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Jan, 04 2012

DRIVING PROFITS IN FAST LANE

After logistics, it's now the turn of people logistics business to conquer the Indian market. Whether it's a car rental for masses or people logistics for corporate honchos, opportunity galores in this untapped industry.

THE organised car rental industry, which is just around 25 per cent of the total car rental market in India, offers lucrative opportunities in the same. Of this, a mere 10 per cent is currently contributed by the self-drive business, around 20 per cent by leasing of cars and the rest comes from chauffeur-driven cars that are largely used by corporate houses.

A matured concept worldwide, where corporate honchos take cars on lease basis for their employees instead of buying them, is now fast gaining ground in India. The same has led to a booming opportunity especially in the metros and cities like Hyderabad, Chennai, Gurgaon, NCR etc. There is no doubt that top players are gung-ho about the growth in the industry. Organised players in car rental industry are leaving no stone unturned to make the industry organised by spreading its wings across the nation. One of the leading players, Premier Travels is all set to replicate its success across the nation via franchise model.

 

Premier’s success tale
Premier took its inception in 1979, when Syed Inayathullah, a professional with 18 years of expertise in tea business, with an entrepreneurial zeal, forayed into the car rental business in Hyderabad with one ambassador, which is still in the fleet. With an inspiration to take the brand global, his elder son, Syed Sarosh Inayathullah, Managing Director, Premier Travels, was given the mantle of leadership in 1997 and with his hard work, creativity, aggression and customer-centric involvement took the brand to a new scale.

After a smooth stint of over three decades, Premier Travels has made a mark in the highly competitive car rental market in Hyderabad. With the onset of the IT boom since 2005, the brand has witnessed unprecedented growth in the 'people logistics' business.

Premier is synonymous with leadership, as it is the only brand, having maximum number of corporate clients. Its clientele has names like  Microsoft, Wipro, Amazon, ADP, Cognizant, HSBC etc, which also bears testimony to Premier's commitment of providing top-class service for pickup and drop facility of their associates on a 24/7 basis.  From a mere one car, the brand has grown as the market leaders in Hyderabad with a fleet of over 1,000 cars and 100 buses, dominating the BPO staff transportation business in Hyderabad. And thanks to the 300 strong staff force for the success of the brand.

 

En route to franchising
Unlike other sectors, franchise business model in business services sector has proven fruitful, as a franchisee retains the corporate clientele of a franchisor other than the brand name and an established business model. Moreover, brands that offer concepts and are new in franchising are like icing on the cake, because they offer opportunity that has no competition. Premier also falls under the similar category, as it's the first brand in people logistics, which is strengthening its presence in India via franchise business model.

When asked about opting for franchising business model, Syed Sarosh said: “Franchising is an apt way to take forward an established business. We believe in dealing with entrepreneurs, who want to institutionalise their work over the next decade and two.” The brand is a debutant in franchising, but has a transparent and ultra feasible franchise model, which will not only aid franchisees to earn moolah, but also help them in asset building. Asset building means adding on to the self bought fleet, which will remain their asset and will have resale value. Therefore, a franchisee looking at taking franchise in this industry will have an advantage of asset building too. The brand outsources its fleet, but ensures it undergoes a thorough verification. Also, Premier would expect the same if its franchisees outsources the fleet.

After closing its first franchise deal in Kolkata in October, 2011, Premier is now proud to take franchise route for smooth business drive. Moulik Singh, Premier's first franchisee, has a similar background and is also proud to be associated with them. When asked about their franchise relationship, Moulik avers: “Since the day we have joined hands there is a lot of growth we have witnessed. Post our franchise deal, I have got a lot of support in terms of corporate clientele. It's a win-win situation for both of us.”

 

Partner in profits
With the growth of IT sector, Premier is eyeing the corporates and therefore looking at conquering IT driven cities like Bengaluru, Chennai, Pune, Gurgaon etc. Besides expansion pan-India, the company has plans to go global by spreading its footprint in Philippines, Sri Lanka, China etc, where "people logistics " is a fully grown service industry.

Since the company is keen to expand via conversion franchises, therefore potential franchisees with similar background will top their priority list. Besides conversion franchises, Premier wants to partner with those, who are well-educated, well-versed with operations and execution, labour management, have passion for quality, affinity for automobiles with a prior corporate experience  and most importantly a franchisee should be in the age bracket of 25-40.

While taking Premier’s franchise, a franchisee needs to invest Rs 20 lakh as the franchisee fee and Rs 15 lakh as working capital. As far as area is concerned, franchisee needs a compact office space of around 500 to 800 sq.ft in the IT hub, which can be an apartment as well, but close to the IT companies/IT parks etc like Whitefield area in Bengaluru, Hinjewadi in Pune etc.

According to Syed Sarosh: “We intend to appoint franchisees only if we find the right franchisee we are looking for. Premier will expand only if we get the right associate and believe in having quality franchisees.”

Commenting on the same, Syed Inayathullah says: “The company is seeking entrepreneurs, who will represent Premier brand in each city. We believe that to associate with us as a franchisee, one must have the ability to assimilate fast and adopt learning for quick growth.”

Besides people logistics business, tier-II and III cities may not have an IT boom, but they will surely have the need for tourist-based car rentals through cars, SUVs, buses and coaches.

Premier is also seeking franchisees in spot rental services pan-India. In the growing cities where corporate culture is not too strong it would be more of “retail and tourist rentals”. The area and investment for this model would depend upon the city.

 

Nurturing franchisees
Regarding support and training, Premier offers a 360 degree support system. The company offers total training on vehicle sourcing, vehicle deployment, tracking, police verification of drivers and on-the-field staff training to manage operations.

To maintain quality at franchise outlets, the brand has a national operations manager, who visits franchisees for any kind of advice, fine tuning of routing/deployment etc. Franchisees are also supported in fuel management, vendor payments systems, which are tried and tested and fool proof. They also aid their partners in IT support for billing and maintenance of accounts online. Also, they offer client servicing support. Vehicle finance arrangement support is also given by using existing relationship with existing financers and training in vehicle maintenance, related know-how and systems is also provided.

 

Regarding marketing and advertising is concerned, Premier offers a thorough guidance and support in sourcing vehicles. The car rental industry is at an inflection point today. The next decade belongs to the car rental industry, which will see growth, especially in the organised sector. However, the momentum created will stay and will grow.

 

BOX_1
For spot rental & people logistics,

Premier expects its franchisees to:

Set up a compact office in the IT /commercial hub of the city

Take care of office and staff cost

Develop new clients with contracts under Premier Travels

Dispatch vehicles on time/invoice/collect money from clients

Maintain the quality standards of the fleet

Continuously strive to procure outsourced cars through paper advertisements and agent networks

Focus on building vehicle assets

Premier will take care of:

Marketing support for new contracts

Supply fleet on fixed lease terms

Pan-India conversion of its blue chip clientele

Operational support

Consistent staff/driver training and quality audits

 

BOX_2

From entrepreneur to enterprise

On a mission to take his brand to a new scale in the transport sector, Syed Sarosh Inayathullah, MD, Premier Travels, discusses in detail his entrepreneurial journey and his dream to take the brand international.

Tell us about your entrepreneurial journey?
I started working at the age of 21 and opened an advertising agency Heights Communications India Pvt Ltd. I built it in four years and disinvested to get into the family business of car rentals, which I took over in 1997 with 50 vehicles and Rs 1 crore turnover. In 14 years, Premier Travels has travelled a swift journey to Rs 45 crore per annum and a fleet of 1,100 vehicles on road daily with 100 per cent on time arrival.

How has the growth been in the last year?
We have grown by 25 per cent in the last financial year and are hoping for 20 per cent growth in this fiscal too.

Discuss in brief about your marketing strategy.
Our marketing strategy is simple. Since we have many clients like Micorsoft, Wipro, ADP, Amazon etc in Hyderabad, we will use our relationship to extend contract to our associates/franchisees in other cities, which would be a start-point for them. Also, we will have a national marketing manager, who will spend time in the market with his team to deliver contracts to our franchisees.

Your advice to entrepreneurs..
Entrepreneurs must have a quarterly focus on the wealth creation trend. Be merciless in implementation and compassionate with your team.

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