Jul 4, 2008

Business - Taxi+Drive = Smooth Ride

Down a bustling hallway, across a call-centre and rows of busy executives, Neeraj Gupta, MD of Meru Cabs, paces restlessly. It's almost 4 pm, and he hasn't come up with a new idea all day "Every day, I need to come up with one new idea to help further the business," he said, as the turquoise blue of his firm's Maruti Esteem taxis seeped into his cabin's large bay windows. "It gives me sleepless nights if I don't manage to."
IdeaOne thousand taxi drivers and a customer base of 30,000 passengers across the city are sure glad he came up the idea for a 24x7 call-taxi service in January 2007. An idea he got from Singapore's nearly 25,000-strong round-the-clock, on-call taxi service, which bowled him over.

BusinessIn July 2006, six months before he started up, the state government had announced it would grant licences to anyone who wanted to operate private taxi fleets.
His timing was perfect. Gupta set about creating his business plan. The 300 per cent growth of Gupta's four-year-old private fleet service V Links - from one bus to 13,000 vehicles - was testament to the fact Gupta was no Johnny-come-lately.
Over six months, he sat with global consulting firm Accenture's executives and convinced private equity firm India Value Fund to invest Rs 10 crore in the venture. He made three trips to Singapore to study its taxi system and finally sourced a state-of-the-art mobile communication device system - a mapping device to track the exact location of the taxi - from Australia at Rs 10 crore for 1,600 vehicles. His project was ready to roll.
"We carried out a survey on the passenger transport market and felt that Neeraj's concept had huge potential," said Prateek Roongta, vice president of the fund. "He had four solid years of experience in running a private fleet service - the perfect platform to securely invest in."
But manpower sourcing turned out to be a lot more difficult than Gupta had expected. The government had stopped issuing fresh permits to new drivers in 1997. "So we had to convince the existing black-and-yellow drivers to join us," said Gupta. "But the fear of losing their freedom to a corporate set-up with fixed works hours held most of them back."
But all it took was convincing the first batch of five to sign up in July 2007. "We told them that they were free to take as many street pick-ups as they wanted when they were not on call, as long as they submitted Rs 600 to the company daily," explained Sajid Rane, senior manager, operations at Meru cabs. "What they earned beyond this was theirs as the company managed maintenance and vehicular insurance."
The first batch of recruits then convinced their peers to make the switch. Within four months, the company had 1,000 drivers on its payroll. Mohammed Sheikh was one of them. He cannot believe how much his life has changed over the past nine months.
He is glad he took fleet service Meru Cabs up on its offer to Mumbai's taxi drivers: Trade your black-and-yellow taxi for an air-conditioned Maruti Esteem, wear a smart ochre and chocolate brown uniform and double your income.
It was a challenge when he changed over. The rattletrap had been the 32-year-old breadwinner's sole source of livelihood for two-and-a-half years, and helped him buy a one-room home in Mumbai. "But I don't regret my decision," said Sheikh of his giving up the familiar. "I now earn almost double what I did before, and my passengers treat me respectfully. I enjoy going to work everyday."
As Sheikh talks about the gifts he bought his family a month ago, ten clean shaven, uniformed men seated in the company's plush meeting room nod in unison to his testimony. Their lives changed too after they took a risk and changed course.
"As a Cool Cab driver, I would spend hours unengaged by the side of the road and make half the money I do today," said another Meru driver, whose earnings have even peaked to Rs 10,000 to Rs 12,000 a day over the last six months. "The permission to take both street pick-ups and phone appointments keeps me busy all day."
Meru's drivers are not the only ones to praise Gupta's business plan. Smita Shrivastava, a corporate communications manager at Mastek India, uses only Meru cabs to ferry her to the airport for business trips. "I can be assured of a pick-up even if I make a call to Meru 10 minutes before I leave," she said. "The drivers are very polite and hand over a printed bill at the end of the journey. You feel safe knowing you are not being taken for a ride."
That's because Gupta's blueprint ensures that the entire service works with clockwork precision. A call on the helpline sets off a flashing red dot on a digital map stored in the call centre executive's computer. That helps him or her locate the caller's location and the number of engaged and free drivers in the vicinity.
The executive then sends a message with the caller's address to the closest free vehicle through the communication system. The address flashes across a digital screen inside the vehicle.
"I've timed the entire process," said Gupta, pointing to tiny maps with red and green dots across the call centre. "If executed perfectly, it shouldn't take more than two minutes. I've invested in GPS (global positioning system) and MCD (mobile communication device) because you will never be able to grow beyond a fleet of 200 without the right technology."
It's this eye for detail that is evident in Gupta's choice of drivers as well. Each of the 1,000 drivers has been picked after three rounds of scrutiny - a personal interview, a psychometric test and a five-day training programme at the Meru Academy, the small training division.
In fact, he picks just one percent of the 1,000 applications he receives every month. "One of the major complaints that customers had with the black-and-yellow cabs was bad driver behaviour," Gupta said. "We have to ensure that our drivers speak courteously, dress neatly and are on their best behaviour while on duty."
Erring drivers are counselled and put through monthly etiquette refresher courses.
Gupta displays a similar perfectionism when chalking out his expansion plans. With his fleet of 500 having made a statement across Mumbai, Gupta is in the process of expanding to a fleet of 400 in Hyderabad, 250 in Delhi and 350 in Bangalore. And Roongta of private equity firm India Value Fund, which invested in Meru, said Gupta is bang on course. "Over the last year alone, Meru's services have grown so rapidly," he said. "Like all evolving economies, different transport formats will eventually co-exist, posing no threat to the other."
Gupta also has a team that is in charge of thoroughly researching the potential market in Chennai, Ahmedabad and Pune, with the aim of permeating every major metro by March 2009. "We're not even considering Kolkata, which already has a well-established private cab network," Gupta said. "But I am determined to have 5,000 Meru Cabs plying across the country by December. When your business plan is well thought-out, nothing can stop you from expanding."

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