Meru – Car financing or Cab company

Recently, I was traveling to Delhi for a customer visit and had an early morning flight from Bangalore. Got into a cab at around 6:30 AM. I really hate this new government rule of check-in at airport 45 min prior to flight departure. On top of that Bangalore airport is 60 KM away from town. You almost spend equal time in cab from home to airport and then from Bangalore to Mumbai/Nagpur. Anyways, so I got into a MERU cab with a magazine in my hand but wasn’t able to concentrate on reading anything as my brain didn’t boot up properly and my body and head both were striving for some more sleep. Those last 10 mins in the bed..

So I was wondering what to do now? Was looking in and around the cab and I noticed rate card on the window glass. Looking at the rate card got me into thinking that Meru as a cab company have grown very fast, the way it expanded was really interesting. It was a really unorganized market (except for Mumbai, where we have cab driver association and theose black-yellow cabs run with proper meter). But there was no big brand or a single big player, and I think that was the business opportunity of creating a brand out of a very widely used service.

I started talking to cab driver. Wanted to get details about their operations and revenue model. And here is what I have, a small effort to put together their business functionality. If you know better than what’s written here, it would be great if you could put that in comments below. I am all ears.

MERU launched in 2007 and now have around 1000 cab in Bangalore and even more in Mumbai and NCR (Delhi, Gurgaon, Noida). They operate in four cities now. Mumbai, Delhi, Bangalore, Hyderabad. Bangalore and NCR launch was a big bang launch in 2 months with approx 200 taxis each.

Business of running a taxi company is not new in India. Lots of lots of people already operate in this space and not to mention we have taxi driver unions and associations, etc (at least in Mumbai, its very organized). So the question is how do you attract a taxi driver to run your cab under Meru banner and not take a loan from bank and run his own cab. In traditionally run cab companies, driver is just an employee of cab company getting either monthly salary or daily wages and per trip incentives ('bata' as its termed, which ultimately goes into customer invoice). MERUs have a very different model. MERU’s proposition to cab drivers was not employment, it was loan to buy a taxi and repay the loan by running the same taxi under MERUs banner. Sounds simple. This is how most big banner taxi company operation abroad.

Meru’s Basic Model
As part of the recruitment, a cab driver has to shell out around X amount (this differs from city to city, In Bangalore, its Rs 15000) and get registered with MERU. He undergoes a driving test and rule test for around a week form MERU trainers. He is given an Meru id and a car or a cab. (They are adding more and more new models to their kitty). Car is leased to the driver on a finance model wherein cab driver has to pay daily installment of Y (this differs from city to city, In Bangalore its Rs 900) and eventually shell out Rs 27000 on an average per month. A GPS based tracking terminal is provided by Menu where he gets orders for pickup and drop. A POS is also attached to the device with a thermal printer for receipt generation and credit/debit card swiping. After 3 years of such hefty installments, cab ownership gets transferred to the driver.

Customer Fare collection
All the daily earning form the cab goes to the driver, driver has to take care of fuel (All Meru cabs operate on CNG), by this MERU makes sure that the car is maintained in a good health with good mileage. Whatever driver makes in a day, goes into drivers pocket. All he has to pay back Meru is that Y amount per day.

Cab Maintain ace and insurance
MERU takes care of cab maintenance, its servicing and car (along with driver) accidental insurance. The extra charge in case of accidental insurance which insurance company do not take, MERU and driver has to share 50:50.

Call center and bringing new business
MERU has a call center and online portal to take on pickup and drop orders. These orders are routed using location intelligent software to driver in the proximity of the pick-up location. Meru guarantees some number of orders to its drivers on per day basis


Alternate revenue
As you can see, the basic revenue channel is installment from driver. MERU has alternate revenue sources like advertising. MERU advertises on their cab in around 4 to 5 ways. Roof-top posters, rare view top strip, side doors, and interior sitting of the cab.

Questions/Comments welcome. Thanks.

Uniapply.in Launched

Have recently launched my website Uniapply.in. Its an education portal to help students choose the right career and right institute. We aim to remove information based discrimination among students by providing them with all sorts of information about careers, admissions, entrance procedures, entrance examinations, etc.

Please visit website at http://www.uniapply.in

Transnet - South Africa client

Transnet was incorporated in April 1990. Transnet is a large South African rail, portand pipeline company. A majority of the company's stock is owned by the South African government. This is like Indian Railways in South Africa. Its revenue was ZAR 26 bn in 2006

Transnet has six Operating Business Divisions

• Transnet Freight Rail (formerly Spoornet – the freight rail division) – This division is our client
  
• Transnet Rail Engineering - the rolling stock maintenance business
  
• Transnet National Ports Authority - fulfils the landlord function for South Africa’s port system
  
• Transnet Port Terminals - managing port and cargo terminal operations in the nation’s leading ports
  
• Transnet Pipelines - the fuel and gas pipeline business, pumps and manages the storage of petroleum and gas products through its network of high-pressure, long distance pipelines
  

Spoornet has its core competency on the transportation of freight, containers and mainline passengers on rail. The company maintains an extensive rail network across South Africa that connects with other rail networks in Africa, with its rail infrastructure representing about 80% of Afric's total. The company is has presence in 17 countries in Africa. Spoornet recorded operating revenue of ZAR 1 bn in 2006.

Financials: Transnet is investing ZAR 78 billion on revitalizing and extending its infrastructure (widening and deepening ports; building a new pipeline and buying hundreds of new locomotives) over the next five years. Spoornet will inject capital investment to the value of ZAR 14 billion by 2010. Ninety percent of the expenditure is allocated to the rehabilitation and renewal program for infrastructure, locomotives and wagons.

Spoornet Businesses Verticals

• GFB Commercial: Accounts 70% of Transnet income. It manages the flow of material and information between suppliers and customers.
  
• COALlink: It is one of the world's most efficient bulk export logistic supply chains. Coal is a vital export commodity, generating billions of ZAR in foreign exchange earnings for South Africa .
  
• Orex: Dealing with the transport of iron ore over the 861km railway line. It transports more than 22 million tons a year.
  
• Luxrail: World-famous Blue Train, which caters for a growing international tourist market of SA. Crossing South Africa 's landscape along four routes, these trains combine the comfort and luxury of a five-star hotel.
  
• Shosholoza Meyl: Inter-city passenger rail services to and from South African destinations. Approximately four million passengers a year use Shosholoza Meyl services.
  

What do they transport?

• Automotive: They have specialized car wagons, particularly suited to the safe and secure conveyance of high-value automotives. Primary customers are the original equipment manufacturers (OEMs) in the automotive industry. Some of them include BMW, GMSA and Volkswagen, Ford Group, Nissan
  
• Containers: The containerized freight market include import traffic, export traffic, and domestic traffic. They offer services in all three. Also offer services like physical and administrative checks, conveyances from and to interchanges zone at the terminal, Stacking/de-stacking, storage, etc. They have six major inland terminals and nineteen satellite depots that are strategically located to link with the ports in South Africa. They track movement of freight by satellite systems.
  
• Cement and lime: In South Africa, Cement industry is forecasting growth of between 8 and 10% in the next five years due to the 2010 soccer finals. There are four major cement producers producing in excess of 10 million tons per year. They compete in other Southern African markets. Transnet has specialized types of wagons for this industry; Open wagons for bulk raw materials, specialized open wagons for palletized bagged cement, tanker fleet for bulk cement and lime.
  
• Agriculture Fast Moving Consumer Goods: The commodities here include Sugar, Beer, Malt and barley, Fruit and Wine and spirits. The raw commodities are conveyed from rural areas to ports for export or to processing plants in industrial regions. Processed foods are distributed nation-wide, or sent to the various harbors for export.
  
• Fuel: Africa plays an important role in world oil markets, with its huge potential reserves off its eastern, southern and western coastlines. Transnet has capacity to move large volumes in excess of 4 000 tons per dedicated train-load. They have dedicated jet fuel train that runs from Durban to Johannesburg International Airport on daily basis. Commodities here are Petrol, Diesel, Jet fuel, Paraffin, Liquid petroleum gas (LPG) and Heavy furnace oil.
  
• Chemicals: They have tankers that are highly specialized to transport hazardous and non-hazardous chemicals.
  
• Fertilizer: The industry value to the SA economy is estimated at about ZAR 20 billion per year, contributing about 2% to the country's GDP. The industry is a major earner of foreign exchange for the country at about ZAR 2.1 billion annually. Transnet Freight Rail enjoys a market share of 78.27%.
  
• Chrome and Manganese: South Africa is the world's largest integrated ferrochrome producing country. Up to 80% of the world's known chrome ore reserves are in Southern Africa. Chrome is second to gold in terms of foreign exchange earnings. The average annual growth rate potential is 5%, directly linked to the growth in the stainless steel industry.
  
• Granite: About 600 000 to 800 000 tons of South African granite is conveyed annually to Durban, Cape Town and Richards Bay for export to the Far East and Europe. The bulk of South African granite, about 86%, is exported.
  

First look at south Africa

Congestion at Dubai airport caused the delay in the arrival at Johannesburg. It took long time to get out of airport because of delay in the baggage collection and customs. I reached here 9 PM (00:30 AM Saturday morning in India). SA is 3:30 Hours late.

My flight was via Du-bhai. Dubai airport is like most preferred transit location in international travels. Emirates has 100 aircrafts and flies to 90 international location. 40% of the flights via Dubai are by Emirates. This Dubai government owned company made $700 M in last financial year. Emirates has connectivity to whole of Europe, whole of Asia, Middle East and Africa, but it’s slightly lesser for America (Both north and south).

Duty free shops at Dubai airport has lot to offer. Electronics is damn cheap, just to give example, I got Sony cyber shot DSC-S650 7.2 Mpx camera for around 9000/- in India last month, it was $155 (6600/-) in Dubai. Apparels, leather materials, Hand-wathces, books are costly; chocolates and liquors on the other hand are cheap like anything. I Saw a Porches car which was on free on purchase of 1000 Emirates tickets (each worth $100). I saw some of the hand watches in the range of INR 7–12 Lacs. A leather belt with diamond coating was for INR 12 Lacs.

To South Africa: In Johannesburg – (sometimes written as Joburg):

Things are good here. The working style is a little different than India. Sunrise is at around 5:30 AM. People start commuting as early as 6:30 in the morning, reach office by 7:30 to 8 depending on the distances, work till 4 PM and leave. Weather is pretty cold. Its summer going but still the temperature falls to around 20C in night; it reaches around 26 C in day time.

There are two types of people out here. Africans: Nigers, black people; Afrikans: whites who are settled here for decades. I am still looking for ratio. There is racism to a certain extent but it’s not visible and doesn’t bother us. These people are good with Indians.

We have a wonderful 2-bedroom, very well furnished apartment at 8th floor. There is swimming pool and a jogger’s park in the complex. The special thing is its on 2nd floor above the parking area and its open air. You all can see it in the photographs that I will upload very shortly. There are lots of Indians out here. Some are there in our apartment as well. We have been to couple on Indian restaurants, amazing vegetarian food. My senior has around 5-6 friends who are Indians but shifted to SA for job/work/business, couple of them are married. So I have good company. I am learning to cook from these guys.

The swimming pool and jogging park @ second floor: There are lot of Afrikans (the whites) and foreigners in my building. There are lots of hot babes as well. Every morning, somebody comes to the pool. “Din ki shuruwat acchi ho jati hai”. You know what I mean!!!

We took a car (Nissan Tiida) on rent yesterday. We had Toyota Yaris for two days prior to this. Tiida is amazing. Indian driving license works here. People here use only cars. You hardly find bikes here; I think one of the reasons is weather. All bikes that I saw were racing bikes around 700, 800 CCs. Bikes below 200cc are not allowed on some of the highways. All roads are like express ways even inside city. Everybody follows traffic rules. Traffic moves smoothly without traffic police. Most cars are costly. BMWs, Lexus, Audi, Mercedes, Jaguar, Volkswagen, etc are common here. Right now both of us don’t know driving very well, so we took a Tiida; very soon we will be taking one of the Mercedes/BMW models.

Infrastructure wise it is no different than that of US. There is lot of scope in development in almost all sectors like telecom, infrastructure, construction, automobile, banking, and almost all.

Because of economic imbalance, the rich are real-rich and poor and damn-poor, so the cost of leaving is high and there is a little crime that exists in some of the areas. Walking on roads (even in cities) is not advised, everybody moves in cars only. There are some areas where even police frightens to go but that is normal here. It doesn’t affect your living as such. My apartment is in Sandton city which the most expensive area in whole of Africa. It is referred as “Africa's richest square mile”.

I did a little shopping for around 700 ZAR (3500/-). We get most of the Indian food items including bhidi but they are damn costly. Just to give you an idea, two pencil cell (non rechargeable) costs me 18 ZAR (96/-).

On Saturday night, we went Monte-Casino, the biggest casino in South Africa. It has 1700 slot machines and 70 gaming tables with $600 million turnover. One of us lost around 1000 ZAR (6000/-) in 10 minutes. I will write more about this after my next visit.

We can see mostly all Indian movies in theaters here. To sum up till now I am not finding it to be a lot different than India except that the leaving standard is a little high.

More later.