The other day it was pouring heavily, so i decided to take a cab from home to office to avoid the traffic on the roads of Delhi. I called up easy cabs & it was at my place in the next 5 mins which always left me wondering HOW ??Anyways, so I happened to strike a conversation with the driver (after giving up on the newspaper in the moving cab & bumpy ride). I happened to ask him if the cab is owned by him etc. He then told me the business model on which these cabs function. These cab drivers are picked up from the market who are given cars to ride. They pay the company/owner INR 700 on a daily basis irrespective of national holiday, weekends etc for all 365 (or 366) days in the year. This makes INR 21,000 per month per cab for the owner. Now all that the owner has to do is to pay up the EMI on which the car was purchased which one should not be more than 15k per month & two these cabs are not purchased at the market price. Why are these cabs not purchased for market price is because Delhi urgently needs some neat "feel good" cabs both for population reasons & commonwealth games in 2010 so the Delhi government provides not just subsidy to purchase these cars plus also advises banks to provide loans for the same at lower interest rates. Moreover any cost incurred on the cab like fuel, maintenance etc etc are to be borne by the cab driver & not the company. Also these cab drivers will always stick around with the company because else they wouldnt get any business on their own. One cab driver drives for almost 150-175 kms (at Rs 15/km) a day which makes a revenue of Rs 2250- 2600 day & costs of Rs 2-2.5/km (CNG fuel) including maintenance which makes a flat profit of 1500-1700 per day making it INR 30,000 per month (only 20 days working - better than most corporates) without owning the car is fantastic which makes it a fantastic business model which is completely risk free from both ends since sensitive areas of both have been swapped. A driver earning this money with a company experience than earning 5-6-7k per month if he drives a private car is exceptional monthly earning for him

All the company incurs cost into is:

1. EMI of the car which also exhausts at the end of maximum 5th year while the life of the cab will be 7-8 years if not more

2. Call centre costs which is outsourced

3. Cost of equipment like GPS system installed in these cars which helps the call centre executive trace the position of the car so as to send the maximum business to each car & minimize the TAT)

4. Expenditure on parking spots in crucial areas like Airports where the cab availability & usage is maximum & round the clock.

Last Updated on Tuesday, 23 February 2010 09:25.

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