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 we are 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 thats 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 and employees 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 friendly solution 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 the society at large. Over and above it, this business idea is a simple yet innovative and powerful concept. Its 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 (as mentioned 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 charges we 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)

Number of Clients Number of users (150 users per client) per day Distance travelled per day per user Total distance travelled(per annum) Emissions reduction (kgs of Co2) Number of CERs Sales proceeds (CERs)- euros Sales proceeds (CERs) in rupees Our Share of sales proceeds from CERs Service charge per bicycle per km Service revenues Profit to clients Revenues from Client Revenues from advertising** Total revenues Year 1 30 4500 5 5625000 513000 513 10260 677160 67716 0 562500 46944 630216 5625000 0 5688021 6 Year 2 60 9000 5 1125000 0 1026000 1026 20520 1354320 135432 0 1125000 93888 1260432 7500000 0 7626043 2 Year 3 100 15000 5 1875000 0 1710000 1710 34200 2257200 225720 0 1875000 156480 2100720 1250000 00 1271007 20 Year 4 130 19500 5 2340000 0 2134080 2134 42682 2816986 281699 0 2340000 195287 2621699 1625000 00 1651216 99 Year 5 150 22500 5 2700000 0 2462400 2462 49248 3250368 325037 0 2700000 225331 3025037 1875000 00 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, dont 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 employers 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 todays 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 a greener 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 spots of 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 Rides 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 Cost of each bicycle Total cost of acquiring bicycles Cost of Docking Station + Accompanying Tech Historical cost of acquired bicycles Amortised bicycle acquiring cost*** Maintenance cost per bicycle / year**** Cost of Maintenance of bicycles 2250 8000 18000000 30600000 18000000 9720000 1500 3375000 3000 8720 6540000 10200000 26160000 3348000 1635 4905000 5000 9505 19009600 27200000 47524000 9241920 1782 8910750 6500 10360 15540348 20400000 67341508 7188070 1943 12626533 7500 11293 11292653 13600000 84694897 4978531 2117 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) Cost of leasing trucks Cost of running trucks to haul bicycles Year 1 56 56250 00 31640 63 Year 2 75 7500000 4218750 Year 3 125 12500000 7031250 Year 4 163 16250000 9140625 Year 5 188 18750000 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 1 1 1 1 1 3 6 2 CEO Marketing and Sales Legal Personnel - looking into CER sales Finance Accountant Sales reps Operations team Assistants Total Year 1 960000 720000 720000 720000 480000 900000 1800000 600000 6900000 Year 2 1046400 784800 784800 784800 523200 981000 1962000 654000 7521000 Year 3 1140576 855432 855432 855432 570288 1069290 2138580 712860 8197890 Year 4 Year 5 1243228 1355118 932420.9 1016339 932420.9 1016339 932420.9 1016339 621613.9 677559.2 1165526 1270423 2331052 2540847 777017.4 846949 8935700 9739913

LAND LEASING COSTS (INR) Year 1 Land Leasing Costs 12000000 Year 2 12000000 Year 3 12000000 Year 4 12000000 Year 5 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**** Cost of Maintenance of bicycles Number of trucks (for hauling bicycles) Cost of leasing trucks Cost of running trucks to haul bicycles Salary expenses Selling and General Expenses Land Leasing Costs Operating Expenses

1500 3375000 56 5625000 3164063 6900000 2275209 12000000 33339271

1635 4905000 75 7500000 4218750 7521000 3050417 12000000 39195167

1782 8910750 125 12500000 7031250 8197890 5084029 12000000 53723919

1943 12626533 163 16250000 9140625 8935700 6604868 12000000 65557726

2117 15880293 188 18750000 10546875 9739913 7621001 12000000 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

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

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 67716

1354320 135432

2257200 225720

2816986 281699

3250368 325037

Our Share of sales proceeds from CERs

Service charge per bicycle per km

0 562500

0 1125000

0 1875000

0 2340000

0 2700000

Service revenues

Profit to clients

46944 630216

93888 1260432

156480 2100720

195287 2621699

225331 3025037

Revenues from Client

Revenues from advertising**

56250000

75000000

125000000

162500000

18750000 0

Total revenues

56880216

76260432

127100720

165121699

19052503 7

CAPITAL EXPENDITURE Year 1 Cost of acquiring Bicycles Cost of Docking Stations Total Year 2 Year 3 Year 4 15540348 20400000 35940348 Year 5 11292653 13600000 24892653 18000000 6540000 19009600 30600000 10200000 27200000 48600000 16740000 46209600

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.

We would be targeting a select set of companies with considerable employee base in a particular area first. After providing services to them, we would then be expanding our services to new areas leveraging the experience and popularity gained from the previous experience. Also we have identified areas in cities like Mumbai, Delhi, Bangalore and Pune where this service can be installed. Hence the target of 150 clients in the first five years can be comfortably attained. Beyond this, we strongly feel that this idea is extremely scalable and going forward can be extended from the private domain to the public domain. This medium which would initially be used only by the company employees can subsequently be used even by the normal citizens. This can be made possible if the government collaborates with us and introduces this at a large scale as a public transport mode. The government would then be able to infuse the required infrastructure required to run this business at a large scale. Indeed in France this idea has been implemented for the citizens and is being successfully run there. The state runs this mode of transport and hence has been able to ensure availability and funds requirement. Currently on the basis of the unprecedented success that this venture has achieved in France, the same is being replicated in London also. Indeed we can look to integrate the other mediums of transportation i.e. Rail, Bus etc with the bicycle transport system. A common card will be issued that can then be used across all the different mediums of transport. EXIT STRATEGY FOR INVESTOR According to our financial projections, we would be requiring funds to the tune of Rs 7 crore from the investors when we start off the business. In terms of the exit strategy for the investors, we have deliberated on the different investor exit strategies that can be used i.e. IPO Issue, Sale or Acquisition, Joint Venture, Buy out etc. However we feel that we can offer an exit option to the investor at 2 different stages in our business. Depending on the risk appetite and fund availability of the investor, the investor can choose to exit the business in the short term as well as the long term. SHORT TERM INVESTMENT INVESTOR EXIT AFTER THE FIRST 3 YEARS OF OPERATION The method to be used would be the Franchising Model. We would be selling out the franchisee to other agencies in different states. The detailed business concept along with

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.