DELHI has about 85 lakh cars plying on its roads and though the state government has made several efforts to reduce the number of cars on the road and control pollution levels, it has not been able to achieve much success. Meanwhile, cab companies Ola and Uber continue to report surge in revenues. Spying an opportunity, Revv, a start-up that provides cars on rent for self-driving purpose, entered the Indian market in July 2015 and since then has made inroads into four cities—Delhi/NCR, Hyderabad, Bengaluru and Chandigarh.
Co-founders Anupam Agarwal and Karan Jain realised that while a four-wheeler continues to be an expensive asset to own, renting a car is not that unaffordable. Targetted at professionals in the 20-30 years age group, Revv was launched as an alternative to owning cars. One can book a car via the Revv app and the car is delivered at the doorstep of the customer who is charged an hourly rental for the service. “We are the first company in India to start delivering cars to the consumer’s doorstep as opposed to the customer coming to the parking lot. This operating model is by far the cheapest,” said Jain.
Given that cost of labour is far lower than the cost of real estate in India, providing doorstep delivery of cars to its clients was far less expensive than renting parking lots. And the customers also stand to benefit—according to Jain, cost of driving a rented car is 40-50% less than hiring a chauffeur-driven car.
Revv is now planning to expand its operations to 8-10 cities by December 2016. Revv will be looking at markets such as Mumbai, Pune, Chennai, Ahmedabad, Jaipur, Visakhapatnam and Kochi. It also plans to focus on inter-city travel. According to Agarwal, 70-80% of the demand will be generated by inter-city travellers on routes such as Ahmedabad-Vadodara (mostly work-related travel), Chandigarh-Manali and Shimla-Delhi (for tourism purpose).
“We turned Ebitda positive in less than one year of operations in April and hope to become PAT positive by the end of this calendar year,” said Jain. By December, the company hopes to achieve an annualised run rate of R60 crore with a fleet size of 700. Revv is aiming for a five-fold jump in revenues to Rs 30-35 crore for FY17 from Rs 6-6.5 crore a year ago.
Starting with nine cars in July 2015 for Delhi/NCR, Revv has today expanded its fleet to 300 cars and 60 drivers and targets to have 700 cars under its platform by December and subsequently 1,000 by March 2017. Currently, Revv has 60 drivers on its payroll, i.e., one driver for delivery of five cars. While Revv offers cars for a minimum duration of 10 hours, usually cars are hired for 38-40 hours, with average ticket size of R5,000. “At a fleet size of 700 cars we will be doing about 7500 transactions a month, which will mean 10-11 transactions per car,” Jain said.
Initially, Revv had bought 100-120 cars and added them under its balance-sheet. Over the last couple of months, however, it has pivoted to an asset-light model, inducting the last 70-80 cars under several asset-light tranches. “One of them is bringing in cars via leasing companies so we can convert capital expenditure to a monthly operating expenditure. Second, we have opened up channel partners or franchise partners where we will sign up a franchise partner who will buy the cars on his books and also run the operations to an extent (managed franchise) and the profit he earns will be shared. We also allow self-driven car companies to register their fleet on our platform,” he added.
* Expand fleet size to 1,000 by March 2017
* To be present in 8-10 cities by December 2016
* Earn total revenue of Rs 30-35 crore for FY17
* Clock 7500 transactions every month by December
* Maintain dominance in intercity travel