Era Business School, New Delhi AJ; Ajay K Raina1

Part 1 - Executive Summary

McG McG

Executive Summary….

• McGypsies India Pvt Ltd (McG) offers off beat motorcycle based travel services.

• Our clients are those who dare to be different.

• Motorcycle (MC) based travel is fast catching up in India even though we are way behind the West.

• Many companies have started offering MC rides but no one has yet ventured into hard-core off-roading.

….Executive Summary….

• Our strategy revolves around exploring uncharted areas and offer unusual experience to our clients.

• Company owned MCs and a unique ‘Participative Concept’.

• The management made up of three MC enthusiasts with a plethora of experience in the field.

• The capital requirement to the tune of 01.10 Crore.

…..Executive Summary

• Qualitative method used for forecasting: lack of figures as well as accurate precedence.

• Conservative estimates used for calculations.

• Scope for expansion after two or three years.

• Break Even expected by 6th or 10th year depending on the expansion plans and model.

Part 2 – Business Plan

Sub Part - Industry

The Industry : An Overview… • Size of Indian travel industry - $ US 20 Billion.

• Likely to grow @ 2.0% to 2.5% of GDP (1900=47) by 2018.

• Size of Indian MC travel industry – approx 0.7%.

• Major players – Aboriginal (Ind MC Tours), Ind Backpack MC, 60 KPH, Royal Bike Riders, Blazing Trails, Extreme Bike Tours, Vintage Rides and so on.

…The Industry : An Overview…

• Sectorial Focus : Ladakh, Goa, Rajasthan.

• Packaging : Pure rentals to variety of package(s) (MC+ Accommodation+ Guidance + Backup cover).

• Issues:-

– Great Indian Jugaad : Rented bikes.

– No niche-specific outlook.

– Unscientific conduct.

– Lack of personal touch.

…The Industry : An Overview…

• Trends :-

– International Footfall in India

• Improved infrastructure is a magnet;

• Now at less than 0.6%, aspiring to hit 1.0% soon.

– National : Changing Trends

• Youngest country;

• Higher disposable income;

• Gen## looking to be different;

• Quest for unseen beyond media.

….The Industry : An Overview

• Growth Curve:-

– No confirmed data; street operators; lack of regulations.

– Indians tend to mix n match.

– @ 0.7% = $ US 14 Million.

– On ground data, eg 30,000 (2013) v/s 1000 (2008) = @ 100%.

– Even@ 20% = healthy LT growth prospect.

Position in Industry… • Our Services:-

– MC + Backup.

– Participative Accommodation & Food.

– Guidance.

– Permit handling.

– Thematic travel – photo-tours/ Lakes of Ladakh/ Camel Fair/ Rural Olympics/ Elephants of India/ Majestic Tigers/ Holi Chaos/ Sacred Rivers/ Hornbill Kick/Haunted Spaces/ Kite Fiesta/ Dandiya Special……..!

…..Position in Industry…

• Our USP:-

– Company owned fleet.

– Participative – big family feel.

– High degree of customisation on demand.

– Knowledge bank – terrain/customs/relationships.

…..Position in Industry…

• Barriers to Entry – very low.

• Competitors – As mentioned; however, nil as per niche.

• Expected Market Share - @ 10% of overall MC travel market (T/O = $ 0.7 Million = ₹45 Lac); First Movers!

• Niche market of enthusiasts : Foreigners, HNI, NRIs.

• Relationship based reach into hinterland; need to preserve relationships with locals – difficult to replicate.

Part 2 – Business Plan (contd)

Sub Part – Market & Competitive Analysis

Market Analysis….

• Target Segments:-

– Upper middle class and HNI.

– Foreigners and domestic.

– Age & Gender no bar; physical fitness would be the key.

– Adventure seeking/ bored with rut/ very busy jobs/ urban centric/ informed class/ self-challengers.

….Market Analysis…. • Market Size:-

– World travellers – Approx 01 Billion.

– India’s share – 0.5 % = 05 Million (M:F = 66:34).

– Percentage of young arrivals in India = 30% = 15 Lac.

(UK, USA, Canada, France, Japan, Australia, Singapore, SL)

– Size @ 0.5% = 7500 + domestic (follows).

– 66% of Indians below 35 = 925 Million.

– Total travellers =700 million.

….Market Analysis….

– Youth component = 425 Million approx.

– Conservative 0.5% = 2.1 million.

– Mix n Match = 99.5% = 2.09 million.

– Balance = 10,000.

• Looking at = 7.5K+10K=17.5K or 17,000 Approx.

• @10% = 1700 or 1500/year

– Group size of 20 (average).

– No of groups = 75 (details later).

Competitive Analysis….

• A mixed bag in the real sense:-

– Many in the field.

– Commonality of services and reputation.

– General market coverage.

– No niche specialist except 60kph but area of operations narrow.

• Possible to carve out a niche market.

• Human relationship based local contacts- forte!

….Competitive Analysis

• Our niche:-

– HNI and foreigners looking for out of the rut experience.

– Participative model that is unique.

– Areas that have remained out of bounds to outsiders for decades.

– Goodwill among locals; self contained and ecologically savvy.

Part 3 – Business Plan (contd)

Sub Part – Marketing Plan/Strategy

Marketing Plan • USP – as mentioned.

• Pricing Strategy. – The general trend - ₹ 4000-5000 per head per day.

– The rough actual breakup:- • Driving approx 100 Kms/day @ 25kmpl=4 litres@75=300.

• Maintenance and depreciation costs (2000/month)= 100.

• Food n accommodation (participative)= 500; Organised= 1000; average= 750.

• Services including 12.5% tax = 700. (Total Say 1800)

– Our Offer = 3500 per person per day.

Communications

• Foundation exists:- – IronButtsItchySoles.

– Membership of BCMT; bhp; 60 Kph.

– Word of mouth reputation in the environment.

• Tie ups with Banjara Campers India on mutual benefit basis.

• Own site, Page 3, Social sites, channel partners sites.

• BBC Magazine, Discovery and TLC.

• Travel fairs

Sales and Distribution

• A combination of:-

– Direct; online.

– Offshore contacts on commission basis.

– Yatra, Travelmart, makemytrip, Govt Tourism Departments of concerned states, Airlines and so on as channel partners.

– Competitive rates to suppliers; discounts to sponsors.

– Corporate selling.

Services Offered

• Travel experience based on motorcycles.

• Guidance, consultations, handling of travel formalities.

• Travel Café – place to meet and plan travel.

• Camping, community living and participative trip.

• Special thematic trips.

• Customisation.

• All inclusive canvas excluding only drinks and calls.

Part 4 – Business Plan (contd)

Sub Part – Management Plan

Ownership

• Partnership – 3*33.33%.

• Debt model through bank/ pvt funding.

• Debt not to exceed 40% of capital outlay.

• Plans afoot to generate ST funding through attractive business proposal like pay today and earn vouchers for two or three years at half of the commercial costs.

Internal Management Structure

• Broad Supervisory Roles:-

– Manoj – Sales, Marketing and communications.

– AJ– Administration , HR & Finance.

– Navdeep – Field operations, ground liaison, fleet management.

• Initially, the management will follow ‘Lean & Thin’ profile with multi-tasking being the model.

• Each department will have one/two assistants.

External Management Services

• Professional Services to be hired:-

– CA, IT, Sales & Service Tax consultants.

– Medical and Mechanical backup (on need basis).

– Camp site / accommodation liaison personnel.

• Advisory Services:-

– Retired professional(s).

– Travel reporter(s).

HR Needs

• Lean & Thin Mantra; on payroll:-

– Three partners.

– Three Assistants.

– Ministerial staff and helpers – 03.

– Web Administrator.

– Mutli-vehicle driver – 01.

• All other needs would be met through outsourcing.

HRM

• Initial model bound to expand as business grows.

• At the trigger, a monthly outgo of ₹1.50 Lac on staff expected.

• Partners @40K =120 (Total outgo of ₹ 2.70 Lac).

• No training expenses visualised initially.

• PF and Insurance costs + outsourcing= 30K.

• Cost of HR to company = 3.0 Lac PM.

Part 5 – Operations Plan

Sub Part - General

Location

• NCR; Vasant Kunj (convenience and reputation).

• Travel Café Mode:- – Self-service coffee machine.

– Free wi-fi.

– Travel library.

– Brochures and leaflets.

– Travel memorabilia.

– Lazy day attitude.

• Informal office set up based on internet, few machines.

Inventory & Stocking • No major recurring expenses on inventory beyond

maintenance.

• One time Investments:-

– 20 MCs along with complete riding gear.

– One Truck – hired v/s need to modify.

– One SUV.

– Camping equipment.

– Climbing ropes, carabineers and safety equipment.

Capital & Expense

• The Initial K, 01.10 Crore:- – Office set up (including IT ware) – 05 Lacs. – MCs and equipment – 25 Lacs. – Vehicles – 25 Lacs. – Camping equipment and misc – 05 Lacs. – Leasing costs – 15 Lacs. – Communications – 05 Lacs. – Website – 10 Lacs. – Misc (licenses, clearances etc) – 10 Lacs. – Working Capital – 10 Lacs.

Running Monthly Expenses

• HR costs (first 24 months) – 3.0 Lacs.

• Maintenance of inventory – 10K.

• Café – 20K.

• Web and communications – 10K.

• Loan Service–50K (Initially, only Interest component)

• Misc – 10K

• Total Per Month (approximately) – 4.0 Lacs.

As on Date

• License and permits applied for.

• Member of IATA, ITTA, IBF, 60kph, BCMT.

• Loans applied for; detailed Business Plan submitted.

• Have been participating in seminars and meetings.

• A thorough networking with local populace as also the local administration in place through personal interactions and rapport built over years.

Risk-Identification • Natural calamities and weather.

• Terrorist activities and strikes.

• Reliance on foreigners; travel advisories.

• China factor.

• MoD issues.

• ‘Down Wala’ syndrome.

• Road accidents, health hazards and mishaps.

Risk Management

• Indemnity bonds.

• Life and medical insurance.

• Weather and disaster mapping.

• Close liaison with MoD and troops.

• Respect for local traditions and sentiments.

• Employment to natives and meaningful CSR.

• Detailed briefings prior to and during the conduct.

Part 6 – Operations Plan (Contd)

Sub Part – The Process of Delivery

General

• A seasonal business, hedged through geographical expansion/coverage.

• Season specific focus regions.

• Day-to-day office : 08 hours.

• Time zone free net based business interactions.

• Six days a week; 24x7 otherwise.

• Project approach towards geographical segments.

The Café: Layout

ENTRY

Locker Room

Wall adorned with Travel Memorabilia and Collectibles

20

Ft

Wall adorned with Travel Memorabilia and Collectibles

Coffee &

Cookies

Wo

rk Station

& R

ecord

s

Loo

Seating

40 Ft

Books

Equipment

A Typical Calendar Year

• April- May : Garhwal/Kumaon Region.

• June-August : Ladakh, Lahaul-Spiti.

• September: Himachal.

• October: Gujarat.

• Nov-Dec : Deserts, Northeast.

• Jan- Feb : Goa, Kerala.

• March : Break.

A Typical Month in Operations • Pre-trip Period (Reception, RV, Briefings) – 02 Days.

• Trip No 1 – 10 days on average.

• Post trip and pre-next trip – 05 Days.

• Trip No 2 – 10 Days.

• Reserve – 03 Days.

Revenue Generation • Eleven months operations (minimum); 22 trips

(capacity utilisation = 22/75= 30% (realistic).

• Each trip = 15-25 (average 20 persons).

• Per trip expense (for 20 pax)=20x1800x10= 3,60,000.

• Per trip(projected)revenue = 20x3500x10=7,00,000.

• Total estimated profit (yr)= 3,40,000x22 = 75,00,000 approx.

Making Two Ends Meet • First Two Years:-

– Projected outflows @4.0Lac/month= 48 Lacs.

– Projected Inflows = 75 Lacs.

– Projected Savings = ₹ 27 Lacs/year.

• Third Year Onwards, additional burden:- – Expansion – coverage & services.

– Principal component of loan.

– Ageing fleet.

• Break-Even expected – 06 years/ 10 years.

Some Loud Thinking

• All estimation based on present pricing model.

• 27 Lac annual return on 60 Lacs , esp on conservative estimates - not bad for beginners.

• Debt service can be broadened from 2nd year.

• Overseas expansion.

• Going public at some point in future.

Our Dream…..How Realistic?

Question Time!!

Thank You!