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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.
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 Players
Competition 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 Governments
Pricing 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 fare
Pricing in a Radio Cab in India
Pricing 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 Haryana
B1
B2
B3
B4
B5
B6
B7
B8
B9
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 drivers
Hard 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 Address
Tel No.
Fax No.
Place
Website
Year of Incorporation
Registered
Address
Products and Services
Products and Services
Category Products/Services
Key People
Car 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 2008
Total 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 company
Overview
• 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 c14
Acquisition
• Both ‐ and ‐ will be working together to introduce new product offerings
Technological add‐ons • Has introduced c15
RADIO CAB MARKET IN INDIA 2012.PPT 15
16. Thank you for the attention
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