efficiently.

Chauffeurs:
Chauffeurs are the most important assets for Ruia Car Rentals. They have a team of expert
who scrutinize, interviews and chauffeurs undergo an intensive training program, which
covers safe driving skills, grooming and appearance, good etiquette and emergency handling
skills. Minimum 6-7 years of experienced is must for chauffeurs to get selected. The chauffeurs
are smartly attired in uniform and carry mobile phones for easy accessibility with STD &
Roaming facilities. Several of Ruia’s clients have appreciated the dedication of their
chauffeurs; they are able to work longer than others. The reason they can attribute for this is
that their chauffeurs team which are amongst the highly skillful and trained in Kolkata. Some
of their clients from other parts of India and even abroad, while placing booking request for
particular driver whose service was very satisfying. Recurring business from a client is a sign
of a satisfied customer. But, request for the same chauffeurs is doubly satisfying. Moreover all
chauffeurs are hired from Security Agencies, so that they are more reliable & serious in their
work.

Govt. Statutory Regulations:
In the private sector they are the only car rental company to wholly comply with the Govt.
Statutory regulations of paying ESI, PF, Gratuity, Bonus, etc. since these involve great deal of
paper work and timely submission with several govt. agencies as such all the paper work is
done through the Security Agencies from whom they have hired the drivers. Copies of the
related documents can be submitted on request.

Page |4

Objectives of The Project

This project consists of two parts: Market Research on Car Rental Industry and Comparative
Financial Analysis of Ruia Car Rentals. Detailed objectives of each segment are given below.

Market Research on Car Rental Industry
1. The project includes primary and secondary research activities on Car Rental industry
in Kolkata to find out the recent trends in service quality standards and to set
qualitative and or quantitative industry benchmark on parameters of service quality.
2. It also includes comparing Ruia Car Rentals with the industry benchmark to
understand a competitive strength of the business and to develop a SWOT Matrix for
them.
3. At the last the project includes developing concrete business recommendations for
Ruia Car Rentals based on the outcome of the market research.

Comparative Financial Analysis on Ruia Car Rentals
1. The project entitles to do an in-depth analysis of balance sheets & income statements
of Ruia Car Rentals to understand the true financial position of the company.
2. It also includes comparative financial analysis of the company with respect to global
player like AVIS Budget Group Inc. and national player like ITC’s International Travel
House.
3. At the last the project includes making financial recommendations for Ruia Car Rentals
based on the outcome of the analysis.

Page |5

Market Research
Research Design

Research Objectives:
The project includes primary and secondary research activities on Car Rental industry in
Kolkata to find out the recent trends in service quality standards and to set qualitative and or
quantitative industry benchmark on parameters of service quality.
Research Methodology:
Descriptive Research methodology is used in this research. In descriptive research both the
primary and secondary data is used.
Data Collection Instrument:
1. Primary data is collected through personal interview and mail survey with a well-
structured questionnaire consists of both open-ended and closed-ended questions to
get information based on the objective of the research.
2. Secondary data is collected from Internet
Sample Design:
Sample design is the method of how the sample will be collected. This method consists of
determination of followings:
1. Population: The survey population is the population we can observe. This is different
from target population. The target population is the population we want to observe. In
this case the survey population is Car Rental Companies which are currently operating
in Kolkata.
2. Sampling Frame: The procedure for listing all the accessible members of the
population is called the sampling frame. In this case the sampling frame is a list of
names and communication addresses of 120 car rental companies in Kolkata, collected
from internet.
3. Sample Units: Entire sample frame is divided into three sample units i.e. Small
Companies, Medium Companies and Large Companies.
4. Sampling Technique: A probabilistic sampling technique is used as every unit has a
'chance' of being selected, and that chance can be quantified.
5. Sampling Method: Stratified Random Sampling method has been used here.
6. Sample Size: 32 (Personal Interview: 24, Mail Survey: 8)
Assumptions:
1. It is assumed that the chosen sample is the representation of whole population.
2. It is assumed that information provided by the samples is accurate and best of their
knowledge.

Page |6

Presentation & Analysis of Data

Case 1: H0: Servicing time period is independent of company type.

Chi-Square Contingency Table of Company Type & Service Time Period

0 To 2 3 To 4 5 To 6 7 To 12 After 1 Only After Total
Months Months Months Months Year Encountering
Major
Problems
Small 0 7 6 0 0 0 13
Medium 2 6 1 0 0 0 9
Large 0 5 4 1 0 0 10
Total 2 18 11 1 0 0 32

Cannot calculate chi-square because one or more expected values = 0

Here we cannot calculate chi-square since there is 0 value in two columns. So in order to get
the chi-square we are eliminating those two columns which contains only 0 values.

0 To 2 Months 3 To 4 Months 5 To 6 Months 7 To 12 Months Total
Small 0 7 6 0 13
Medium 2 6 1 0 9
Large 0 5 4 1 10
Total 2 18 11 1 32

9.60 chi-square
6 df
0.1425 p-value

Here we will accept the null hypothesis since the p-value is greater than the significance level
(5%).

Page |7

Case 2: H0: Maximum number of years that a particular car is used is independent of company
type.

Chi-Square Contingency Table of Company Type & Maximum Years of Usages
Between Between 3 Between 5 Between 7 To More Than 10 Total
0 To 2 To 4 Years To 6 Years 10 Years Years
Years
Small 0 2 11 0 0 13
Medium 0 7 2 0 0 9
Large 0 7 3 0 0 10
Total 0 16 16 0 0 32


Here we cannot calculate chi-square since there is 0 value in three columns. So in order to get
the chi-square we are eliminating those three columns which contain only 0 values.

Between 3 To 4 Years Between 5 To 6 Years Total
Small 2 11 13
Medium 7 2 9
Large 7 3 10
Total 16 16 32

10.61 chi-square
2 df
0.0050 p-value

Here we will reject the null hypothesis since the p-value is less than the significance level
(5%).

Page |8

Case 3: H0: Type of services provided is independent of company type.

Chi-Square Contingency Table of Company Type & Type of Service Provided
On Call Call Centre Fixed Airport Leased Self- Total
Service Pick and Monthly Pick And Cars Driven
drop Duty Drop Cars
Small 13 4 4 13 4 0 38
Medium 9 6 3 8 1 1 28
Large 10 3 6 9 2 2 32
Total 32 13 13 30 7 3 98

6.77 chi-square
10 df
0.7467 p-value

(5%).

Case 4: H0: Accessories kept in cars are independent of company type.

Chi-Square Contingency Table of Company Type & Accessories Kept in Car
English Magazines Mineral First Seat STD Others* Total
Daily Waters Aid Belt Enabled
Newspapers Box Cell
Phones
Small 7 1 7 12 13 11 4 55
Medium 9 7 8 9 9 9 5 56
Large 10 9 10 10 10 10 10 69
Total 26 17 25 31 32 30 19 180

10.06 chi-square
12 df
0.6109 p-value
*other accessories include fire extinguisher, tissue papers, torch, and umbrella

(5%).

Page |9

Case 5: H0: Car Chauffeurs Ratio is independent of company type

ANOVA Table of Company Type & Car Chauffeurs Ratio
Mean n Std. Dev.
1.01572 13 0.114119 Small
0.87516 9 0.120172 Medium
0.92348 10 0.208274 Large
0.94736 32 0.158172 Total

Source SS df MS F p-value
Treatment 0.113365 2 0.0566823 2.48 0.1011
Error 0.662210 29 0.0228348
Total 0.775574 31

Fig. Company Type & Car Chauffeurs Ratio(Comparison of Groups)

1.40000
1.30000
1.20000
1.10000
1.00000
0.90000
0.80000
0.70000
0.60000
0.50000
0.40000
Small Medium Large

(5%).

Case 6: H0: Payroll process of chauffeurs is independent of company type.

Chi-Square Contingency Table of Company Type & Payroll Process of Chauffeurs
Yes No Total
Small 7 6 13
Medium 6 3 9
Large 6 4 10
Total 19 13 32

.36 chi-square
2 df
0.8333 p-value

P a g e | 10

(5%).

Case 7: H0: Hiring process of the chauffeurs is independent of company type.

Chi-Square Contingency Table of Company Type & Hiring Process of Chauffeurs
Through Own Selection Process Hire From Agencies Total
Small 6 9 15
Medium 5 5 10
Large 9 3 12
Total 20 17 37

3.38 chi-square
2 df
0.1846 p-value

(5%).

Case 8: H0: Training process of chauffeurs is independent of company type.

Chi-Square Contingency Table of Company Type & Training Process of Chauffeurs
In House Training Training Is outsourced No Training Provided Total
Small 5 5 5 15
Medium 2 6 1 9
Large 7 7 0 14
Total 14 18 6 38

7.84 chi-square
4 df
0.0976 p-value

(5%).

P a g e | 11

Case 9: H0: Type of training to the chauffeurs is independent of company type.

Chi-Square Contingency Table of Company Type & Training Type of The Chauffeurs
Defensive Soft Skills Etiquette Motor Repairing Disaster Total
Driving Training Management
Training Training
Small 6 4 3 2 2 17
Medium 8 7 7 2 4 28
Large 6 6 3 4 3 22
Total 20 17 13 8 9 67
2.45 chi-square
8 df
0.9639 p-value

(5%).

Case 10: H0: Regulation to maintain uniform for chauffeurs is not independent of company
type.

Chi-Square Contingency Table of Company Type & Maintain Uniform Of the Chauffeurs
Yes No Total
Small 8 5 13
Medium 9 0 9
Large 10 0 10
Total 27 5 32

8.66 chi-square
2 df
0.0132 p-value

(5%).

P a g e | 12

Case 11: H0: Chauffeurs’ ability to communicate in English is independent of company type.

Chi-Square Contingency Table of Company Type & Ability To speak In English of Chauffeurs
Yes No Total
Small 0 13 13
Medium 7 2 9
Large 8 2 10
Total 15 17 32

19.33 chi-square
2 df
0.0001 p-value

(5%).

Case 12: H0: Minimum education qualification of chauffeurs is independent of company type.

Chi-Square Contingency Table of Company Type & Minimum education quality of Chauffeurs
10th Standard 12th Standard Graduation Total
Small 13 0 0 13
Medium 7 2 0 9
Large 2 8 0 10
Total 22 10 0 32


Here we cannot calculate chi-square since there is 0 value in one column. So in order to get
the chi-square we are eliminating that column which contains only 0 values.

10th Standard 12th Standard Graduation
Small 13 0 13
Medium 7 2 9
Large 2 8 10
Total 22 10 32

17.31 chi-square
2 df
0.0002 p-value

(5%).

P a g e | 13

Case 13: H0: Minimum experience of the chauffeurs is independent of company type.

Chi-Square Contingency Table of Company Type & Minimum Experience of Chauffeurs
0 To 2 3 To 4 5 To 6 7 To 10 More Than 10 Total
Years Years Years Years Years
Small 0 8 5 0 0 13
Medium 0 4 4 1 0 9
Large 0 5 5 0 0 10
Total 0 17 14 1 0 32


Here we cannot calculate chi-square since there is 0 value in two columns. So in order to get
the chi-square we are eliminating those columns which contains only 0 values.

3 To 4 Years 5 To 6 Years 7 To 10 Years Total
Small 8 5 0 13
Medium 4 4 1 9
Large 5 5 0 10
Total 17 14 1 32

3.05 chi-square
4 df
0.5498 p-value

(5%).

Case 14: H0: Other parameters considered during hiring of chauffeurs are independent of
company type.

Chi-Square Contingency Table of Company Type & Other Parameters Consider During
Hiring of Chauffeurs
His Smoking, His His Familiarity To Total
Drinking And Attitude Neatness Roads of The
Chewing City
Habits
Small 9 8 5 12 34
Medium 5 8 6 8 27
Large 7 10 8 9 34
Total 21 26 19 29 95
1.97 chi-
square
6 df
0.9225 p-value

P a g e | 14

(5%).

Case 15: H0: Salary package is independent of company type.

Chi-Square Contingency Table of Company Type & Salary Package of Chauffeurs
Less than Rs. 5001 – Rs. 8001 – Greater Than Rs. Total
Rs. 5000 Rs. 8000 Rs. 12000 12000
Small 3 9 1 0 13
Medium 0 5 4 0 9
Large 0 8 2 0 10
Total 3 22 7 0 32


Here we cannot calculate Chi-square since there is 0 value in one column. So in order to get
the Chi-Square we are eliminating the column that contains 0 values.

Less than Rs. 5000 Rs. 5001 – Rs. 8000 Rs. 8001 – Rs. 12000 Total
Small 3 9 1 13
Medium 0 5 4 9
Large 0 8 2 10
Total 3 22 7 32

8.10 chi-square
4 df
0.0878 p-value

Here we will accept the null hypothesis since the p value is greater than the significance level
(5%).

Case 16: H0: Booking process is independent of company type.

Chi-Square Contingency Table of Company Type & Booking Process of The Company
Telephone Email Online Fax Travel Agents Total
Small 12 8 5 2 8 35
Medium 8 9 6 2 9 34
Large 10 10 8 0 9 37
Total 30 27 19 4 26 106

3.66 chi-square
8 df
0.8863 p-value

(5%).

P a g e | 15

Case 17: H0: Payment mode for customers is independent of company type.

Chi-Square Contingency Table of Company Type & Payment Mode For Customers
Cash Cheques/Drafts Online Payments(NEFT/RTGS) Credit Cards Total
Small 13 13 4 0 30
Medium 9 9 9 3 30
Large 8 10 7 3 28
Total 30 32 20 6 88

6.93 chi-square
6 df
0.3275 p-value

(5%).

Case 18: H0: Credit period given to customers is independent of company type.

Chi-Square Contingency Table of Company Type & Credit Period of Customer
0-15 Days 16-30 Days 31-45 Days Total
Small 5 7 1 13
Medium 1 7 1 9
Large 1 6 3 10
Total 7 20 5 32

5.22 chi-square
4 df
0.2653 p-value

(5%).

Case 19.1: H0: Impact score of fleet is independent of company type.

ANOVA Table of Company Type &Impact Score of Fleet

Mean n Std. Dev.
4.7 13 1.75 Small Companies
3.6 9 1.33 Medium Companies
3.6 10 1.58 Large Companies
4.0 32 1.64 Total

Treatment 9.58 2 4.789 1.89 0.1689
Error 73.39 29 2.531
Total 82.97 31

P a g e | 16

Fig. Company Type & Impact Score of Fleet (Comparison of Groups)
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
Small Companies Medium Companies Large Companies

(5%).

Case 19.2: H0: Impact score of pricing is independent of company type.

ANOVA Table of Company Type &Impact Score of Pricing

Mean n Std. Dev.
2.8 32 1.15 Total

Treatment 1.86 2 0.928 0.69 0.5099
Error 39.02 29 1.346
Total 40.88 31

Fig. Company Type & Impact Score of Pricing (Comparison of Groups)
6.0
5.0
4.0
3.0
2.0
1.0
0.0

P a g e | 17

(5%).

Case 19.3: H0: Impact score of garages is independent of company type.

ANOVA Table of Company Type &Impact Score of Pricing
Mean n Std. Dev.
1.5 32 0.92 Total

Treatment 0.60 2 0.300 0.34 0.7125
Error 25.40 29 0.876
Total 26.00 31

Fig. Company Type & Impact Score of Garages (Comparison of Groups)
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0

(5%).

P a g e | 18

Case 19.4: H0: Impact score of services is independent of company type.

ANOVA Table of Company Type &Impact Score of Services
Mean n Std. Dev.
6.6 32 0.72 Total

Treatment 0.32 2 0.161 0.30 0.7429
Error 15.55 29 0.536
Total 15.88 31

Fig. Company Type & Impact Score of Services (Comparison of Groups)
7.5
7.0
6.5
6.0
5.5
5.0
4.5
4.0
3.5
3.0

(5%).

Case 19.5: H0: Impact score of chauffeurs is independent of company type.

ANOVA Table of Company Type & Impact Score of Chauffeurs

Mean n Std. Dev.
3.8 32 1.62 Total

P a g e | 19

Treatment 12.71 2 6.353 2.68 0.0856
Error 68.76 29 2.371
Total 81.47 31

Fig. Company Type & Impact Score of Chauffeurs (Comparison of Groups)
8.0

7.0

6.0

5.0

4.0

3.0

2.0

1.0

0.0

(5%).

Case 19.6: H0: Impact score of business process is independent of company type.

ANOVA Table of Company Type & Impact Score of Business
Process

Mean n Std. Dev.
3.8 32 1.37 Total

Treatment 0.96 2 0.480 0.24 0.7856
Error 57.26 29 1.974
Total 58.22 31

P a g e | 20

Fig. Company Type & Impact Score of Business Process
(Comparison of Groups)
7.0

6.0

5.0

4.0

3.0

2.0

1.0

(5%).

Case 19.7: H0: Impact score of customer relationship is independent of company type.

ANOVA Table of Company Type & Impact Score of Customer
Relationship
Mean n Std. Dev.
5.4 32 1.56 Total

p-
Source SS df MS F value
Treatmen
t 14.45 2 7.225 3.42 0.0464
Error 61.27 29 2.113
Total 75.72 31

Post hoc analysis
p-values for pair wise t-tests
Small Companies Large Companies Medium Companies
4.7 5.5 6.3
Small Companies 4.7
Large Companies 5.5 .1968
Medium Companies 6.3 .0144 .2221

P a g e | 21

Tukey simultaneous comparison t-values (df. = 29)
Small Companies Large Companies Medium Companies
4.7 5.5 6.3
Small Companies 4.7
Large Companies 5.5 1.32
Medium Companies 6.3 2.60 1.25

critical values for experiment wise error rate:
Fig. Company Type & Impact Score2.48
0.05 of Customer Relationship
0.01(Comparison of Groups)
3.16
8.0

7.0

6.0

5.0

4.0

3.0

2.0

1.0

0.0

Here we will reject the null hypothesis since the p value is greater than the significance level
(5%).

P a g e | 22

Summary of The Primary Research

Case 1: Servicing time period is independent of company type.

Case 2: Maximum no. of years that a particular car is used is dependent of company type.

Case 3: Type of service (i.e. on call, call center pick and drop, airport and station pick and drop
etc.) is independent of company type.

Case 4: Accessories supplied to the car during service is independent of company type.

Case 5: Car Chauffeurs Ratio is independent of company type.

Case 6: Payroll process to chauffeurs is independent of company type.

Case 7: Hiring Process of chauffeurs is independent of company type.

Case 8: Training process of chauffeurs is independent of company type.

Case 9: Type of training (i.e. defensive driving, soft skill, motor repairing etc.) to chauffeurs is
independent of company type.

Case 10: Regulation to maintain uniform for chauffeurs dependent of company type.

Case 11: Chauffeurs' ability to communicate in English is dependent of company type.

Case 12: Minimum educational qualification for chauffeur’s dependent of company type.

Case 13: Minimum work experience required for chauffeurs is independent of company type.

Case 14: Other parameters (i.e. smoking and drinking habits, attitude, familiarity to roads etc.)
considered during hiring of a chauffeurs is independent of company type.

Case 15: Salary package is independent of company type.

Case 16: Booking process is independent of company type.

Case 17: Payment mode is independent of company type.

Case 18: Credit period given to customers is independent of company type.

Case 19:

19.1: Impact score of fleet is independent of company type.

19.2: Impact score of pricing is independent of company type.

19.3: Impact score of garages is independent of company type.

P a g e | 23

19.4: Impact score of services is independent of company type.

19.5: Impact score of chauffeurs is independent of company type.

19.6: Impact score of business process is independent of company type.

19.7: Impact score of customer relationship is dependent of company type.

P a g e | 24

Findings of Primary Research

1) Any company irrespective of its type cannot ignore the importance of servicing of its
cars. 56.25% companies service their cars in between 3 to 4 months. So we can take
this as an industry benchmark.
2) According to our research the maximum usage of car is dependent on company size
(p= 0.0050). Our research shows that 70% of the large companies are using a car for 3
to 4 years. So if we take this as benchmark for large car.
3) Most of the car rental companies are operating into on call service and Airport and
Station pick & drop segment. Leased car market and self-driven car market is mostly
untouched by present players.
4) A standard car rental company provides English Daily Newspaper, Magazines, Mineral
water, First Aid Box, Seat Belts, cell phones for chauffeurs etc. So we can take this as an
industry benchmark.
5) Car Chauffeurs ratio signifies the no. of chauffeurs allotted for a particular car. Our
study reveals that Car Chauffeurs Ratio is independent of company type. This industry
has the mean Car Chauffeurs Ratio of 0.94736, which signifies 1.05 no. of chauffeurs
are allotted to a particular car. So, we can take this an industry benchmark.
6) Our study reveals that payroll process of chauffeurs is independent of company type.
Chauffeurs are in direct payroll in 59.3% car rental companies and 40.7% car rental
companies pay their chauffeurs through agencies. Some of these companies are flexible
and pay their chauffeurs directly and during huge requirements they hire chauffeurs
from agencies and pay them through agencies.
7) Our study reveals that hiring process of chauffeurs is independent of company type.
This industry has the trend of hiring chauffeurs through their own selection process
(62.5% of companies do that) and as well as from agencies (53.2% of companies do
that). Some of these companies are flexible and hire their chauffeurs directly and
during huge requirements they hire chauffeurs from agencies.
8) Our study reveals that training process of chauffeurs is independent of company type.
In this industry, chauffeurs are properly trained as 43.75% companies train its
chauffeurs itself and training is outsourced by 56.25%. Some of these companies are
flexible and train their chauffeurs directly and during huge requirements they train
chauffeurs from agencies.
9) Our study reveals that type of training given to chauffeurs is independent of company
type. This industry gives more emphasis on training their chauffeurs in defensive
driving, soft skills and etiquette. So we can take this as an industry benchmark.
10)Regulation to maintain uniform for chauffeurs is dependent of company type (p=
0.0132). All the large companies have the regulation to maintain uniform for
chauffeurs. So we can take this as benchmark for large companies.

P a g e | 25

11)Chauffeurs’ ability to communicate in English considered during hiring is dependent of
company type (p= 0.0001). 80% of large companies hire chauffeurs who can
communicate in English. So we can take this as benchmark for large companies.
12)Our study reveals that minimum educational qualification of chauffeurs is dependent
of company type (p= 0.0002). 68.75% car rental companies in this industry are looking
for minimum educational qualification of 10th standard for chauffeurs before hiring.
But 80% large car rental companies are looking for minimum educational qualification
of 12th standard. So we can take this as benchmark for large companies.
13)Our study reveals that minimum work experience of chauffeurs required for hiring is
independent of company type. 53.12% of the companies hire chauffeurs with 3-4 years
of experience, while 43.75% companies hire chauffeurs with 5-6 years of experience.
So 3-4 years of work experience can be taken as a benchmark for the industry.
14)Our study reveals that other parameters like smoking, chewing and drinking habits of
chauffeurs, their neatness, their attitude and familiarity to roads of the city considered
during hiring is independent of company type. This industry gives proper importance
of all these additional parameters.
15)Salary package of chauffeurs is independent of company type. 68.75% car rental
companies provide salary in the range of Rs. 5001-Rs. 8000.
16)Booking process in this industry is independent of company type. Telephone is mostly
accepted medium of booking followed by email, travel agents and online. Fax is used
rarely.
17)Mode of accepting payments from customers is independent of company type in this
car rental industry. Cheque/Draft is mostly accepted mode of payments followed by
cash, and online transfer (NEFT/RTGS). Credit cards are used rarely.
18)Credit period given to customers is independent of company type. 62.5% car rental
companies provides credit period of 16-30 days. So we can take this as industry
benchmark.
19)A. Impact scores of fleet, pricing, garages, services, chauffeurs, business process are
independent of company type. Our study reveals that Service is the most important
parameter that impacts businesses of car rental companies in this industry. It is
followed by fleet, business process, chauffeurs, pricing and garages. So, we will
recommend Ruia to give proper emphasis on these parameters.

P a g e | 26

Average Impact Score(On A Scale of 7)

Business Process 3.84375

Chauffeurs 3.78125

Services 6.5625

Garages 1.5

Pricing 2.8125

Fleet 4.03125

0 1 2 3 4 5 6 7

B. Customer relationship is dependent of company type (p= 0.0464). While in this
industry, customer relationship is having a mean impact score of 5.4 out of 7, small
companies are less impacted by customer relationship (mean impact score of 4.7 out of
7) and medium companies are hugely impacted by customer relationship (mean
impact score of 6.3 out of 7). Large companies are maintaining industry average
impact score.

P a g e | 27

Ruia Car Rentals In The Light of Porter’s Five Forces

Competitive Rivalry: High

There is a substantial amount of competitors like ITC Travel House, Avis, Orix, NTL, Infinity
Enterprise, Kolkata Cabs, Grewal Enterprise, Lemon, Infinity, Gujral, Lopon, Pearl, Savaari,
Autoriders etc. operating within the Rental industry in Kolkata. The fight for consumer market
share has forced these companies to differentiate themselves through price and their level of
customer service. Unfortunately, because the intensity of this industry is so high, many
competing companies offer similar prices, features and benefits to consumers. As a result
companies lose potential profits as they compete in price-wars to gain consumer market
share.

Per Hr. Rate(in INR)*
Cars (A.C.) Kolkata
Grewal Gujral Lopon Pearl Lemon Autoriders
Cabs
Tata Sumo 140 120 100
Tata Indica 90 95 120 100
Tata Indigo 130 130 130 140 125 125
Maruti Suzuki Swift
140 165 140 130 150 155 155
Dzire
Mahindra Scorpio 140 140 150 165
Chevrolet Tavera 130 140 140 155
Ford Fiesta 180 180
Honda City 250 250 260 210 300 230
Hyundai New Verna 300 300
Toyota Innova 160 200 180 180 220 190 185
Toyota Fortuner 500 520 525
Toyota Camry 600 700 640
Mercedes E 320 850 900 1200 1200 1200 720 1100
BMW Series 5 1200 1600 1500 1200
*Data collected from websites of respective companies.

Threat of New Entrants: Low

To start a rental service company, an individual needs to have an extensive amount of
financial resources. The likelihood of achieving profitability in a highly competitive industry
serves as a barrier for new entrants.

Threat of Substitutes: High

There are a lot of competitors within the Car Rental industry. This has caused consumers to
view the products and services offered by car rental service companies as commodities
because of their similar features and prices. Corporate customer can have their own fleet to

P a g e | 28

meet their requirements or consumers can also utilize public transport like train, bus or semi-
public transport like taxi, shuttle services etc.

Bargaining Power of Buyers: High

Ruia Car Rentals operates on premium car rental segment and all of its clients are from
corporate. Their clients have huge financial strength to create their own fleet to meet their
requirements. Presence of lot car rental service providers has also given high bargaining
power to buyers of car rental services.

Bargaining Power of Suppliers: Low

If Ruia Car Rentals feels that the price bracket of a particular brand of cars is too high which
might cut down the revenue, they might avoid buying cars of that brand. So, bargaining power
of suppliers is low.

P a g e | 29

SWOT Matrix For Ruia Car Rentals

One of the objectives of this project is to develop a SWOT matrix for Ruia Car Rentals based on
primary and secondary research.

Strengths:

1. Large Fleet: In car rental industry service quality can be kept high only if a company
has its own cars. The primary research reveals Ruia Car Rentals has the largest fleet of
self-owned cars in Kolkata.

Self-owned Cars

NTL 15

Grewal 38

Lemon 40

Savaari Car Rental 45

IB Cabs 45
Self-owned Cars
Pearl 55

Gujral 70

Lopon Car rental 80

Megacabs 100

Ruia Car Rentals 117

0 20 40 60 80 100 120

2. Service Quality Standards: One of the objectives of this primary research was to set
some industry benchmark on service quality standards and compare Ruia Car Rentals
with that benchmark. A detailed comparison about the same is given below:

P a g e | 30

Service Quality Quality Standards of Ruia Car Rentals Comments
Components The Industry / Large
Companies *
How frequently cars 3-4 months 2- 3 months Better than the
are serviced industry
Maximum no. of years 3-4 years 2 years Better than the
a car is used industry
Accessories kept in 1. Daily English news 1. Daily English news At par with the
cars during service paper paper industry
duty 2. Magazines 2. Magazines
3. Mineral water 3. Mineral water
4. First aid box 4. First aid box
5. Seat belts 5. Seat belts
6. Cell phones to 6. Cell phones to
chauffeurs chauffeurs
7. Others 7. Tissue papers
Car Chauffeurs Ratio 0.947 (1.05 no. of 1.23 (0.81no. of Below the
chauffeurs per car) chauffeurs per car) industry
standards
Payroll process of 1. Direct payroll 1. Direct payroll Quality will vary
chauffeurs 2. Security agencies with
requirements
Hiring process of 1. Own selection 1. Own selection Quality will vary
chauffeurs process process with
2. Security agencies requirements
Training process of 1. Own selection 1. Own selection Quality will vary
chauffeurs process process with
2. Outsourcing requirements
Type of training to 1. Defensive training 1. Defensive training Better than the
chauffeurs 2. Soft skill 2. Soft skill industry
3. Etiquette 3. Etiquette
4. Disaster
management
Regulation to maintain Yes Yes At par with the
uniform for chauffeurs industry
Is during hiring of Yes Yes At par with the
chauffeurs, his ability standard of large
to communicate in companies and
English considered better than the
industry

P a g e | 31

Service Quality Quality Standards of Ruia Car Rentals Comments
Components The Industry / Large
Companies *
Minimum educational 12th Standard 12th Standard At par with the
qualification required standard of large
for chauffeurs companies and
better than the
industry
Minimum work 3-4 years 6-7 years Better than the
experience required industry
for chauffeurs
Other parameters 1. Smoking, drinking 1. Smoking, drinking At par with the
considered during and chewing habits and chewing habits industry
hiring 2. Neatness 2. Neatness
3. Attitude 3. Attitude
4. Familiarity to roads 4. Familiarity to roads
of the city of the city
Salary package of Rs. 5001-8000 Depends upon Data
chauffeurs company and security insufficiency
agencies
Booking process (in 1. Telephone 1. Telephone At par with the
order of frequently 2. E-mail 2. E-mail industry
used to least used) 3. Travel Agents 3. Travel Agents
4. Online
Mode of payments for 1. Cheque/Draft 4. Cheque/Draft At par with the
customers (in order of 2. Cash 5. Cash industry
frequently used to 3. NEFT/RTGS 6. NEFT/RTGS
least used)
Credit period given to 16-30 days 16-30 days At par with the
customers industry
*Please refer Finding of Primary Research section for any clarifications

So we can see that Ruia Car Rentals is either better or at par with the industry in most of the
service quality standards.

3. Long list of corporate clients: Due to its presence of 16 long years in the industry, Ruia
Car Rental today is doing business with almost 330 satisfied corporate clients. To name
a few Reserve Bank of India, UNICEF, Samsung, LG, Rediff, ABB, Shell India, Bluestar,
Cipla, Ranbaxy, Dr.Reddy's Lab, Pfizer, Mearks India, Dabur, Emami, Times Of India
group, Caterpillar India, Appejay Group, SREI Group, Essar Group, HDFC Bank, United
bank of India, UCO Bank, Reliance Industries, Indian Oil Corporation, Lafarge,
GlaxoSmithKline, ESAB India and many more.

P a g e | 32

Weaknesses:

1. Low visibility on web: In today’s business world, it is very important to be visible in the
internet; mere presence in the web world will not meet the organization’s objectives.
For example, a person from New Delhi seeking a car rental service in Kolkata will
obviously go to internet and search for car rental service providers in Kolkata. If search
engine do not show the page of Ruia Car Rentals then the ultimate aim of creating a
web site is totally useless. The Secondary research is showing Ruia Car Rentals’
visibility on internet is very low.

P a g e | 33

2. No presence of garage in Salt Lake/ Rajarhat: Ruia Car Rentals has two garages in the
city but it does not have any garage in Salt Lake or Rajarhat Areas. As a result, company
has to charge more to some of its clients whose offices are in Salt Lake Sector V.
Because billing is done on garage in and garage out basis in this industry. It is also
creating barriers to developing new clients.

Company Names Garage Locations In Kolkata*
Kolkata Cabs Bhawanipore
NTL Salt Lake
Grewal Enterprise Bhawanipore
Orix Auto Infrastructure Salt Lake
Gujral Park Street, Ballygaunj
Pearl Bhawanipore
Lopon Garcha 1st Lane
*Information collected from primary research

3. Pan India Operations: Ruia Car Rentals has their own fleet in Kolkata and Delhi and
operates in Pan India basis through their associates in other cities. So, maintaining high
service quality standards in other cities except Kolkata and Delhi is a big issue. This
might hamper Ruia’s brand equity.

4. Declined Net Profit: Though car rental income is increasing over last four years but net
profit margin has decreased hugely. For detailed clarification refer Ratio Analysis of
Comparative Financial Analysis section.

Opportunities:

1. Boom of Travel and Tourism Industry: According to the World Tourism Organization,
by the year 2020, it is expected that India will become the leader in the tourism
industry in South Asia, with about 8.9 million arrivals. Of late the Indian tourism
economy has been deemed as the second-most rapidly increasing (8.8 %) tourism
economy in the world, by World Travel and Tourism. The RNCOS-formulated report
titled "Indian Tourism Industry Forecast (2007- 2011)” which reveals following
findings:

P a g e | 34

Year Foreign Exchange Earning From Tourism (in INR Crores) % Change Over
Previous Year
2000 15626 20.7
2001 15083 -3.5
2002 15064 -0.1
2003 20729 37.6
2004 27944 34.8
2005 33123 18.5
2006 39025 17.8
2007 44360 13.7
2008 51294 15.6
2009 54960 7.1
2010 64889 18.1
2011 35163 12.1

Year No. of Domestic Tourist Visits (in million) to States / % change over the previous
Union Territories year
2000 220.11 15.4
2001 236.47 7.4
2002 269.6 14
2003 309.04 14.6
2004 366.27 18.5
2005 391.95 7
2006 462.31 18
2007 526.43 13.9
2008 563.03 7
2009 668.8 18.8
2010 740.21 10.7

2. Government policy about Travel & Tourism:
a. Many states such as Tamil Nadu, Kerala, Uttar Pradesh, West Bengal, Arunachal
Pradesh, Uttarakhand, and UTs of Daman & Diu, Dadar & Nagar Haveli have already
granted ‘Industry Status’ to tourism. It is proposed that tourism should be included
in Schedule 1 of the Industries Development Act 1951.
b. Under Section 80 IA of the Income tax Act, 1961, similar to airports, seaports and
railways, all new hotel projects can avail the benefit of 100% deductions with
respect to profits and gains, for a period of 10 years. This is expected to boost
investments in this sector. Section 80 HHD of the Income Tax Act 1961, which was
discontinued after 2005-06, to be revived and ‘Export Industry Status’ to be
conferred to this industry so that it can claim deductions on foreign exchange
earnings. This would boost growth.

P a g e | 35

c. According to a WTTC report, India’s travel and tourism industry will directly
contribute INR 3,345 billion (USD 61 billion) to the GDP by 2019, allowing 100%
foreign direct investment in hotel infrastructure development. This will prove to be
a major growth driver for the industry.

Threats:

1. Intense competition: Presently Ruia Car Rental is facing intense competition from
brand, product and generic competitors.
A. Brand competitors: ITC Travel House, Orix Auto Infrastructure, Avis
B. Product competitors: Grewal, Gujral, Lemon, NTL, Lopon, Pearl
C. Generic competitors: Kolkata Cabs, Mega Cabs
2. Inflation rate
3. Increasing fuel price

P a g e | 36

Comparative Financial Analysis
Ratio Analysis

1. Current Ratio: It gives us an idea about the capability of the company to pay off its short
term liabilities and obligations.

Current Ratios 2008 2009 2010 2011
Ruia 1.07 1.02 0.63 0.15
ITH 1.87 1.64 1.72 1.75
Avis 1.19 1.43 1.76 1.06

Current Ratios

2.00 1.87
1.72 1.76 1.75
1.80 1.64
1.60 1.43
1.40 1.19
1.20 1.07 1.02 1.06 Ruia
1.00 ITH
0.80 0.63 Avis
0.60
0.40
0.15
0.20
0.00
2008 2009 2010 2011

1. In the year 2010, Cash & Bank Balance has decreased by 60.80% and Loans &
Advances has decreased by 26.05%. Due to these, Total Current Assets has decreased
by 33.71%. At the same time company’s Loan has increased by 45.26%. Due to this,
Total Current Liabilities has increased by 6.95%. These are the reasons why Current
Ratio of Ruia Car Rentals has decreased hugely to 0.63 in the year 2010 from 1.02 in
the year 2009.
2. In the year 2011, company’s Loan has increased by 522.74%. Due to this, Total Current
Liabilities has increased by 156.19%. At the same time, Cash & Bank Balance has
decreased by 60.91% and Loans & Advances has decreased by 100%. Due to these,
Total Current Assets has decreased by 39.45%. These are the reasons why Current
Ratio of Ruia Car Rentals has decreased hugely to 0.15 in the year 2011 from 0.63 in
the year 2010.

P a g e | 37

Current Ratio of Ruia Car rentals has decreased gradually throughout the 4 years and it is less
than Avis and ITC Travel House. On the other hand Current Ratios of ITH and Avis are stable
compared to Ruia Car Rentals and up to the standard that a bank will look for before giving
loans to the company. It will make tough for Ruia Car Rentals to apply for loans as banks will
be looking for current ratio of 1.33.

2. Cash Assets Ratio: It measures the company’s ability to pay its short term obligations. It
is the strictest measure of company’s liquidity position.

Cash Assets Ratio 2008 2009 2010 2011
Ruia 0.19 0.22 0.08 0.01
ITH 0.20 0.15 0.11 0.11
Avis 0.28 0.37 0.98 0.36

Cash Assets Ratios
0.98
1

0.8

Ruia
0.6
0.37 0.36 ITH
0.4 0.28 Avis
0.19 0.2 0.22
0.15
0.2 0.08 0.11 0.11
0.01
0
2008 2009 2010 2011

1. In the year 2009, Cash & Bank Balances has increased by 12.49% but Current
Liabilities has decreased by 2.32%. This is the reason why Cash Assets Ratio has
increased from 0.19 in the year 2008 to 0.22 in the year 2009.
2. In the year 2010, Cash & Bank Balances has decreased by 60.8% but in respect to that
Current Liabilities has increased by 6.95%. This is the reason why Cash To Total Assets
Ratio has decreased from 0.22 in the year 2009 to 0.08 in the year 2010.
3. In the year 2011, Cash & Bank Balances has again decreased by 60.91% but Current
Liabilities has increased by 156.19%. This is the reason why Cash Assets Ratio has
again decreased from 0.09 in the year 2010 to 0.01 in the year 2011.

On the other hand Cash Assets Ratio of ITH is decreasing gradually throughout 4 years, and
for Avis it has increased in the period of 2008-2010 but it has decreased in 2011. Presently,
Ruia Car Rentals’ Cash Assets Ratio is less than ITH and Avis, which is signifying low degree of
safety from a creditor's viewpoint.

P a g e | 38

3. Debt To Equity Ratio: It gives us the idea about the amount of Debt a company is having
compared to its Equity. Higher Debt To Equity signifies the risk arising from the use of
debt capital as the company has to pay its Debt first.

Debt To Equity Ratio 2008 2009 2010 2011
Ruia 13.92 59.49 NA 7.50
ITH 0.15 0.08 0.03 0.01
Avis 110.90 38.54 21.91 26.83

Debt To Equity Ratios

120.00 110.90

100.00

80.00
Ruia
59.49
60.00 ITH

38.54 Avis
40.00
26.83
21.91
20.00 13.92
7.50
0.15 0.08 0.00 0.03 0.01
0.00
2008 2009 2010 2011

1. In the year 2009, Equity has decreased by 77.14% whereas total debt has decreased by
only 2.32%. This is the reason why Debt To Equity Ratio of Ruia Car Rentals has
increased from 13.92 in the year 2008 to 59.49 in the year 2009.
2. In the year 2010, Ruia Car Rentals encountered only 0.07% net profit growth but its
drawings increased by 9.80%. Due to this huge Drawings Ruia’s equity has decreased
by 692.77%. But in the year 2011 the company has introduced fresh capital which has
increased Equity by 466.59%. In comparison to that debt has only increased by
156.19%. As a result Debt To Equity Ratio had come down to 8.50 in the year 2011.

In case of ITH, the Equity has increased as the company has issued more and more share and
it has paid off its Debt. As a result Debt To Equity Ratio of ITH is very low. In case of Avis,
Equity of the company has increased but not as much as the Debt as a result the ratio has
continued to be high. Debt To Equity ratio of Ruia is higher than ITC Travel House throughout
the 4 years and less than Avis in most of the years. So it indicates high risk.

P a g e | 39

4. Debt To Total Asset Ratio: It gives us an idea about how much of the asset is funded by
debt.

Debt To Total Asset Ratios 2008 2009 2010 2011
Ruia 0.93 0.98 1.10 0.88
ITH 0.12 0.07 0.02 0.01
Avis 0.91 0.85 0.87 0.85

Debt To Total Asset Ratios

1.20 1.10
0.98
0.93 0.91
1.00 0.87 0.88
0.85 0.85

0.80
Ruia
0.60 ITH
Avis
0.40

0.20 0.12
0.07
0.02 0.01
0.00
2008 2009 2010 2011

1. In the year 2009, Total Assets has decreased by 7.34% whereas Debt has also
decreased by only 2.32%. This is the reason why Debt To Total Asset Ratio of Ruia Car
Rentals has increased marginally from 0.93 in the year 2008 to 0.98 in the year 2009.
2. In the year 2010, Debt of Ruia Car Rentals has increased by 6.95% but Total Assets has
decreased by 4.62%. As a result Debt To Total Asset Ratio had come up to 1.10 in the
year 2010from 0.98 in the year 2009.
3. In the year 2011, Debt of Ruia Car Rentals has increased by 156.19% but Total Assets
has increased by 220.18%. As a result Debt To Total Asset Ratio had gone down to 0.88
in the year 2011.

In case of ITC company’s maximum assets are funded by its Equity. It has a very small amount
of Debt, so Debt to Total Asset Ratio is also very low. Since Ruia is a proprietorship business
its amount of capital is less and most of its assets are funded by debts. So its Debt to asset
ratio is high. Like Ruia Avis is also having high amount of Debt to fund its assets, and compare
to its Equity, Debt is very high so its Debt to Asset ratio is also very high. Debt To Asset ratio of
Ruia Car Rental is fluctuating. It has increased in the year 2009 and 2010 but has decreased in
2011, which is a positive thing for the company though it has been higher than ITC Travel
House and at par with Avis.

P a g e | 40

5. Cash Turnover Ratio: It reflects the company's ability to finance current operations, the
efficiency of its working capital employment, and the margin of protection for its creditors.
A high cash turnover ratio may leave the company vulnerable to creditors, while a low
ratio may indicate an inefficient use of working capital. In general, sales five to six times
greater than working capital are needed to maintain a positive cash flow and finance sales.

Cash Turnover Ratio 2008 2009 2010 2011
Ruia 24.92 114.49 -5.93 -1.52
ITH 2.16 5.18 3.03 3.67
Avis 34.37 8.97 7.31 71.95

Particulars % Increased In 2009 % Increased In 2010 % Increased In 2011
Sales -4.59% 35.96% 50.87%
Working Capital -79.24% -2725.02% 488.12%

Cash Turnover Ratios
114.49
120.00

100.00

80.00 71.95
Ruia
60.00
ITH
34.37 Avis
40.00 24.92

20.00 5.18 8.97 7.31
2.16 -5.93 3.03 -1.52 3.67
0.00
2008 2009 2010 2011
-20.00

1. In the year 2009, Sales has decreased by 4.59% but Working Capital has decreased by
79.24%. As a result Cash Turnover Ratio has increased from 24.92 in the year 2008 to
114.49 in the year 2009.
2. In the year 2010, Sales has increased by 35.96% but Working Capital has decreased by
2725.02%. This is due to huge drawings. Company’s working capital became negative.
As a result Cash Turnover Ratio has decreased from 114.49 in the year 2009 to -5.93 in
the year 2010.
3. In the year 2011, fresh capital was induced which gave 488.12% hike in working
capital but its working capital was still in negative figures. Increase in Sales of 50.87%
has improved the situation.

P a g e | 41

6. Interest Coverage Ratio: It gives us an idea about how many times the company can pay
off its interest through its profit before interest and taxes.

Interest Coverage Ratio 2008 2009 2010 2011
Ruia 7.01 4.68 3.56 1.78
ITH 12.50 12.03 1.53 1.56
Avis -1.98 0.83 1.15 1.07

Interest Coverage Ratio

14.00 12.50 12.03
12.00

10.00

8.00 7.01 Ruia
ITH
6.00 4.68
3.56 Avis
4.00
1.53 1.15 1.78 1.56
2.00 0.83 1.07

0.00
2008 2009 2010 2011
-2.00
-1.98

As On 31st March As On 31st March Increase / Decrease
Particulars 2008 2009 (%)
Bank Charges &
Interest Rs. 5,96,253.34 Rs. 11,24,164.42 88.54%
Rates & Taxes Rs. 0.00 Rs. 53,232.00 Undefined
Interest On Car Loan Rs. 0.00 Rs. 0.00 Undefined
Interest Rs. 5,96,253.34 Rs. 11,77,396.42 97.47%
Net Profit Transferred Rs. 35,84,464.74 Rs. 43,28,891.20 20.77%
PBIT Rs. 41,80,718.08 Rs. 55,06,287.62 31.71%

In the year 2009, Interest paid by Ruia Car Rentals has increased by 97.47% but PBIT has only
increased by 31.71%. As a result Interest Coverage Ratio has decreased from 7.01 in the year
2008 to 4.68 in the year 2009.

P a g e | 42

Bank Charges &
Interest Rs. 11,24,164.42 Rs. 14,50,490.49 29.03%
Rates & Taxes Rs. 53,232.00 Rs. 1,04,377.00 96.08%
Interest On Car Loan Rs. 0.00 Rs. 1,32,556.84 Undefined
Interest Rs. 11,77,396.42 Rs. 16,87,424.33 43.32%
Net Profit Transferred Rs. 43,28,891.20 Rs. 43,31,983.41 0.07%
PBIT Rs. 55,06,287.62 Rs. 60,19,407.74 9.32%

In the year 2010, Interest paid by Ruia Car Rentals has increased by 43.32% but PBIT has only
increased by 9.32%. As a result Interest Coverage Ratio has again decreased from 4.68 in the
year 2009 to 3.56 in the year 2010.

Bank Charges &
Interest Rs. 14,50,490.49 Rs. 14,51,304.44 0%
Rates & Taxes Rs. 1,04,377.00 Rs. 0.00 -100%
Interest On Car Loan Rs. 1,32,556.84 Rs. 10,58,826.99 699%
Interest Rs. 16,87,424.33 Rs. 25,10,131.43 49%
Net Profit Transferred Rs. 43,31,983.41 Rs. 19,55,848.40 -55%
PBIT Rs. 60,19,407.74 Rs. 44,65,979.83 -26%

In the year 2011, Interest paid by Ruia Car Rentals has increased by 49% and PBIT has only
decreased by 26%. As a result Interest Coverage Ratio has again decreased from 3.56 in the
year 2010 to 1.78 in the year 2011.

The Fixed assets have increased by 124%, 17358% and 808% during 2009, 2010 and 2011
respectively and as the maximum assets of the company is funded by loans, the amount of
loans have increased with increased fixed assets from 2009 to 2010. As a result the amount of
interest payable increased continuously. On the other hand the profit of the company has not
increased that much. In the year 2009 it has increased by 20% compared to 2008 and in the
year 2010 it has increased by only .07 % compared to 2009.In the year 2011 the profit of Ruia
has taken a dip, due to increasing operating expenses. It has decreased by 54% compared to
2010. As a result interest coverage ratio has decreased that much.

ITH’s the profit has increased over the years and the amount of interest was less in the year
2008 and 2009 but it has increased a lot in the year 2010 and 2011. As a result interest
coverage ratio has decreased. In case of Avis interest coverage ratio is very low since as it is
having negative profit, and the amount of loan of the company is high.

P a g e | 43

MARKET REASEARCH ON CAR RENTAL INDUSTRY IN KOLKATA & Comparative FINANCIAL ANALYSIS OF RUIA CAR RENTALS

MARKET REASEARCH ON CAR RENTAL INDUSTRY IN KOLKATA & Comparative FINANCIAL ANALYSIS OF RUIA CAR RENTALS

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