Sanjeevani IS08070 Cosmic Evolution Others

8/13/2019 Sanjeevani IS08070 Cosmic Evolution Others

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FREE RIDE

INDUSTRY: OTHER SERVICES

BUSINESS SUMMARY

“Free Ride” revolves around the idea of

making transportation and travel less congested, eco friendly and one which can be

monetized. We plan to introduce a new mode of public transport – “Light Geared Bicycles” in selected pockets of certain cities which would be used by corporate employees for

travelling to and fro between the nearest subway\metro\local station and the company office.

There would be parking stations at major locations where the cycles would be locked using

magnetic locks. The company employees would be provided smart cards which would be

used to unlock the bicycles from the stand. The cycles will then be used for transportation

and later they can be parked back into other docking stations which are sprawled across the

city (or locality). The use of these cycles also earns revenue for the company. The

employees earn carbon credits (due to saving on carbon emission by avoiding normal

modes of transport), which can later be traded by the company in international markets (1

Carbon Credit currently earns 20 Euros in the market – which can be realized by the savings

of around 6 employees over a 5 km distance yearly). While earning carbon credits and being

recognized as “green organization” serves as the incentive for the companies, zero

transportation cost, congestion free, good for health ride serves as the incentives for the

employees. Another source of revenue would be the advertisements on the cycles and the

parking lots. This could form a major chunk of our revenues in future since most of our

cycles would be plying in busiest areas of the city.

BRIEF BUSINESS OVERVIEW

If you live in a large city, such as Mumbai, Delhi or Bangalore, odds are that you have faced

the acute problem of automotive congestion, especially in the areas where lots of offices are

located or the areas which are commercial hubs of the city. This is a problem faced in cities

world over. Add to it, the problems of carbon emission and excessive gasoline usage and weare sitting on a problem which is only going to take graver proportion in future. A few



solutions have been implemented so far, the most famous being the one introduced in

London, where one has to pay to bring in their vehicle to the downtown district. However

none of the existing solution attempts to solves the problem completely and neither have

these been very effective to say the least.

A major chunk of this traffic is caused by people going to their offices and that‟s why

congestions are prominent in the areas where you have high concentration of offices. We

believe this problem can be address if we can get these “white collar employees” to use an

alternate transport system which causes lesser congestion and greener as well. Of course

this initiative has to be driven by all the stakeholders involved which are possible only if we

can give them certain incentives to use this system. Hence both the companies and their

employees have to have certain incentives which go beyond reducing congestion on the

road.

The importance of solving the problems mentioned cannot be overstated. The way our cities

have been expanding, this problem is only going to take greater proportions if not addressed

now. The entire urban infrastructure is on the verge of collapsing thanks to the brimming

roads, and different public transport systems plying on them. The problem is not limited to

congestion; the ever increasing pollution level and depletion of natural fuels are other major

issues which need to be addressed soon. The service offered by us targets these problems

and provides other benefits which serve as a strong incentive for the company andemployees to start using this service. The companies earn carbon credits and goodwill

amongst stakeholders for encouraging their employees to use our service. To the employees

it provides a free transport arrangement, a healthier lifestyle and other fringe benefits like

being able to wade his\her way through in traffic jams. We believe that our service offering is

an answer to all the above problems and benefits in way which is both profitable and

sustainable in long terms.

Our service is called “Free Ride” which is basically a short haul hi-tech bicycle renting

service available to corporate whose employees can use this service to ply between their

office and metro station or bus stops. These cycles have gears for smooth riding and can be

picked and parked at multiple locations sprawled in an area. The service remains free for

employees. The companies earn carbon credits for their employee using this service who in

turn pay us a nominal maintenance charge and a cut in carbon credit. We also sell the

advertising space on the cycles and the parking stands which form a major source of our

revenues.



The users are issued smart cards with RFID. This card can be swiped to release a bicycle

from docking stations. The details of the cards are verified at our central server through

GPRS network. Once a cycle is released its kilometer readings are communicated to the

server along with the details of person releasing it. After the cycles are plugged back in, the

details of the distance travelled are also communicated back to the central server. This

information is used to calculate carbon credits per smart card. The cycles have a magnetic

lock which opens only when the card is swiped at the docking station. So when a cycle is not

locked at a station you know precisely who is riding it. Any damage or loss to cycle can be

traced backed to the person using it.

There are no direct competitors to service which we provide. Though there are substitutes

but none of them come close to the benefits and value offered by our service. We have a

distinct advantage over all other public transportation system. The service has something to

offer for all the stakeholders involved directly or indirectly.

Free Ride is a futuristic project which if not taken up today will become the default option

tomorrow. Global warming is a concern which more and more countries and companies

have started taking seriously. In developed countries there has been a clear trend towards

becoming a more responsible corporate entity and the trend will catch up with the rest of

world too. Then there are problems of unhealthy life styles which almost all corporate

employees suffer from. Free Ride offers not only a healthy and environmentally friendlysolution to these issues but a win-win opportunity for every stakeholder. Each of them is

either earning or sparing money, all that in an ethical and respectful way. In a nutshell, Free

Ride is a profitable business project impacting the economy and the environment in a

sustainable way.

This business idea has the potential to be extremely successful. This is because it acts as a

Win – Win situation for all its stakeholders. The stakeholders involved for this concept are:

Corporate, Employees/Users, Government and Society. Now the Free Ride concept would

benefit them in the following ways:

Corporate: It enables the company to earn Carbon credits – something which would

become extremely important in the coming days. Moreover it is also a positive social

initiative from the company

Employees/Users: They are able to save costs, avoid road congestion and traffics. Also

bicycle riding promotes the health of the individual and is extremely helpful.



Government: It is one of those initiatives, which when properly nurtured can take the shape

of a successful public-private partnership. The government can act as a great enabler and

this would help the state in making their area an environment friendly area.

Society: Reduction in carbon emissions would help save the environment and benefit thesociety at large.

Over and above it, this business idea is a simple yet innovative and powerful concept. It‟s

extremely beneficial and relevant for all the stakeholders and its implementation can also be

done easily. It greatly benefits the society at large and is environment friendly with huge

growth potential. Indeed once implemented properly and as prescribed by us (in a phased

manner) it can go a long way and become an unparallel mode of public transport!!!

MARKET OPPORTUNITY

TARGET MARKET SEGMENT

Our idea is to target corporate customers – those with sizeable workforces in the age

bracket of 22 years to 35 years. The idea will appeal most to companies, which have a

younger work force, as younger people will not be against the idea of riding free of charge to

work, and health. Another reason would be that the idea of a free ride would monetarily

appeal more to a young employee than to one who is in a developed and remunerative

phase of his career when financial concerns have ceased to be too troublesome. Hence, to

begin with, we will sell our services in big cities, which are employment hubs of India like

Mumbai, Bangalore, NCR and Hyderabad. Within those cities we will target firms that have

sizeable work forces in the age group of 22 to 35 yrs. However, for advertising purposes we

will approach a much wider segment.

POTENTIAL REVENUES

Our revenues will come from three different sources: from a 10% share of the sales

proceeds of Carbon Emission Reduction Certificates, from services charges for use of the

vehicles and from advertising revenues. The biggest chunk of our revenues would come

from advertising as we cannot charge the companies too much for services nor claim too big

a share of the carbon credit proceeds as that would make our service unattractive to them.

We hope to have a client base size of 30 by end of year 1 and grow it to 150 clients by end

of the 5th year. Given this we have estimated revenues of approximately Rs. 28 crores per

year by the 5th year of operations.

GEOGRAPHIES TARGETED AND EXPANSION PLANS



As mentioned earlier, the pilot implementation of the idea should be in major employment

hubs of India like Andheri and Churchgate in Mumbai, Electronic City in Bangalore and in the

National Capital Region (NCR). We will have our bicycle depots located at distances of 2 to

2.5 km from the companies whose employers avail of our services. We will also try to

position our depots such that they are at close proximity to the local metro station, so that

office goers who arrive at the metro station can avail of our service easily, instead of using

auto-rickshaws or other noisy and polluting modes of transport.

Initially the business will grow organically by adding to the client base of corporate

customers. We will aim at increasing the customer base by 20% every year for the first five

years. Following that we will move into other towns, which are potential employment hubs

and replicate our business model there.

Once the idea catches on and this mode of transport catches the fancy of commuters we

intend to target not just corporates but also individual customers who will be given punch

cards to avail of our services at a nominal price, far cheaper than any other mode of

transport for short distances.

BUSINESS MODEL

REVENUE MODEL

The Revenue generation for Free Ride would be done through maintaining three consistent

streams of revenue:

1. Percentage of Revenues generated from Carbon Credit Certificates (Charged to

Companies): We plan to generate revenues by charging the company a certain

percentage of revenues earned from the proceeds of Carbon Credit. Since our

company would be providing complete service beginning from managing the bicycles

for the company employees, calculating the carbon emissions saved and then

collaborating with the Carbon credit issuing organizations in order to obtain Carbon

Credit Certificates for the organization. Hence we would be charging the company a

certain percentage of the revenues earned from the proceeds of Sales of Carbon

Credits or the Market Value of Carbon Credits (in case the company plans to take a

long position on the Carbon Credits).

2. Maintenance charges for the Bicycles (Charged to Companies): We would be

charging a minuscule amount of Rs X per km travelled on the bicycles to the

companies. This would be charged to the company in order to ensure the

maintenance of the bicycles being operated.



3. Advertising Revenues: This would be the major source of our revenues. The

advertisement would be provided to the clients on various spots in the bicycle.

Please find below the picture of the bicycle which gives us an estimate of the areas

where the advertisements can be done for the clients.

On an average, in the beginning we plan to charge the clients around Rs 6000/- per

month for all the spots on the bicycle. Going forward as the interest in the bicycles

increases, we would be able to charge a higher amount for the advertising spots on

the bicycles.

TECHNOLOGY

Technology Enabled Process Flow:

1. The employee of the company is provided a unique card issued to him by the

company (which has been issued to the company by us).

2. The employee reaches the railway station/metro and swipes the card at the cycle

stand. This swipe of the card does the following things in the database:

a. The card swipe leads to the verification of the card in the central database.

b. The card and the bike are then associated together in the database: i.e. the

company is able to track uniquely which bike has been issued to the particular

employee



c. Parallely, the central database currently stores the number of kilometres

travelled in the bike (when the bike has been issued to the employee).

d. Time stamp of when the bicycle has been taken out from the cycle stand.

3. Finally, after the employee has used the bike and places it back in the cycle stand,

he swipes his card in order to plug in the bike.

4. This swipe allows the database to track the following details:

a. The final reading on the number of kilometres travelled (the difference

between the initial reading on the database and the final reading gives the

distance travelled).

b. The employee who keeps the bicycle back in the parking stand.

c. The time stamp of when the bicycle is placed back in the cycle stand.

The time stamp details recorded would help in tracking cases of vandalism/damages to the

bikes. The electronic card would be a unique card for every employee. We would be

distributing these cards to all the employees of the company. The following details will be

available on the card:

a. Account Number: The account number of the company to which the money would be

billed

b. Employee Number – Company Code: In order to uniquely identify the employee and

the company.c. Validity Status: The card would have a 2 bit code to determine the validity status of

the card.



INFRASTRUCTURE

The following infrastructure would be required in order to run the business:

Office Space and Supplies: We would need to rent/lease an office space for establishing

the office for our agency. The office supplies would include the supplies and furniture

required to run the business.

Central Database + Peripherals: This is the most vital component of infrastructure. The

Central Database would host all the information of the bicycles and the smart cards issued to

the companies. This Central Database would be connected to the technology enabled

bicycle stand and would collect information from there. The other peripherals would include

the additional computers etc that we would require to perform our analysis and run the

business.

Bicycle Carrying Truck/Lorry: We would be hiring truck/lorry for ferrying the bicycles

during the peak time in order to uniformly distribute the bicycles across the different parking

areas.



Technology Enabled Bikes: We would be buying the geared bikes and would be fitting the

smart card enablers in them so that they can be locked in the bicycle stand and the data

from the bicycle can be transferred to the bicycle stand.

Smart Card: These are the cards which would contain vital information in them (asmentioned earlier). These cards would be provided to all the employees of the company that

avail the Free Ride service.

Networked Parking Stand: This is also a vital part of the infrastructure. This would be the

parking stands which would be connected to the central database and would pass on all the

information from the bicycles to the central database. This would help in tracking the bicycles

and also in calculating the distance travelled and the carbon credits earned subsequently.

COMPETITIVE ANALYSIS & MARKETING PLAN

GO TO MARKET STRATEGY

The company would sell three services:

1) Bike Renting

2) Advertising and

3) Facilitation of delivery of Carbon Credits (Carbon Emission Reduction Certificates)

BIKE RENTING

The service we offer involves renting of bikes to employees of our corporate customers by

positioning our bicycle stations at the doorstep of the company offices and at the exit of the

closest train or Metro station. The main selling propositions for the target customer are as

follows.

The companies will be able to earn carbon credits thanks to the kilometres covered by their

employees on bicycles instead of other carbon emitting modes of transport. On top, in terms

of image, in a world where green concern is increasing, having employees opting for

environmentally friendly transport means is an asset. Companies will be able to sell this

green positioning as part of their CSR and ethical values.

Our bikes would be far better in terms of speed, control and riding comfort for employees.

They will come equipped with gears for swift acceleration and better control and

manoeuvrability for city riding conditions. It will make negotiating traffic jams much easier.Besides, the service is free and will enable them to save the money they would spend on a



cab or a rickshaw every day. Riding is healthy, especially for people who spend their days

sitting in office, more pleasant than being stuck in a traffic jam, quicker when it comes to

short distance on crowded roads, and environmental friendly. Employees will have the nice

feeling of contributing positively to the survival of their planet!

ADVERTISING

We will sell advertising space on the bikes themselves and on their parking spaces. As the

parking and the bikes are situated at the subway exits and doorsteps of business centres,

our ad space will offer great visibility for ads dedicated to 18-45 years old, middle income,

skilled working people. Moreover, it gives an innovative touch to the ads transported by the

bikes throughout the town. The fact that the advertisements are being borne by an

ecologically favourable, healthy mode of transport which is trendy and attractive to look at as

well and being driven by responsible citizens en masse will carry huge appeal and will

bolster the legitimacy and credibility of the products/services advertised.

CARBON CREDITS DELIVERY FACILITATION

We will calculate the reduction in emissions due to company employees opting for our mode

of transport instead of carbon emitting modes of transport and enable the firms to get

Carbon Emission Reduction Certificates for reduction of every tonne of Carbon dioxide from

the CDM department of the United Nations Framework Convention for Climatic Change.



Each such CER certificate sells in the spot market for 20 Euros each. The companies can

sell their carbon credits to Power utility firms and others in Europe and other Kyoto Protocol

Nations.

The proceeds from the sales of carbon credits would more than offset the services chargeswe would charge them and even allow them to reward their employees – especially the ones

who contribute most to emission reductions.

BIKE RENTING & CARBON CREDITS

SALES CHANNELS STRATEGY AND SALES TARGETS

We intend to build a sales team of in-house sales representatives to showcase the

entrepreneurial spirit of the company while getting in touch with potential customers.

There will be one salesman in each of the targeted city, whose main task will be to get in

touch with companies, visit them several times, close the deal and sign the contracts with

support of one team member having a legal background. Each salesman will report to the

national relationship manager.

As the business grows, sales representatives will be hired to support the growth accordingly.



Sales targets: In the first year of operations itself we intend to land 30 corporate customers,

all big firms with sizeable workforces in the age group of 22 to 35 years. We intend to have

an average of 150 employees/users from each corporate house. We also expect to grow our

customer base to 150 companies by the end of the fifth year. The following chart will show

our sales targets during the first five years from all three sources of revenue: bike renting

service charges, advertising and carbon credit sales shares:

Sales Targets (In INR)

Year 1 Year 2 Year 3 Year 4 Year 5

Number of Clients 30 60 100 130 150

Number of users (150 users per client)

per day

4500 9000 15000 19500 22500

Distance travelled per day per user 5 5 5 5 5

Total distance travelled(per annum) 5625000 1125000

0

1875000

0

2340000

0

2700000

0

Emissions reduction (kgs of Co2) 513000 1026000 1710000 2134080 2462400

Number of CERs 513 1026 1710 2134 2462

Sales proceeds (CERs)- euros 10260 20520 34200 42682 49248

Sales proceeds (CERs) in rupees 677160 1354320 2257200 2816986 3250368

Our Share of sales proceeds from CERs 67716 135432 225720 281699 325037

Service charge per bicycle per km 0 0 0 0 0

Service revenues 562500 1125000 1875000 2340000 2700000

Profit to clients 46944 93888 156480 195287 225331

Revenues from Client 630216 1260432 2100720 2621699 3025037

Revenues from advertising** 5625000

0

7500000

0

1250000

00

1625000

00

1875000

00

Total revenues 5688021

6

7626043

2

1271007

20

1651216

99

1905250

37

RISKS & CHALLENGES

The main risk our business will face is safety: safety of bikes on the one hand, safety of

drivers on the other in congested city riding conditions

We plan to tackle these issues by:

Inbuilt magnetically controlled lockers on the bikes to ward off thefts

Tracking individual usage of bicycles closely by means of Radio Frequency

Identifiers embedded in swipe in cards, and holding the user/parent company

responsible for damage done to bicycles due to rash riding.



As far as mitigating accident risks is concerned, we intend to run a communication

campaign that will focus on main threats like pedestrians suddenly crossing the road,

opening of cars doors without warning, cars turning without notice etc. We plan to

send every customer private mail warning them against the road dangers in the

traffic.

The biggest challenge to the successful implementation of our plan will be drawing

commuters away from other modes of transport like auto rickshaws and cabs. We will try

and lure customers by running promotion campaigns that will highlight the benefits to health

and society as well as convenience and a welcome escape from the whimsical and at times

obnoxious auto rickshaw and cab drivers. We will also drive home the economic benefits of

the service as users will not have to pay anything to avail of it and will end up saving

transport costs to the tune of almost R. 2000/- per month.

FEASIBILITY CHECK

In order to understand how feasible this plan is, let us start off firstly by checking which can

be the major roadblocks to the feasibility of this business idea.

BAD CONDITION OF INDIAN ROADS, TOUGH TO RIDE A BICYCLE

Solution: As we have decided, this idea would be implemented in a phased manner in

certain areas of the city only. We plan to drive the bicycles only for an average distance

of 2.5 km and that also in areas where there is a high concentration of companies. In

such areas, the problem of bad roads is not prevalent and hence people are not required

to drive on bad road conditions. For example the areas where we plan to implement this,

don‟t face the problem of bad roads i.e. from Churchgate railway station to the Marine

drive area; Brigade road area in Bangalore; Connaught place area in Delhi etc

HOW TO MOTIVATE COMPANY EMPLOYEES TO RIDE THE BIKE?

Solution: The motivation for the employees would be as follows:

i. Employees currently spend some money for transportation from the metro

stations to their employer‟s office. Now when we implement this service, it would

be offered to these employees free of cost.

ii. Since the company stands to earn from the proceeds of the carbon credits hence

we would be working along with the company to incentivize the employees

towards using this new mode of transport



iii. With the use of a bicycle the employees would be able to easily negotiate

amongst the heavy traffic and would be able to save on precious time. The

possibility of getting caught up regularly in traffic jams would be nullified.

iv. A new mode of transportation which promotes the environmental cause and goes

ahead in making a green world.

HOW TO CONVINCE THE COMPANY TO ENGAGE OUR SERVICES?

Solution: For the company this is an excellent proposition and we believe the

companies would be extremely willing to accept our services.

i. An Excellent source of constant revenues for the company through Carbon

Credits. The value of 1 carbon credit in today‟s market is around 22 euros and

going forward, with the environmental concerns on a steep rise, Carbon credits

would become extremely important.

ii. An Excellent Corporate Social Responsibility, this would be one of the most

tangible steps in reducing the carbon emissions and making the world a safer

place.

iii. Positive PR for the company as the “Going Green” initiative would be positively

acknowledged in the media.

iv. Lastly, even in terms of our charges we are not charging the company any money

for providing this service (the whole service being run fully by us) apart from a

minuscule bicycle maintenance charges. The share in Carbon Credit revenue

would only be taken from the company once we earn them those Carbon Credits.

PROBLEM OF CALCULATING, AUTHENTICATING AND COORDINATING WITH

THE CARBON CREDIT PROVIDING AGENCY

Solution: Before we provide these services to the companies, we would be getting in

touch with the Carbon credit agencies. From the extensive secondary research that we

have conducted, the methodology and process adopted by us for calculating Carbon

credits is accurate and viable. Nevertheless we would enter into an accredited MOU with

a Carbon Credit agency.

FINDING PARKING SPACE

Solution: In terms of finding parking space, we need to ensure that we get parking

space at two areas: Outside Metro stations and Company premises.

In case of company premises, we should be able to find parking space within the

company premises or in the area adjacent to the company premises as in when



companies are housed together in a complex there are always common parking spaces

available.

For the area around metro stations, we would approach the state government in order to

get a leased area at competitive rates. Since the government also stands to gain from agreener state, the government willingness to provide support would be higher.

OPERATIONAL HASSLES – MANAGING SERVICE IN PEAK HOURS

Solution: Maintain wagons which would ferry the bikes from the overloaded areas to the

empty bicycle stand in order to minimize the waiting time of people. This service would

be used during peak hours.

TAKING CARE OF VANDALISM AND THEFT OF BICYCLES

Solution: Using technology to secure the bicycles in the bicycle stand so that they can

only be removed through the use of smart cards. Also forced removal of the bicycle from

the stand would lead to the triggering of alarm in the vicinity. We can also hire a few

people for security at the metros.

HOW TO ENSURE COMFORT FOR EMPLOYEES WHILE RIDING THE BICYCLE?

Solution: The Bicycles would be advanced bicycles with gears in them. The gears would

help in minimizing the effort of the bicycle ride. Moreover there would be a cycle cart

provided in the front of the bicycle in order to unload stuff of the employees while they

travel.

MARKETING PLAN ON-LINE / OFF-LINE

Our marketing campaign focuses on creating interest and increasing awareness at local

level. No need to spend money advertising at national level but rather targeting specific

business areas.

The brand image must spread the ideas of dynamism, youth, health and trendiness. The

bikes, colourful and all similar, will be easily noticeable on the roads. They will be the best

media of the brand image.



ON-LINE

In order to raise interest for our project among potential users and business partners, we will

launch a buzz marketing campaign, 4 weeks before the use of the first bikes with short

movies on youtube, dailymotions etc with silhouette of a man or a woman, filmed from back

cycling.

Concept week 1: I look at you night and day on your way to office.

Concept week 2: I am fancy, healthy and will make you feel better.

Concept week 3: What about meeting me?

Concept week 4: Ready for a ride for a better world tomorrow?

We would create a website with a clear and entertaining presentation of the concept,

targeting potential users and employers. Aim of the website would be to provide information

to people having heard about the project and selling both bike renting and advertising

services.

OFF-LINE



Off-line marketing will be concentrated on prints (billboards), radio, a launching event and

direct mailing.

BEFORE THE PROJECT LAUNCH

In order to raise interest, we plan to set up a communication campaign in line with the online

buzz, using the same concept, with billboards situated in the business areas and especially

inside and at the exit of the main subway and train stations leading to these areas.

LAUNCH

For the inauguration, we plan to organise a cycling marathon in order to get press releases

in the targeted towns‟ newspapers and magazines. To proceed, we will provide bikes for the

first subscribers and invite people to join with theirs. Getting the involvement of celebrities

willing to show their environment friendliness would definitely be an asset.

AFTER THE LAUNCH

A more classical communication campaign, using both local radios and prints on the bikes

themselves, will be implemented later on in order to raise awareness about the concept and

providing a contact number / website address.

Then, the best advertising mean will be the bikes themselves, noticeable at the main spotsof the business areas and transports hubs.

Besides, we plan to launch a direct mailing campaign.

The first one would be targeting companies‟ top management directly, explaining the assets

of our business and providing full information regarding carbon credits and bikes renting.

The second one would support our advertising service. It would target marketing services of

many companies and media agencies in order to offer them the opportunity to advertise on

our bikes.

EXISTING AND POTENTIAL COMPETITION / COMPETITIVE ADVANTAGE

As bike renting and carbon credits facilitator , Free Ride is the first service existing as such in

India. Consequently, there are no direct competitors, but substitutes only, offering a similar

service: transportation.



Taxis, rickshaws, companies‟ private buses and public transports. The competitive

advantages that „Free Ride‟ has are as follows:

1) Its free for those who will be the actual users and will be economically viable for the

employers as well as their services charge expenses will be more than offset by

sales of Carbon Emission Reduction Certificates

2) The idea is Environment friendly and this feature will make it easier for us to obtain

necessary permits and even support from the local governments.

3) Healthy way of transport as it gets user some much needed exercise.

4) Quicker in traffic jams than motorised transportation

5) Easy to ride, faster, more manoeuvrable, more pleasant and less frustrating than

public transportation, especially over short distance in city riding conditions.

As media space, Free Ride has direct competitors such as billboards in street, on buses, in

transports means and stations, and indirect competitors such as TV, Internet, radio etc…

Still, „Free Ride‟s‟ main competitive advantage will be its image as an innovative, youthful,

dynamic and „green‟ media space, embodied by active, ecologically sensitised people

cycling throughout the business areas on their fancy bikes. Companies implementing the

bike renting system for their employees will be offered discounts on advertising fees.

The fact that the advertisements are being borne by an ecologically favourable, healthy

mode of transport which is trendy and attractive to look at as well and being driven by

responsible citizens en masse will carry huge appeal and will bolster the legitimacy and

credibility of the products/services advertised.

OPERATIONS PLAN

BICYCLE ACQUISITION AND MAINTENANCE COSTS (IN INR)

Expenses

Number of bicycles 2250 3000 5000 6500 7500

Cost of each bicycle 8000 8720 9505 10360 11293

Total cost of acquiring bicycles 18000000 6540000 19009600 15540348 11292653

Cost of Docking Station + Accompanying Tech 30600000 10200000 27200000 20400000 13600000

Historical cost of acquired bicycles 18000000 26160000 47524000 67341508 84694897

Amortised bicycle acquiring cost*** 9720000 3348000 9241920 7188070 4978531

Maintenance cost per bicycle / year**** 1500 1635 1782 1943 2117

Cost of Maintenance of bicycles 3375000 4905000 8910750 12626533 15880293



The major portion of the operating expenses would be taken up by the cost of acquiring the

bicycles. Each bicycle would cost Rs. 8000/- during the year of introduction and we have

factored in inflation to arrive at a cost per bicycle of Rs. 11000/- by the 5th year of

operations. We have planned to amortise the cost of acquiring the bicycles over the next five

years.

Cost of accompanying technology and docking station requirements have been estimated to

be Rs. 13600 for every bicycle. Given that we have estimated our tech and docking station

expenses as shown in the sheet above.

Maintenance of the bicycles would come next. We have assumed Rs. 1500/year to be

maintenance costs during the year of inception. This will take care of maintenance of

bicycles as well as docking stations and tech upgrades as well. Inflation has been accounted

for in arriving at the annual maintenance costs of the business.

COST OF HAULING BICYCLES BACK TO BASE (IN INR)


Number of trucks (for

hauling bicycles)

56 75 125 163 188

Cost of leasing trucks 56250

00

7500000 12500000 16250000 18750000

Cost of running trucks to

haul bicycles

31640

63

4218750 7031250 9140625 10546875

Since the number of bicycles we have is half that of the total number of users we will have to

employ trucks to haul the bicycles back to the bases from where they can be reused. We

have assumed a carrying capacity of 40 bicycles per truck to arrive at the number of trucks

we will need to lease. Leasing costs of Rs. 400 per truck per day and running cost of Rs. 225

per truck per day, which includes fuel and manpower charges.

SALARY EXPENSES

Annual Salaries

Number Year 1 Year 2 Year 3 Year 4 Year 5

1 CEO 960000 1046400 1140576 1243228 1355118

1 Marketing and Sales 720000 784800 855432 932420.9 1016339

1 Legal Personnel - looking into CER sales 720000 784800 855432 932420.9 1016339

1 Finance 720000 784800 855432 932420.9 1016339

1 Accountant 480000 523200 570288 621613.9 677559.2

3 Sales reps 900000 981000 1069290 1165526 1270423

6 Operations team 1800000 1962000 2138580 2331052 2540847

2 Assistants 600000 654000 712860 777017.4 846949Total 6900000 7521000 8197890 8935700 9739913



LAND LEASING COSTS (INR)


Land Leasing Costs 12000000 12000000 12000000 12000000 12000000

We have calculated our land needs by assuming 4 sq. feet per bicycle and multiplying that

by the number of bicycles we expect to have by 5 years time.

We have estimated lease cost of land per square foot to be Rs. 400. Thus we have arrived

at our land leasing costs.

TOTAL OPERATING EXPENSES

Maintenance cost per bicycle /

year****

1500 1635 1782 1943 2117

Cost of Maintenance of bicycles 3375000 4905000 8910750 12626533 15880293

Number of trucks (for hauling bicycles) 56 75 125 163 188

Cost of leasing trucks 5625000 7500000 12500000 16250000 18750000

Cost of running trucks to haul bicycles 3164063 4218750 7031250 9140625 10546875

Salary expenses 6900000 7521000 8197890 8935700 9739913

Selling and General Expenses 2275209 3050417 5084029 6604868 7621001Land Leasing Costs 12000000 12000000 12000000 12000000 12000000

Operating Expenses 33339271 39195167 53723919 65557726 74538083

FINANCIAL PROJECTIONS

For our business plan we have estimated revenues for a period of 5 years from inception.

The idea is to target major corporate customers first and later on, when the idea and its

underlying usefulness to health, society, environment and finances catch on, expand

operations so as to encompass opportunities provided by individual consumers.

Since our pilot operation will be executed in employment hubs like Mumbai, Delhi or

Bangalore and keeping the trend towards eco-awareness among corporates, we expect to

net 30 customers in year 1. We expect to grow from that to 60, 100, 130 and 150 customers

by end of the 2nd, 3rd, 4th and 5th years.

Since most of our initial customers will be big players, we expect to have on an average of

150 employees from each organisation using our services.



Each user is expected to travel for an average distance of 5 km per day on the bicycle.

Given these assumptions, we calculated the distances travelled on the bikes and from that

we arrived at our estimates of revenues from service charges and sales of CERs.

We have calculated carbon emission reductions from the fact that each litre or petrol burnt

produces 2.28 kgs of CO2. 1 Carbon Emission Reduction Certificate is obtained in exchange

for reduction of 1 tonne of CO2. Each CER nowadays sells in the spot market for 20 Euros.

From these facts we calculated the proceeds our client would get from sale of CERs.

We intend to charge the companies 10% of their yearly proceeds from CER sales.

We are going to levy service charges on the company at the rate of 10 p per bicycle per

kilometre. From this rate and the estimate of the total distances traversed by all the users we

have arrived at our annual revenues from service charges.

We have deliberately kept the service charges low and our percentage of revenues from

carbon credit sales capped at 10% because we intend to make our offer very attractive to

our customers by making it a marginally profitable venture for them.

As far as advertising revenues are concerned, we intend to charge Rs. 50/day per bicycle for

250 working days a year. From this and the number of bicycles we have in service we

arrived at our advertising revenue figures.

Revenue Projections


Number of Clients 30 60 100 130 150

Number of users (150 users per

client) per day

4500 9000 15000 19500 22500

Distance travelled per day per user 5 5 5 5 5

Total distance travelled (per annum) 5625000 11250000 18750000 23400000 27000000

Emissions reduction (kgs of Co2) 513000 1026000 1710000 2134080 2462400

Number of CERs 513 1026 1710 2134 2462



Sales proceeds (CERs)- euros 10260 20520 34200 42682 49248

Sales proceeds (CERs) in rupees 677160 1354320 2257200 2816986 3250368

Our Share of sales proceeds from

CERs

67716 135432 225720 281699 325037

Service charge per bicycle per km 0 0 0 0 0

Service revenues 562500 1125000 1875000 2340000 2700000

Profit to clients 46944 93888 156480 195287 225331

Revenues from Client 630216 1260432 2100720 2621699 3025037

Revenues from advertising** 56250000 75000000 125000000 162500000 18750000

0

Total revenues 56880216 76260432 127100720 165121699 19052503

7

CAPITAL EXPENDITUREYear 1 Year 2 Year 3 Year 4 Year 5

Cost of acquiring Bicycles 18000000 6540000 19009600 15540348 11292653

Cost of Docking Stations 30600000 10200000 27200000 20400000 13600000

Total 48600000 16740000 46209600 35940348 24892653

As can be seen, we have designed our service so as to make it an attractive proposition for

our clients as not only does our offering improve their corporate image but also without any

additional costs incurred. The proceeds from carbon credit sales will more than offset service

charge expenses incurred.

FUTURE ROADMAP

SCALING UP AND EXPANSION PLANS

The Business venture starts off with 30 clients in year 1 and subsequently goes on to

increase to 150 clients by the end of year 5. This would be achieved by rolling out the

service of bicycle transport in a sequentially manner across different areas.





the implementation expertise would be shared with the different franchisees across states.

This would enable the franchisee to operate the business smoothly. The advantage of using

this method is that we would be able to obtain cash, retain the current management and this

would provide us avenues for large scale growth. Also the investor would get an early exit

from the business by receiving cash payments.

LONG TERM INVESTMENT

INVESTOR EXIT AFTER THE FIRST 5-6 YEARS OF OPERATION

Here the investor would seek an exit at that point of time when we strike a Joint Venture with

a larger partner. The JV can be formed with a larger private player with expertise in the field

of public transport or else the JV can be with the government enterprise. This is in line with

the concept of the expansion plan that we have discussed in the previous section – where a

joint venture/collaboration with the state government can be done. This JV would provide

exit option to the investor in terms of cash as well as stock options.

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