Encounter with an Entrepreneur

He begged on the streets once. Today,

this entrepreneur has a turnover of
Rs.30 Cr and dreams of an IPO.

It was quite late in the evening as we were waiting for Mr. Renuka Aradhya, MD, Pravasi Cabs.
Then at around 9-30 pm, we saw a man entering the office of Pravasi Cabs with a bag in his
hand. As this was the first time that we were interviewing any MD of a company we had an
image of him being a man of rigid personality but proving us wrong he welcomed us to his
office with a great smile on his face. As we were taking our seats in his office our discussion
beganQ. Sir, we are management students and as a part of our curriculum we are supposed to
understand the journey of an entrepreneur and prepare a case study on the same. As we were
searching through different profiles, we saw your profile and different articles on you and your
journey; it was indeed quite inspiring for us.
Sir, we would like to know how did it all started? ..
Renuka: My life started as a security guard and today I am coming back from a college in Indore
where I was invited as a guest speaker. I have shared the same platform from where eminent
persons like Narayan Murthy and Amitabh Bacchan have addressed the students. That was a
moment of pride for me. I used to work at a travel agency to collect the trip sheets/duty sheets.
At that time they used to keep me waiting at their doors and the way they used to treat me, I
felt very bad. So I had made up my mind that one day I shall be to give trip sheets of my own.
My objective was that even when I become a big-shot in my life I wont treat my subordinates in
this way. If you see my cabin, the door is open 24 X 7 for every employee. They can directly come
and address me personally.
Q. Why the cab service? Why not any other business?.......

Renuka: Basically the major part of my life was spent as a driver. I have transported even 300 to
400 dead bodies in my life. There were times when I had to carry dead bodies even on my
shoulder; often they used to be of poor peoples bodies.
I dont know anything other than driving. So in my domain itself I had to find an opportunity.
After spending quite a number of years as a driver, I saved a lump sum of money and bought an
Indica car with it. That was my first car and after that I started my own cab service along with
my brother; we used to drive it in alternate sequences. Then by 2005-06 the number of cars
almost increased to 5 or 6. Then I got an opportunity; a cab service company was put up for
sale. Generally it is the common practice to study about the business, the revenue model, the
market scenario and other parameters before taking over any company. But I being a driver
didnt know anything about mergers and acquisitions. I didnt even know how to fix a royalty or
how to fix a rate. I just looked at what all things I am getting with the company and you can say
I almost blindly took the decision to buy the company. I sold all my cars, borrowed money from
my friend, also took loan on my wifes jewelry and bought the company. The companys name
was City Taxi and it had 20 cabs, Rs.40000/- as fixed deposit for the office rent, few computers
and few telephones. At that time I was into meter taxi business. That is how it all started.
Then I felt that meter taxi was not a sustainable market. Down the line it wont give much
returns and the turnover was also very little with a minimum scope to earn a huge margin. So I
gradually moved on to employee transportation. Other than that there was no vertical in this
business. Along with it was tourist trips outstation drives and disposal cabs.

I grew because I was not educated enough..Nor I knew strategies like people
of IIM and IIT.
I started like that and then gradually I grew and luckily amazon was starting its business at
around 2007. So, I tied up with amazon and amazon became my first client. The first cheque
that I received from Amazon was of Rs.48000/-. Then the number of vehicles increased to
around 375 with no money in hand and high receivable from the market. My strategy was to
save Rs.20000/- per month as it would be enough for my and my brothers family. The rest of
the money was invested back in the business for sustainability.

The main strategy was to aim for sustainability and not for profits.
For any business to sustain it is very critical to have working capital in hand, without it things
would have been much difficult. So I started borrowing money from the market. At that time the
interest rate was 5% for 15 days and then 10% per month. Then amazon people promoted me to
Chennai and I started my operations there. At that time my turnover was around Rs.6 Cr and
that too without having any working capital. I was paying lakhs of rupees as interest. It would

be dangerous at that kind of situation to continue with only one client. So, I decided to expand
my business. So by the end of 2007 I had Walmart, General Motors, LinkedIn and other similar
MNCs as my clients. But because of the support of those money lenders and the venture
capitalists I am here at this position. If you worry about paying interests then you can never
expand the business. Even retaining the clients was difficult. But my strategy is very clear- if you
dont get any profit then it is not an issue but in no way you can afford to lose the clients.
So this was how I expanded my business. I have also invested in school buses. I started with 7
buses. What I thought was I would start getting returns after 4 years. So I made a contract of 10
years with my clients and gave them 4 years of service at a free of cost. So, I used to earn my
revenue for the remaining 6 years. In this way, although I am getting a lesser margin but the
volume of business increases. Today I have increased to almost 40 buses. Whatever money I
used to earn, I used to put it back to the business

You should not invest your money outside the business. If you dont have
working capital then your business is dead.
I dont believe in having unnecessary assets. Your business will give you more or less 20% returns
whereas your assets will give you around 1% returns. Then why to have unnecessary assets like
houses on rents etc. and lose out 19%.As a company if you want to have assets then go for
vacant plots. These will give you returns almost at a compounded rate. Sell-off the plots to real
estate groups and invest the money back to the business.
Q. Talking about the big fishes in the cab service, Ola and Uber came to India and grabbed the
market. So People and Taxi drivers left traditional taxi services in order to get more profits. At
that very point of time you had a very good strength of around 700 Cabs, which you couldve
easily sold and take the bulk profit and invest in some other business. Why didnt you do that?
Renuka: See, we are traditional operators, which means I cannot sell the company to anyone
else. Weve more efficiency than anyone to take this company to any level. Ive that confidence
and Ive that vision. From sweat equity I started it and Im dreaming of an IPO. That vision is
with me and I could manage this company till this level. There are people who play buying and
selling game, those who sell their company and invest in other business. Well today you
mightve heard that they are closing Taxi for Sure. They bought it by spending 1200-1300 crores
and now they are closing it. There are many more examples like this. If Id have those 1300
crores then Id turn it into 3000 crores. You have to think one more thing that your business is
like your own kid. Youve to take care of it, nurture it, educate it, standardize that, like that
youve to do everything for that until it reaches on some stage. Like your father and mother
send you to a business school by having a vision in their mind, you should have the same kind of
vision for your business also. It is not a short term vision but with broader perspective you need

to have a minimum 20 years of vision in you about your business. You should have such a
dedication that you should put your every hard work and everything you have into this. If you
sustain your business like this then it will increase day by day. Instead of taking every surplus to
your home or putting in some other business, you should invest it for the expansion of current
business. But most of us store it somewhere. Money is to flow, we shouldnt stop it, the more it
rotates the more will be your return .If you stop any of your project then it wont see the sun
light for next 5 years and neither will any return come to you. If it is able to give you 20,000 for
the next 5 years then why should we stop it from that? It might be able to give you 30-40% in
bulk but if it is giving you 20% for the next 5 years then youre getting 100% in 5 years. Another
point is that youre also providing employment to many others. A business is not only for the one
who starts the business or for his family but you need to contribute to the society also. Be it
knowledge or money or empowering others other than by providing salaries too. If one
employee want to start the same business of yours then do not think like he will be become your
competitor. How much ever you empower others, you will get the same amount from others
too. If you empower your employees then either the will be a businessman by looking at you or
else they will be with you forever. For me I use to empower my employees by using Owner cum
Driver option .In that if they pay 1 Lakh they will be given a New Toyota Innova and they should
work with us for next 3 years, we will take care of Insurance, EMI and everything, Once the EMI
completed we will transfer the vehicle to them.
Q: Sir the next question is about this idea. How did you pull off this Idea when it is so hard to
do?
Renuka: See it is like business and spirituality in you should go parallel. If you decide to
contribute to the society then you will have to lose some things too. So in my case I purchased
nearly 200 vehicles under this. Anything can happen in between, like accident, driver might
expire, or theft, you need to be ready for the challenge. As Modi said We should learn how a
businessman learned to face the challenge. Even if the businessman is from IIT or IIM, if he is
scared then he dont have the right to be a businessman. Next is as I said, empower the society,
empower your drivers, even auto drivers. When youre going to a street vendor then you will
bargain for 1 rupee but when youre going to a PUMA showroom you will forget everything.
When youre giving even 2 rupees to such a small vendor then youre indirectly empowering
him. By doing that tomorrow also he will sit there itself and in this way we should empower
everyone in the society.
Q: So when youre contributing to this empowerment and also into new plans, how and from
where are you getting the revenue Sir?
Renuka: You know the drivers with whom I am tying up with, 15% will be to the company and
rest of all will go to the driver. So this 15% will be guaranteed for next 3 years and the drivers

will not leave me too. Moreover I wont have to take tension driver out where the driver is or
why he is not there etc. Some companies own the cars and although they show 35% book value
but at the end of the day they too end up earning a profit of around 15% only. The extra that
they have is the tension associated.
I have expanded my business to the school buses because the drivers are easily available and the
margins are high as well.
Q. So how do you manage your fleet?
Renuka: No app is required as most of the business is company specific. The execution is routine
in nature. There are in-plant teams in every company managing the daily in and out of the
vehicles. No big office is required too. I just have an account of the late and on time arrival and
clear the payables and collect the payment.
Today I have around 900 cabs with a turnover of more than Rs.35 Cr. In 3 years I hope to
achieve a turnover of around Rs.100 Cr and then issue IPO. Lets hope for the best.
Q. Any suggestion for the budding entrepreneurs?
Renuka: My only suggestion is do not run after profits but aim high enough to sustain your
business and expand it. Running after money will only limit your growth and stop you from
achieving what you are capable of.
Reported By:
Ion Bandyopadhyay (66)
Jethin Varghese Mammen (67)
Jobin George (68)