Carzonrent to invest Rs 2,000 cr; to buy 23,500 cars in 3 yrs
New Delhi: Car rental company Carzonrent (India) will invest up to Rs 2,000 crore to expand its business by launching its operations in nearly 50 new cities across the country in the next three years.
Under its expansion plans, the National Capital-based firm will purchase about 23,500 new cars to add in its fleet.
"In the next three years, it will require us to invest Rs 1,800-Rs 2,000 crore to add new vehicles, setting up offices in new locations and strengthening the technology front," Carzonrent (India) Managing Director Rajiv K Vij said.
The company currently has a fleet of about 6,500 units of different types of vehicles, catering to general public and various industries in 13 cities, he said, adding it has so far invested Rs 400 crore.
"We are targeting to increase our fleet size to 30,000 cars in the next three years. It will further strengthen our leadership position in the market," Vij said.
He said the company may tie up with some associates to source vehicles, but most of the additional cars will be purchased during its expansion phase.
When asked about the source of funding the amount, he said the investment will be coming from internal accruals, existing private equity partners and debt from banks.
The company had earlier raised around Rs 80 crore from SIDBI Venture Capital, WestBridge Capital and BTS Investment Advisors, which together currently own about 32 percent stake in Carzonrent.
"For our future investment, most of the amount will be infused through bank debt. However, we will require about Rs 120 crore from our end and the existing three PE partners will put in one third of that amount, while the rest will be internal accruals," Vij said.
Elaborating the company's expansion plans, he said: "There is massive opportunity to expand the organised car rental service. We see potential to start our business in another 49 cities. So, we are expanding in these cities over the next three years."
The company will set up its shop in various cities including Indore, Surat, Ranchi, Bhopal, Jamshedpur, Kanpur, Vadodara, Ludhiana, Amritsar and Jammu, he added.
On the back of its growth plans, Carzonrent (India) is aiming for a revenue of Rs 850 crore by 2015. It is expecting Rs 300 crore revenue in the current financial year.
He said the company will also increase its headcount to about 800 people from 600 employees at present.
According to Vij, the Indian taxi market stands at about 4,00,000 vehicles that generate around Rs 10,000 crore of revenue every year. Organised players such Carzonrent, Orix and Meru Cabs have only 10-12 percent of the total market.
"With the country's economic growth and expansion of industries, the airlines and hotel sectors will grow in the future. Their requirements for limousine cars are increasing. We want to focus more on this segment and will be adding more such cars," Vij said.
Besides, Carzonrent will also emphasise to expand the self-driven segment as gradually more customers prefer going on a holiday destination without a chauffeur, he added.
"There is also another sector -- car insurance. Nowadays, insurers are planning to offer a mode of conveyance to a customer while a vehicle is at workshop. We are trying to address this," Vij said.
Carzonrent is on advanced stages of negotiations with some insurance providers to offer transportation solutions to customers while availing the insurance claim facilities.
Without naming anyone for a possible tie up, Vij said currently only Tata AIG has started such a facility, while ICICI Lombard and Bajaj Allianz are working on this.