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PROJECT ON: Marketing Plan

CAR LEASING
Vroom car leasing services ltd.

Submitted to : Prof. Prasanna Salvi


Name :Ravindra R. Danane
Class : F.Y.MMS (Sem II)
Roll No. 2009038
EXECUTIVE SUMMARY

It is a dilemma that every entrepreneur is likely to face sooner or later.


Every business, however big or small, has to keep aside a significant sum
for the transport needs of its employees.
But what should one do to keep this cost down? If you think buying the
fleet is an option, then think again because leasing could have its
advantages too.
Having said that, whether to buy or to lease is the question that remains;
to which the answer is: it depends on your priorities. For many people,
purchasing vehicle is a kind of an investment. For others, saving is the
need of the hour, and they prefer to tie up with such service providers.
Whatever the reason, one should not just look at financial comparisons
before making this decision. Here is a guide to what one should consider
before making the choice.

Lease, buy, rent. What is the difference?

Typically, when one buys a vehicle on cash payment, one pays the entire
amount of the vehicle. Similarly, when one opts for an auto loan, one pays
the cost of the vehicle plus the interest. Besides these, maintenance and
the fuel costs also have to be taken care of. Now picture this. What
happens after a few years or after the loan period is over? The vehicle you
purchased has depreciated in cost, and, obviously, keeping the other costs
in mind, you have ended up paying more for the vehicle. the monthly
lease rental is lower considering that it includes other costs, compared to
a monthly installment when purchasing a car. This means, the extra
money that you would have otherwise spent on purchasing a car can be
invested in better way.
On the other hand, when a vehicle is leased for a certain number of years,
you pay only a part of that cost. When leasing, a monthly rental is
calculated based on the cost of the car, insurance, maintenance costs,
and depreciation over a period of time. At the end of the lease period the
leasing company takes care of the disposal of the vehicle.

VISION
The vision of our company is to be pioneer in providing best leasing
services in the corporate world. To improve the quality of life of the
corporates we serve.

MISSION
Our mission is to provide the best leasing services at the lowest cost and
we will be using cost minimizing techniques to reduce the cost and
provide better services.

MARKET SUMMARY
Leasing has big potential in the indian market. customers should move
from the conventional buying mode or finance mode on depreciable
assets like vehicles and only focus on the cost incurred for usage of such
assets. Leasing could work better financially as most leasing companies
take a risk on the residual value and makes the EMIs lower. Leasing
companies also provide coverage in terms of maintenance, accident
repairs and other value added features.
In order to cash in on the demand by corporates and small & medium
enterprise sectors, various multinational car leasing companies in India
like Lease plan and Hertz India are expanding their network in the country
with new locations and hubs being added regularly. While MNCs have
always preferred to go in for leasing rather than buying cars, Indian
companies are now gradually following suit, especially since the used car
segment is now getting a lot of attention from some of the bigger players.

Name of the
1. M/s Vroom Fleet Management Services Ltd.
company
2. Constitution Limited Company.
1. Mr. Ravindra R. Danane, CMD
3. Directors
2. Mr. Dharmapal Rathod, Jt. MD
4. Proposed Activity To run car leasing Services.
Plot No. 9701-16, Sakinaka, Andheri (East),
5. Registered Office
Mumbai
6. Head Office --do--
Mr. Ravindra R. Danane is the key person
who is also the director of M/s Akbar travels
ltd. and has vast experience in operation of
Business
7. Rent-a-car services & Mr.Dharmapal Rathod
Experience
is a financial consultant to a vast no. of
MNC’s & Banks IDBI, Bank of Baroda to
name a few

TARGET MARKET

Corporate, whatever be the type of your business, Vroom has a solution


that exclusively meets all employee transportation needs with efficiency.

POSITIONING

We are positioning our company for its efficiency in providing car leasing
services to corporates & coverage in terms of maintenance, accident
repairs and other value added features.

Cost benefits: First, a company opting for lease does not have to make a
capital purchase of the vehicle. They just have to pay for the use of the
car. Let us consider any vehicle and evaluate its value after a period of
time. If we say, this vehicle will fetch us 40 percent of its initial amount
after the lease period, then 60 percent of the vehicle cost is what is taken
into account to be charged to the customer. Hence, the cost factor
becomes significantly less.
The effect of this is that there is no use of the company’s precious equity
in buying the vehicle. If a company has taken a debt, their debt raising
capacity gets affected in case of buying. But in the case of leasing, there
is no equity allocation required, which can be used for their core business.

Another benefit is that company vehicles are generally not used to


generate revenue for the business. It is used by the employees for official
needs. In this case, leasing helps as the leased vehicle becomes a
completely off-balance-sheet item.

There are other benefits as well There are three things: first, when a
leasing company buys a vehicle, they are able to get better deals from the
automobile manufacturers; second, in terms of operating costs, it
becomes a pre-budgeted expense, that is, you know you are going to shell
a particular amount to maintain the vehicle, and are not going to pay
anything more than the lease rent; third, we as a leasing company get a
good garage benefit, which can be passed on to the consumers. This
might mean that while going for the lease, to get a better deal, you can
negotiate with the dealer on price.

Tax benefits: There are also advantages to be had when it comes to tax
considerations. If companies buy a vehicle, they get depreciation benefit
at 15 percent. If they take debt, on the interest part they get a tax break.
Let us say a company leases out a car for a period of three years, on
about 40 percent of the asset value. Then they they get a tax break
benefit. Whatever the lease rent paid, including maintenance cost, there is
an expense off the complete piece. So you get a far higher tax break than
when the vehicle is in your books.

COST OF PROJECT & MEANS OF FINANCE

The details of cost of project and means of finance for the proposed
facility are as under Per Annum:

Cost of Project:

Particulars Amt (Rs)


Total Revenue 56,25,000

Back Office Salary 3000000


Communication Exp. 50,000
Computer Hire Charges 25,000
Conveyance 35,000
Printing & Stationary 25,000
Rent & Electricity 3,00,000
Courier Charges 12,000
Other Misc. Expenses 10,000
Total Administrative Exp. 3,90,7000

Profit Margin 17,18,000


% Profit Margin Before Tax 30.54

Means of Finance:

Particulars Amount
Promoters contribution 2,00,00,000
Secured Long Term Loans 4,00,00,000
Total 6,00,00,000
The company so far has incurred expenses on the proposed project to the
extent of one month’s operations on various site apart from, some
Preliminary & Preoperative expenses of about Rs. 2,00,000 have been
incurred from their internal accruals.

Sales Tax
Service Tax shall be charged @ 5.00 % on the gross billing amount.

ORGANIZATION CHART

WORKING METHODOLOGY

Marketing :
Cold Calling
Direct client visit
Newspaper advertisement
Business Journals
Agreement with client
Agreement to include all terms Such as Rate, Vehicle type, Credit period,
delinquency interest Etc.

Other Infrastructure / Utilities / Manpower:

Land & Building: The Vroom proposes to rent its facility layout. The
estimated cost of renting is Rs. 25,000 per month.

Roads: The location of the rented office is well connected by roads.

Manpower Requirement:

For the leasing operation, the company proposes to employ 10 - 15


personnel.

The Backoffice incharge will be an CA over 5 years of experience in the


similar industry such as operation of rent a car services

Billing executive (Graduate with an experience of 3 years in Rent a car


services)

MIS executive (Graduate, with 3 years experience in Rent a car services)


and.

Marketing executives (MBA marketing, with 4 years experience in Rent a


car services).

Trainings: All the employees working in the Vroom Car Leasing Services
will be given required training depending on the job roles and
responsibilities. It is envisaged to be given on site job training to the
employees, which will include operations, Billing, MIS reports, etc.

SWOT ANALYSIS:

STRENGTHS
1. Organized Company
2. On time Delivery and efficiency
3. Experienced Personnel
4. Regular Vehicle Health check up
5. Coverage in terms of maintenance
6. Accident repairs and other value added features

WEAKNESSES
1. Dependency on availability of vehicles from the dealers

OPPORTUNITIES
1. Providing facility to schools and colleges for leasing School buses.
2. Providing facility to individuals

THREATS
1. Unorganized Players providing facilities at cheaper rate
2. Clients default in payment of rentals

CONTINGENCY PLAN
In case of failure or losses in the business we can sale off the cars to
the individuals, hotels, etc. Vroom is also into providing fleet
management services to corporate.