Taxi Co., Ltd
Taxi Co., Ltd.
EXECUTIVE SUMMARY was initiated from the idea that people living in Bangkok prefer to get better was Pai Sure Taxi service from its public transportation. Hence, group of founders finally came up with this new business which mainly focuses on providing new taxi service. The key business concept is the company will serve every customer request with a superior service and well-trained taxi drivers. Besides, new technology including Global Positioning System (GPS) and radio communications will equip with all of the vehicles in order to ensure the security of each individual passengers. The target customers normally will be the people who particularly concern about their belongings and/or punctuality with middle to high income including women, businessmen, foreigners and tourists. Those people will gain benefits through company’s superior services. Another advantage of the company is that passengers can also make an advance booking for using its services via call center and online booking.
Taxi Co., Ltd.
EXECUTIVE SUMMARY was initiated from the idea that people living in Bangkok prefer to get better was Pai Sure Taxi service from its public transportation. Hence, group of founders finally came up with this new business which mainly focuses on providing new taxi service. The key business concept is the company will serve every customer request with a superior service and well-trained taxi drivers. Besides, new technology including Global Positioning System (GPS) and radio communications will equip with all of the vehicles in order to ensure the security of each individual passengers. The target customers normally will be the people who particularly concern about their belongings and/or punctuality with middle to high income including women, businessmen, foreigners and tourists. Those people will gain benefits through company’s superior services. Another advantage of the company is that passengers can also make an advance booking for using its services via call center and online booking.
Taxi Co., Ltd. Director, has background in finance of various industries as she worked as a consultant at Deloitte Touche. Suchai Noic Noicha haya ya,, COO, COO, has has acad academ emic ic back backgr grou ound nd in libe libera rall arts arts and and has has 5-ye 5-year ar work work expe experi rien ence ce in cust custom omer er serv servic ice. e. Pai Sure Taxi’s revenue is anticipated to begin in 2012 and projected to grow to 127 million in the next five years based on conservative assumptions assumptions about the market environment. environment. This business plan will yield a Net Present Value (NPV) of 137 million at a discount rate of 15%, and will have a projected Int ernal Rate of Return (IRR) of 61.277 %. The payback period is about three years and nine month. Pai Sur Sur e Taxi is seeking an equity funding of 15 million in 2012. In return f or this investment,
the investor would receive an equity stake of 50% and two seats on the Board of Directors. This investment fund will be recovered within three years and four months for the dividend stream and yield an NPV of 106 million at the discount rate of 15%. The IRR for the investor will be 62.93%. is an exciting and potentially very lucrative investment opportunity and the Pai Sure Taxi management management team looks forward to discussions with the investor.
Taxi Co., Ltd.
TABLE OF CONTENTS
THE COMPANY AND THE PRODUCT .................................................................................5 Company History ...............................................................................................................5 The Product .....................................................................Error! Bookmark not defined. Resource-Based Analysis ................................................. Error! Bookmark not defined. MARKETING PLAN.................................................................................................................7 Market size and growth .....................................................................................................7 Underlying Trends .............................................................................................................8 Current Rivals....................................................................................................................8 Potential Rivals and Substitutes ........................................................................................8 Our Strategic Advantages ......................................................................................................8 Strategic Options and Alternative Chosen .............................................................................9 Target Market .........................................................................................................................9 Marketing Strategy...............................................................................................................10 OPERATIONAL PLAN...........................................................................................................12 Company Structure and Organization Chart ........................................................................12 Key Personnel ......................................................................................................................12 Production and Operations...................................................................................................13 Research and Development ..................................................................................................14 Risk Reduction Strategies ....................................................................................................15 Exit and Harvest Strategies ..................................................................................................15 FINANCIAL PLAN .................................................................................................................15 Underlying Assumptions......................................................................................................15 Pro-Forma Financial Statements (Expected Case) ...............................................................16
Taxi Co., Ltd.
THE COMPANY AND THE PRODUCT Company H istory Taxi passengers are facing serious problems: taxi drivers refuse to drop them to any particular places especially in raining and/or rush hour. Besides, this problem arises from the fear of both passengers and taxi drivers, due to increase in crime rate. Consequently, his firm is founded in order to address these problems. Pai Sure Taxi ’s first goal had been to provide quality transportation services non-existent in Bangkok at
the time and also to maintain such a high standard of quality and service over the years. Itwill become the pioneering taxi company to implement the strict use of taximeters, Global Positioning System (GPS) system, in-car camera and radio communications on air-conditioned vehicles. Safety glass will be attached between the drivers and passengers in order to guarantee the security for both sides. Also, several service stations will set up in Bangkok to support daily operations of such vehicles. Moreover, the company plans to expand its operation into other big cities in Thailand including Pattaya, HuaHin, Chiang Mai, Phuket and Nakorn Ratchasima. Pai Sure Taxi ’s mission is to achieve customer satisfaction and to build and defend the first position as
Taxi Co., Ltd. the taxi is, the distance to each destination and the duration for getting to the destination. Moreover, the DriveCam is installed to monitor the driver and passenger in case if any unethical act or crime happened in the taxi and for company’s quality control of the taxi drivers. These technologies incorporated in the taxi also helpful for tracking Lost and Found service if passengers forget their belongings in the taxi later on. Due to variety term of payments available for customers who do not want to carry too much cash with them, the company also offers credit card payment apart from normal cash payment to its customers. provides its customers with reliable, more safety, availability, on-time, and superior taxi Pai Sure Taxi service. Since there is an issue regarding the increased in taxi crime rate, taxi drivers and passengers are scared at each other, and sometimes taxi drivers refuse to go to certain destinations, this product is designed for customers who concerns about safety and availability for taxi service. The service also covers booking service through call center, internet, and mobile application booking. Also, noted that this booking service will be running for 24 hours. To create brand identity of the product, Pai Sure Taxi is designed to be unique in its appearance such that there will be Pai Sure logo with sign built on top of the
taxi. To protect this technical resource,
Taxi Co., Ltd. Human Resources Technical Resources
employees to work as a team and have service mind and honest that will contribute to the entrepreneur culture and quality of organizational resources. integrates the existing technology such as computer network (communication and information Pai Sure Taxi system), EDC and GPS to provide the superior and safety service.
MARKETING PLAN M arket Size and Growth The market for Pai Sure Taxi consists of 3 main groups of stakeholder which are taxi owner who already owned taxi vehicles and provided taxi service to customers, taxi driver who already registered as a taxi driver and is leasing taxi to drive, and passenger who is normal commuters that uses taxi service. Pai Sure plans to use both push marketing – to taxi owner and taxi driver as well as pull marketing – to passenger. Taxi Owner M arket Currently, there are approximately about 91 taxi companies in Thailand. Of these, 21 are licensed taxi service companies1 around Bangkok and suburban areas. Those licensed taxi companies are our primary targets to partner with when introducing our premium-safety taxi service. Moreover, the number of registered vehicle for urban taxi in Bangkok as of December 2010, according to
Taxi Co., Ltd. Underlying
1,995,487
Earning 15,000 THB or more per month
Trends
People are using more public transportation due to the following factors: 1. Oil price has been increasing. It is believed that using public transportation is a more economical way of transportation. Consequently the number of people using their own private car has also been decreasing. 2. The extent of sky-train and metro rail line massively increases the number of commuters. Moreover, taxi is a way to connect passengers from the stations to the desired destinations. 3. With the increasing trend in sedan purchase, the number of parking spaces has been decreased and was perceived as insufficient. Ironically, many people tend to park their cars at home or big parking spot provided at the sky-train or metro station and use public transportation. 4. The standard of living has improved. As income increases, the number of people using taxi, among people who previously preferred cheaper means of public transportation has increased. For further investigation on trend of firm’s business environment, please refer to exhibit 3 and 4 for SEEDTIP and Five-Force Analysis.
Taxi Co., Ltd.
Strategic Options and Alternative Chosen Al ternative Business M odels Strategic Options
1.Acquire established taxi corporation
Advantages
2. Joint venture with established taxi corporation
3.Lease new car
Quick market entry Relatively low capital investment Better knowledge about the industry Immediate acquisition of previously owned license Quick market entry Moderate capital investment Better knowledge about the industry Strengthen competitive advantage of each firm Easy to modify with intended equipment Fully control of finance and policy
Disadvantages
Required some capital for business development Harder to modify with intended equipment Required some capital for business development Conflict of interest among TMT Partial control of finance and policy Require high capital investment High financial risk Management ignorance
Bu siness M odel Chosen aims to provide safe and reliable taxi service in Bangkok with future expansion into other Pai Sure Taxi major cities in Thailand. The company decides to operate by joint venture with established taxi corporation. To deliver excellent service, Pai Sure Taxi employs in-house training and accreditation. This will ensure our superior
Taxi Co., Ltd. belonging and/or punctuality. The company targets passenger with middle to high income (social economic status B to A). The secondary target is families with kids, businessmen, foreigners and tourists.
M arketing Strategy Product Design Strategy As previously discussed, Pai Sure provides safety taxi service to taxi owners who want to improve service and charge more from safety accreditation, taxi drivers who want better driving experiences from training, and
customers who want to travel with safe and reliable taxi. Pricing Strategy Due to the superior service offered to customers by Pai Sure , the company selects to use differentiation strategy for its market positioning. Thus, the company will command price premium based on additional quality of services it provides. The startup taxi-meter price will be 60 baht and will increase relative to the distance to destination as follows; Distance in kilometers
Price in Thai baht (THB)
Introductory Price in Thai baht (THB)
Taxi Co., Ltd.
Lower initial price will generate market base for repeat service purchase as well as referral (word-ofmouth) sales.
Promotion Strategy During the first year of launch, Pai Sure will focus its marketing activities to potential customers in Bangkok and surrounding suburban areas. 5% of sales will be allocated to marketing budget which is used to create awareness among potential customers. Additional profit will also come from special placement advertising at the back of driver’s seats. Marketing activities are listed below; Promotional activity Advertising
Word-of-mouth and celebrity endorsements Stealth marketing Public Relations
Details Persuasive TV Commercial on prime time to persuade and induce customers for trial service purchase. The claim will be ‘How much your life or that of your loved ones worth when travelling with unsafe taxi? Pai Sure provides you with a reliable and safe riding experience.’ Advertorial in men and women lifestyle magazine on Pai Sure service of what it is, how to get the service and what to look for Pai Sure will be provided in the content. Famous young women celebrity endorsement to ensure the quality claims of the reliable and safety of the taxi. Word-of-mouth will be followed either from endorsement or from friends who have tried this new service. Pai Sure Taxi cab will show up in famous local sit-com TV program. Free publicity by sending useful article regarding tips on self-defense when riding with perilous taxi driver. Also, when get accredited, the company could get free publicity by having management team
Taxi Co., Ltd.
Operational Plan Company Structur e and Ownership Pai Sure’s Organizational Chart BOARD OF DIRECTORS
Panithan A. CEO
Nipaphan N.
Tanyatip K.
Kantika A.
Suchai N.
CFO
CMO
R&D
COO
Taxi Co., Ltd. and had professional work in financial and risk management for Siam Cement Group (SCG) that provides a wealth of experience in new venture business structuring and planning, particularly in financial issues. Tanyatip Kharuhayothin, Chief Marketing Officer (CMO), is mainly responsible for developing and
implementing marketing strategies of the company. She will interact with target groups - taxi owners, taxi drivers, and customers to gain insights on their service preferences and adjust the service according to their demands. Tanyatip earned her bachelor degree in Communication Management from Chulalongkorn University and had extensive work experience in Public Relations at Hill & Knowlton Thailand. Suchai Noichaya, Chief Operating Officer (COO), is responsible for production control, supply relations
and human resources. He monitors and enhances the quality of vehicles and human resources to meet the standard of Pai Sure Taxi . He is also responsible for contacting and negotiating with suppliers. His academic background is in liberal arts and his work experience is in customer service. Kantika Angsutornrangsi, R&D Director, is primary responsible for conducting research, developing
existing and new products and establishing the products in potential geographical markets. Kantika earned her
Taxi Co., Ltd. Production Plan will begin installing equipment in taxi cabs in April 2012 and train the first set of taxi Pai Sure Taxi drivers in June 2012. At the end of the training session, taxi drivers who pass the test will receive a certificate and will be required to take 1-day brush-up course every year. Other Aspects of the Production Plans
Location: Pai Sure Taxi head office will be located near On-Nuch area. The size of the office is
approximately 600 square meters. In addition to the office, there is also a garage area in which up to 40 vehicles can be parked. It gives advantage to service near the airport. This parking area has proved to be sufficient as most of Pai Sure Taxi cabs are still kept for maintenance at the taxi owner’s garage.
Labor: Pai Sure Taxi relies on the qualified taxi drivers. Effective training program is developed to
achieve the objective. 1,000 taxi drivers will be needed to cover 9-hour shift a day. The training includes 1-day driving training and 1-day customer service training, with brush-up course once every year. Various benefits for taxi drivers include food at stop areas, recreational field, New Year Party and health benefits.
Taxi Co., Ltd.
Future Geographic M arkets After Pai Sure Taxi has been well-established in Bangkok and suburban areas, the company expects to expand its service into other major districts/cities in Thailand. The company focuses on the areas which projects high demand of taxi service such as tourist and business district/cities, and highly populated cities. The target district/cities are Pattaya, HuaHin, Chiang Mai, Phuket, and Nakorn Ratchasima. The market expansion can be achieved by joint venture. The table below shows geographical expansion plans. Districts/Cities
Pattaya HuaHin
2014
2015
2016
Seek partner
2017
Joint venture
Seek partner
Chiang Mai Phuket Nakorn Ratchasima
2018
Joint venture
Seek partner
Joint venture
Seek partner
Joint venture
Seek partner
Risk Reduction Strategy Risks Perceived 1. Licensed taxi owners and taxi drivers must incur switching cost from renovating their cabs to align with
Pro-acti ve Risks Strategies Engaging long term contracts – at least 5 years with licensed taxi owners and taxi drivers. Furthermore, Pai Sure is seeking the
Taxi Co., Ltd. Income Statement (000s)
Pai Sure Taxi
(Most Likely Scenario )
Year 0 Year of Operation
2012 July
Price/unit (net of discounts) Units Sold (000s) ( see Sales Proj ections sheet) Sensitivity Analysis Sales Deflator (e.g. -15%) TOTAL SALES (THB000s) Unit Direct Cost (see COGS sheet) Sensitivity Analysis CGS Inflator (e.g. +10%) COST OF GOODS SOLD % of Total Sales GROSS PROFIT % Gross Margin
Nov
Dec
Jan
Feb
Mar
Apr
May
June
Total
2015
2016
Total
Total
Total
Total
16.13 avg. 4212
17 4739
17 5449
Year 4
17 6397
17 7345
16.50 351
16.50 351
16.50 351
16.50 351
16.50 351
16.50 351
16.50 351
16.50 351
16.50 351
16.50 351
16.50 351
4,212
5,792
5,792
5,792
5,792
5,792
5,792
5,792
5,792
5,792
5,792
5,792
67,919
10.68
10.62
10.59
10.56
10.55
10.53
10.52
10.51
10.50
10.49
10.48
10.48
10.48
3,748 89% 464 11%
3,728 64% 2,064 36%
3,716 64% 2,075 36%
3,708 64% 2,083 36%
3,702 64% 2,090 36%
3,697 64% 2,095 36%
3,692 64% 2,099 36%
3,689 64% 2,103 36%
3,685 64% 2,106 36%
3,682 64% 2,109 36%
3,680 64% 2,112 36%
3,677 63% 2,114 37%
44,404 65% 2 3,515 35%
49,469 60% 32,626 40%
56,639 1 37,770 0
66,281 1 44,546 0
75,909 1 51,337 0
200 444 461 700 2 1,807 43%
0 523 464 700 3 1,690 29%
0 523 464 700 5 1,692 29%
0 523 464 700 7 1,693 29%
0 523 464 700 8 1,695 29%
0 523 464 700 10 1,697 29%
0 523 464 700 11 1,698 29%
0 523 464 700 13 1,700 29%
0 523 464 700 15 1,701 29%
0 523 464 700 16 1,703 29%
0 523 464 700 18 1,705 29%
0 523 464 700 20 1,706 29%
200 6,198 5,562 8,400 127 20,487 30%
2,945 5,898 8,400 372 17,615 21%
3,215 5,668 5,600 220 14,703 0
3,392 6,065 6,533 314 16,304 0
3,619 6,576 7,467 413 18,075 0
-1,343
374
384
390
395
398
401
403
405
406
407
408
3,028
15,011
23,067
28,242
33,262
119 752.19 -633
145 517 -371
173 299 -126
232 82 150
14,378 3,307
22,696 5,220
28,116 6,467
33,413 7,685
82,095
94,409
110,828
127,246
10
10
10
10
0%
Mnth 0.1% 0.6%
23%
0.00 89.11 -89
1.59 87.60 -86
1.94 86.09 -84
2.34 84.58 -82
2.74 83.07 -80
3.15 81.56 -78
3.56 80.05 -76
3.98 78.54 -75
4.40 77.03 -73
4.82 75.52 -71
5.24 74.01 -69
5.67 72.50 -67
Mnth 39 0.1% 969.69 0.6% -930
-1,432 0
288 66
299 69
308 71
314 72
320 74
325 75
329 76
332 76
335 77
338 78
341 78
2,098 812 23%
-1,432 -34%
221 4%
231 4%
237 4%
242 4%
246 4%
250 4%
253 4%
256 4%
258 4%
261 4%
263 5%
1,286 2%
11,071 13%
17,476 0
21,650 0
25,728 0
10
10
10
10
10
10
10
10
10
10
10
10
120
120
0
0
0
-1,432 -1,422 0 -1422
-1,422 -1,190 111 -1301
-1,301 -1,061 115 -1176
-1,176 -929 119 -1047
-1,047 -795 121 -916
-916 -660 123 -783
-783 -523 125 -648
-648 -385 127 -512
-512 -246 128 -374
-374 -106 129 -235
-235 36 130 -94
-94 178 131 47
-1,432 178 1,359 47
47 6,169 5,535 5702
5,702 16,796 8,738 14440
14,440 28,144 10,825 25265
25,265 41,515 12,864 38129
GRANT INCOME RECEIVED Retained Earnings (opening) Available for Distribution Dividends Paid RETAINED EARNINGS (CLOSING)
Oct
Ye ar3
2014
0%
INCOME BEFORE INTEREST & TAXES
INCOME BEFORE TAXES Taxes on income (Zero if negative Income Deduct accumulated losses if applicable) NET INCOME % of Total Sales
Sept
Ye ar 2
2013
12.00 351
OPERATING EXPENSES Initial setup costs (expensed) Sales and Marketing General and Administrative Depreciation of P&E Depreciation of R&D & IPP TOTAL OPERATING EXPENSES % of Total Sales
Interest income Interest expense NET INTEREST INCOME
Aug
Year 1
COMMERCIAL IN CONFIDENCE
16
Taxi Co., Ltd. Cashflow Statement (000s)
Pai Sure Taxi Year of Operation 0 CASH INFLOW FROM OPERATIONS Sales Revenue ($000s) Plus: Accounts Receivable opening balance Less: Accoun ts Receivable endin g balance CASH INFLOW FROM OPERATIONS CASH OUTFLOW FROM OPERATIONS SETUP COSTS Cost of Goods Sold Plus: Accounts Payable opening balance Less: Accounts Payable ending balance CASH PURCHASES
Sales & Marketing Expenses General & Administrative Exp Research & Development Intellectual Property Protection Taxes payable Net increase in Inventory Net increase in Equipment CASH EXPENSE DISBURSEMENTS NET OPERATING CASH FLOWS
July
50%
Sept
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
June
T otal
5792 176 241 5726
5792 241 241 5792
5792 241 241 5792
5792 241 241 5792
5792 241 241 5792
5792 241 241 5792
5792 241 241 5792
5792 241 241 5792
5792 241 241 5792
5792 241 241 5792
5792 241 241 5792
67919 0 241 67677
200 3748 0 156 3592
0 3728 156 155 3729
0 3716 155 155 3717
0 3708 155 155 3709
0 3702 155 154 3702
0 3697 154 154 3697
0 3692 154 154 3693
0 3689 154 154 3689
0 3685 154 154 3685
0 3682 154 153 3682
0 3680 153 153 3680
0 3677 153 153 3677
200 44404 0 153 44251
444 461 97 0 0 0 42000 43003 -42758
523 464 98 0 66 0 0 1151 846
523 464 98 0 69 0 0 1154 921
523 464 98 0 71 0 0 1155 928
523 464 98 0 72 0 0 1157 932
523 464 98 0 74 0 0 1158 936
523 464 98 0 75 0 0 1159 940
523 464 98 0 76 0 0 1160 943
523 464 98 0 76 0 0 1161 945
523 464 98 0 77 0 0 1162 947
523 464 98 0 78 0 0 1163 949
523 464 98 0 78 0 0 1163 951
6198 5562 1 174 0 812 0 42000 55746 -32519
0 10 30,000 15,000 45010
2 10 0 0 12
2 10 0 0 12
2 10 0 0 12
3 10 0 0 13
3 10 0 0 13
4 10 0 0 14
4 10 0 0 14
4 10 0 0 14
5 10 0 0 15
5 10 0 0 15
6 10 0 0 16
89 250 0 0 339 44671
88 250 0 111 448 -437
86 250 0 115 451 -439
85 250 0 119 453 -441
83 250 0 121 454 -441
82 250 0 123 455 -442
80 250 0 125 455 -441
79 250 0 127 455 -441
77 250 0 128 455 -441
76 250 0 129 455 -440
74 250 0 130 454 -439
1913 0 1913
409 1913 2323
482 2323 2804
487 2804 3291
491 3291 3782
495 3782 4277
498 4277 4775
501 4775 5277
505 5277 5781
507 5781 6289
510 6289 6799
4%
0%
Aug
4212 0 176 4037
4%
CASH INFLOW FROM FINANCING Interest earned Grants Received Equity funding Proceeds from Debt funding CASH INFLOW FROM FINANCING CASH OUTFLOW FROM FINANCING Interest payable Debt retirement Equity Buy-back Cash Dividends CASH OUTFLOW FROM FINANCING NET FINANCING CASH FLOWS
(Most Likely Scenario) 0
NET CASH FLOW OPENING CASH BALANCES ENDING CASH BALANCES
COMMERCIAL IN CONFIDENCE
17
Year 1
Year 2
Year3
Ye ar 4
2013 Total
2014 T otal
2015 Total
2016 Total
82095 241 285 82051
94409 285 1026 93668
110828 1026 1197 110657
127246 1197 1368 127075
0 49469 153 171 49451
0 56639 171 615 56195
0 66281 615 715 66181
0 75909 715 816 75809
2945 5898 1258 0 3307 0 0 13407 19193
3215 5668 1356 0 5220 0 8400 23859 13613
3392 6065 1436 0 6467 0 8400 25760 18716
3619 6576 1519 0 7685 0 8400 27799 23467
39 120 30000 15000 45159
119 120 0 0 239
145 0 0 0 145
173 0 0 0 173
232 0 0 0 232
73 250 0 131 454 -438
970 3000 0 1359 5329 39831
752 3000 0 5535 9288 -9049
517 3000 0 8738 12254 -12109
299 3000 0 10825 14124 -13951
82 3000 0 12864 15945 -15713
513 6799 7312
7312 0 7312
10144 7312 17456
1504 17456 18960
4765 18960 23725
7754 23725 31479
4%
4%
0
Taxi Co., Ltd.
Balance Sheet (000s)
Pai Sure Taxi Year of Operation 0 ASSETS CURRENT ASSETS CASH & MARKETABLE SECURITIES A/R Opening Balance A/R Closing Balance ACCOUNTS RECEIVABLES
(Most Likely Scenario) 0
July
Aug
Sept
Oct
N ov
Dec
Jan
Feb
Mar
Apr
May
June
Total
Year 1
Year 2
Year3
Ye ar 4
2013 Total
2014 Total
2015 Total
2016 Total
1913 0 176 176
2323 176 241 241
2804 241 241 241
3291 241 241 241
3782 241 241 241
4277 241 241 241
4775 241 241 241
5277 241 241 241
5781 241 241 241
6289 241 241 241
6799 241 241 241
7312 241 241 241
7312 241 241 241
17456 285 285 285
18960 855 1026 1026
23725 1026 1197 1197
31479 1197 1368 1368
0 2089
0 2564
0 3046
0 3533
0 4024
0 4518
0 5017
0 5518
0 6023
0 6530
0 7040
0 7553
0 7553
0 17741
0 19986
0 24923
0 32847
42000 700 41300
42000 1400 40600
42000 2100 39900
42000 2800 39200
42000 3500 38500
42000 4200 37800
42000 4900 37100
42000 5600 36400
42000 6300 35700
42000 7000 35000
42000 7700 34300
42000 8400 33600
42000 8400 33600
42000 16800 25200
50400 22400 28000
58800 28933 29867
67200 36400 30800
97 2 95
195 5 190
293 10 283
391 16 375
489 24 464
587 34 552
684 46 639
782 59 724
880 73 807
978 90 889
1076 108 969
1174 127 1047
1174 127 1047
2432 500 1932
3788 719 3069
5224 1033 4191
6743 1446 5297
43484
43354
43229
43107
42988
42871
42756
42642
42530
42419
42309
42200
42200
44874
51055
58980
68944
0 156 156 0 14750 14906
0 155 155 0 14500 14655
0 155 155 0 14250 14405
0 155 155 0 14000 14155
0 154 154 0 13750 13904
0 154 154 0 13500 13654
0 154 154 0 13250 13404
0 154 154 0 13000 13154
0 154 154 0 12750 12904
0 153 153 0 12500 12653
0 153 153 0 12250 12403
0 153 153 0 12000 12153
0 153 153 0 12000 12153
OWNERS' EQUITY Common Stock Retained Earnings TOTAL OWNER'S EQUITY
30000 -1422 28578
30000 - 1301 28699
30000 - 1176 28824
30000 - 1047 28953
30000 -916 29084
30000 -783 29217
30000 -648 29352
30000 -512 29488
30000 -374 29626
30000 -235 29765
30000 -94 29906
30000 47 30047
30000 47 30047
30000 5702 35702
30000 14440 44440
30000 25265 55265
30000 38129 68129
TOTAL LIABILITIES & EQUITY
43484
43354
43229
43107
42988
42871
42756
42642
42530
42419
42309
42200
42200
44874
51055
58980
68944
4%
INVENTORY (% of Cost of Goods Sold) TOTAL CURRENT ASSETS PLANT AND EQUIPMENT Less: (Accum. Depr) NET PLANT AND EQUIPMENT R&D AND INTELLECT. PROP. Less: (Accum. Depr) NET INTANGIBLE ASSETS TOTAL ASSETS LIABILITIES CURRENT LIABILITIES Short term Debt Accounts Payable TOTAL CURRENT LIABILITIES Shareholders Loans Long Term Debt TOTAL LIABILITIES
4%
COMMERCIAL IN CONFIDENCE
18
0
0
0 171 171 0 9000 9171
0 615 615 0 6000 6615
0 715 715 0 3000 3715
0 816 816 0 0 816
Taxi Co., Ltd.
Summary of Financial Results (M ost L ikely Case Scenario)
2012
2013
2014
2015
Unit 000s baht 2016
67,919
82,095
94,409
110,828
127,246
EBIT Net Income
3,028 1,286
15,011 11,071
23,067 17,476
28,242 21,650
33,262 25,728
Cash Balance
7,312
17,456
18,960
23,725
31,479
Sales
The Internal Rate of Return (IRR), calculated from the forecasted free cash flow and the end of 2016 (year 5) valuation of the company (P/E =10) is 61.277%. The Net Present Value (NPV) discounted at 15% is 137 million baht with the payback period of 3 years and 9 months.
Sour ces and U ses of Funds has already raised 50 million baht and is seeking for additional 550 million baht from 2 Pai Sure Taxi parts, which are 50% from equity and the other 50% from long-term loan. These funds will be used for supporting the investment in training, service facilities, marketing efforts, working capitals, and R&D of the service system.
Taxi Co., Ltd. Summary of Financial Resul ts (Worst Case Scenar io)
2012
2013
2014
2015
Unit 000s baht 2016
Sales
67,568
78,185
89,913
105,550
121,187
EBIT
2,695
11,108
18,595
22,995
27,245
951
8,058
14,013
17,576
21,045
6,978
15,631
15,441
18,180
23,603
Net Income Cash Balance
The Internal Rate of Return (IRR) Calculated from the projected Free Cash Flow streams and the end of 2016 valuation of the company is 53.692%. The Net Present Value (NPV) discounted at 15% is 104 million and payback period is 4 years and 4 months. (For more detail on Pro-forma Statements please see appendix B, C and D)
Proposal to I nvestor
Pai Sure Taxi is seeking from investors: The total fund of equity capital; Familiarity with industry (preferable); and Harmonious relationship (personality fit)
Investors will receive from Pai Sure Taxi
50% equity Two seats of the Board from the total seats of four Dividend payment Performance contract with management team
Taxi Co., Ltd.
Appendices Exhibit 1: Background analysis (TERMS) Time
Emotional
Add
Increase
Decrease
Delete
Save waiting time for customers due to on time service & saved time to find another taxi Pleasure from riding in a unique & safe taxi service
Increased customers’ time to do their other businesses
Time waiting for taxi to arrive when ordered
Time to find another taxi when get refused to go to particular destinations in rush hour Anger when get refused from taxi driver to go to desired destination
Risk
Risk of customer ignorance of the product
Monetary
Cost of superior service and taxi cab
Situation
Allow customers to get to their destinations safe and sound
More comfortable ride Fear of taxi crime, taxi drivers, on a safe taxi and more passengers, and fear of refusing to convenient for go to particular destination customers who in hurry Risk of rivalry Risk of taxi crime rate & risk of introducing similar getting bad/ unpunctual drivers as service or substitutes to well as bad/unpunctual customers customers Increased cost of Cheaper taxi service due to service compared to differentiate customer service regular taxi service Increase opportunity to Situation where drivers rob find forgotten passengers or passengers threaten belongings through lost drivers and found service
Risk of taxi refused customers to go to particular destination. Decrease opportunity cost, which can translate into monetary cost, such as missing business Inability to catch a taxi in rush hour or get refused by drivers
Exhibit 2: Market Survey The majority of the answer has indicated that most people take taxi during 6 a.m.-12 p.m. and 6-9 p.m. Some group
Taxi Co., Ltd.
Exhibit 4: Porter’s Five-Forces Model (For taxi service industry) New Entrant: Moderate Barrier to Entry High cost for start-up business The business model is not very hard to copy unless Pai Sure has acquired its reputation as the first-mover.
Suppliers: Low Bargaining Power There are many suppliers of equipment such as GPS and radio systems.
Rivalry: High Numerous competitors
Buyers: Low Bargaining Power Passengers act individually rather than collectively.
Substitute Product: High Various types of other means of transportation
Exhibit 5: Characterizing the Business Model of Pai Sure Taxi Factors related to offering
Foundation level Provide taxi services Customize offering Narrow breadth
Proprietary level Safety and reliable taxi service Punctuality Lost and found feature
Rules level Waiting time should not exceed 10 minutes
Taxi Co., Ltd.
Appendix A: Management Resume
Panithan Akarasriprapai Address: 88/3 Klang Muang Village Sukhumvit 77 Road Suanluang Suanluang Bangkok 10400 Tel. (662) 184-8552, (668) 9-968-3161 E-mail:
[email protected]
EDUCATION 2011-2013
SASIN GRADUATE INSTITUE OF BUSINESS ADMINSTRATION CHULALONGKORN UNIVERSITY BKK, Thailand Master of Business Administration Graduate
2005-2006
CHULALONGKORN UNIVERSITY BKK, Thailand Master of Arts Labour Economic and Human Resource Management
2001-2004
CHULALONGKORN UNIVERSITY Bachelor of Economics, Quantitative Analysis
BKK, Thailand
Taxi Co., Ltd.
Tanyatip Kharuhayothin Address: 198/170 Therdthai Road Pak-klong, PhasriJaroen Bangkok 10160 Tel. (662) 457-2243, (668) 9-261-4837 E-mail:
[email protected]
EDUCATION 2011-2013
SASIN GRADUATE INSTITUE OF BUSINESS ADMINSTRATION CHULALONGKORN UNIVERSITY BKK, Thailand Master of Business Administration Graduate KELLOGG GRADUATE SCHOOL OF MANAGEMENT NORTWESTERN UNIVERSITY IL, USA Foreign Exchange Student, Spring 2012
2004-2008
EXPERIENCE 2009-2011
CHULALONGKORN UNIVERSITY BKK, Thailand Bachelor of Arts, Communication Management (1st class honor)
Hill & Knowlton Thailand Associate
BKK, Thailand
Taxi Co., Ltd.
Nipaphan Nicrodhanon Address: 12/1 Ramkamhaeng 24 Yaek 2 Huamark, Bangkapi, Bangkok 10240 Tel. (662) 718-5357, (668) 9-443-5981 E-mail:
[email protected]
EDUCATION 2011-2013
2003-2007
EXPERIENCE 2007-2011
SASIN GRADUATE INSTITUE OF BUSINESS ADMINSTRATION CHULALONGKORN UNIVERSITY BKK, Thailand Master of Business Administration Graduate
CHULALONGKORN UNIVERSITY BKK, Thailand Bachelor of Science, Statistic (Insurance) (1st class honor)
The Siam Cement PLC BKK, Thailand Assistance Manager Handle all insurance policies and loan agreements Manage in-house captive insurance company, Cementhai Captive Insurance Pte Ltd (CCI)
Taxi Co., Ltd.
Kantika Angsutornrangsi Address: 60/122 Krisadanakorn 21 Bangna-Trad, Pravais, Dokmai Bangkok 10260 Tel. (662) 751-6830, (668) 6-790-5124 E-mail:
[email protected]
EDUCATION 2011-2013
SASIN GRADUATE INSTITUE OF BUSINESS ADMINSTRATION CHULALONGKORN UNIVERSITY BKK, Thailand Master of Business Administration Graduate KELLOGG GRADUATE SCHOOL OF MANAGEMENT NORTWESTERN UNIVERSITY IL, USA Foreign Exchange Student, Spring 2012
2003-2007
EXPERIENCE 2007-2010
ASIAN UNIVERSITY Chonburi, Thailand Bachelor of Business Administration, Major in Finance (1st class honor)
Deloitte Touche Tohmatsu Jaiyos Advisory
BKK, Thailand
Taxi Co., Ltd.
Suchai Noichaya Address: 18 Somkid Gardens 11B, SoiSomkid, Pleonchit, Pathumwan Bangkok 10330 Tel. (662) 254-2228, (668) 9-688-4116 E-mail:
[email protected]
EDUCATION 2011-2013
SASIN GRADUATE INSTITUE OF BUSINESS ADMINSTRATION CHULALONGKORN UNIVERSITY BKK, Thailand Master of Business Administration Graduate SAMUEL CURITS JOHNSON GRADUATE SCHOOL OF MANAGEMENT CORNELL UNIVERSITY NY, USA Foreign Exchange Student, Spring 2013
2002-2006
EXPERIENCE 2007-2011
CHULALONGKORN UNIVERSITY Bachelor of Arts, Spanish Major (1st class honor)
BKK, Thailand
Thai Airways International
BKK, Thailand
Taxi Co., Ltd.
Appendix B: Pro-forma Income Statement (Worst Case Scenario) Income Statement (000s)
Pai Sure Taxi Year of Operation
Price/unit (net of discounts) Units Sold (000s) ( see Sales Projections sheet) Sensitivity Analysis Sales Deflator (e.g. -15%) TOTAL SALES (THB000s) Unit Direct Cost (see COGS sheet) Sensitivity Analysis CGS Inflator (e.g. +10%) COST OF GOODS SOLD % of Total Sales GROSS PROFIT % Gross Margin
Sept
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
June
Year 2
Year 3
Year 4
2013
2014
2015
2016
T otal
Total
Total
17 5449
17 6397
17 7345
67,568
78,185
89,913
105,550
121,187
10.48
10.48
10
10
10
10
3,680 64% 2,112 36%
3,677 63% 2,114 37%
44,404 66% 23,164 34%
49,469 63% 28,717 37%
56,639 1 33,274 0
66,281 1 39,269 0
75,909 1 45,278 0
0 523 464 700 16 1,703 29%
0 523 464 700 18 1,705 29%
0 523 464 700 20 1,706 29%
200 6,180 5,561 8,400 127 20,469 30%
2,945 5,892 8,400 372 17,608 23%
3,215 5,645 5,600 220 14,679 0
3,392 6,036 6,533 313 16,274 0
3,619 6,535 7,467 412 18,033 0
406
407
408
2,695
11,108
18,595
22,995
27,245
109 752.19 -643
121 517 -396
131 299 -168
168 82 87
10,465 2,407
18,199 4,186
22,826 5,250
27,331 6,286
16.50 351
16.50 351
16.50 351
16.50 351
16.50 351
16.50 351
16.50 351
16.50 351
16.50 351
16.50 351
16.50 351
3,861
5,792
5,792
5,792
5,792
5,792
5,792
5,792
5,792
5,792
5,792
5,792
10.68
10.62
10.59
10.56
10.55
10.53
10.52
10.51
10.50
10.49
10.48
3,748 97% 113 3%
3,728 64% 2,064 36%
3,716 64% 2,075 36%
3,708 64% 2,083 36%
3,702 64% 2,090 36%
3,697 64% 2,095 36%
3,692 64% 2,099 36%
3,689 64% 2,103 36%
3,685 64% 2,106 36%
3,682 64% 2,109 36%
200 427 461 700 2 1,789 46%
0 523 464 700 3 1,690 29%
0 523 464 700 5 1,692 29%
0 523 464 700 7 1,693 29%
0 523 464 700 8 1,695 29%
0 523 464 700 10 1,697 29%
0 523 464 700 11 1,698 29%
0 523 464 700 13 1,700 29%
0 523 464 700 15 1,701 29%
-1,676
374
384
390
395
398
401
403
405
16.04 avg. 4212
T otal
17 4739
11.00 351
Total
0%
INCOME BEFORE INTEREST & TAXES
INCOME BEFORE TAXES Taxes on income (Zero if negative Income Deduct accumulated losses if applicable) NET INCOME % of Total Sales
Aug
Year 1
0%
OPERATING EXPENSES Initial setup costs (expensed) Sales and Marketing General and Administrative Depreciation of P&E Depreciation of R&D & IPP TOTAL OPERATING EXPENSES % of Total Sales
Interest income Interest expense NET INTEREST INCOME
2012
Year 0 July
2012
(Worst Case Scenario )
Mnth 0.1% 0.6%
23%
GRANT INCOME RECEIVED Retained Earnings (opening) Available for Distribution Dividends Paid RETAINED EARNINGS (CLOSING)
COMMERCIAL IN CONFIDENCE
0.00 89.11 -89
1.33 87.60 -86
1.66 86.09 -84
2.06 84.58 -83
2.47 83.07 -81
2.87 81.56 -79
3.29 80.05 -77
3.70 78.54 -75
4.12 77.03 -73
4.54 75.52 -71
4.96 74.01 -69
5.39 72.50 -67
Mnth 36 0.1% 969.69 0.6% -933
-1,765 0
287 66
299 69
308 71
314 72
320 74
324 75
328 76
332 76
335 77
338 78
341 78
1,762 811 23%
-1,765 -46%
221 4%
230 4%
237 4%
242 4%
246 4%
250 4%
253 4%
256 4%
258 4%
260 4%
263 5%
951 1%
8,058 10%
14,013 0
17,576 0
21,045 0
10
10
10
10
10
10
10
10
10
10
10
10
120
120
0
0
0
-1,765 -1,755 0 -1755
-1,755 -1,524 111 -1634
-1,634 -1,394 115 -1509
-1,509 -1,262 118 -1381
-982 -719 126 -845
-845 -580 128 -708
-708 -440 129 -569
-569 -298 130 -428
-428 -156 131 -287
-1,765 -156 1,358 -287
-287 4,203 4,029 3862
-1,381 -1,129 121 -1250
-1,250 -994 123 -1117
-1,117 -857 125 -982
28
3,862 12,772 7,007 10869
10,869 22,007 8,788 19657
19,657 32,961 10,522 30179
Taxi Co., Ltd.
Appendix C: Pro-forma Cashflow Statement (Worst Case Scenario) Cashflow Statement (000s)
Pai Sure Taxi Year of Operation 2012 CASH INFLOW FROM OPERATIONS Sales Revenue ($000s) Plus: Accounts Receivable opening balance Less: Accoun ts Receivable ending balan ce CASH INFLOW FROM OPERATIONS CASH OUTFLOW FROM OPERATIONS SETUP COSTS Cost of Goods Sold Plus: Accounts Payable opening balance Less: Accounts Payable ending balance CASH PURCHASES
Sales & Marketing Expenses General & Administrative Exp Research & Development Intellectual Property Protection Taxes payable Net increase in Inventory Net increase in Equipment CASH EXPENSE DISBURSEMENTS NET OPERATING CASH FLOWS
July
CASH OUTFLOW FROM FINANCING Interest payable Debt retirement Equity Buy-back Cash Dividends CASH OUTFLOW FROM FINANCING NET FINANCING CASH FLOWS
50%
Oct
Nov
Feb
Mar
Apr
May
June
T otal
5792 161 241 5711
5792 241 241 5792
5792 241 241 5792
5792 241 241 5792
5792 241 241 5792
5792 241 241 5792
5792 241 241 5792
5792 241 241 5792
5792 241 241 5792
5792 241 241 5792
5792 241 241 5792
67568 0 241 67326
200 3748 0 156 3592
0 3728 156 155 3729
0 3716 155 155 3717
0 3708 155 155 3709
0 3702 155 154 3702
0 3697 154 154 3697
0 3692 154 154 3693
0 3689 154 154 3689
0 3685 154 154 3685
0 3682 154 153 3682
0 3680 153 153 3680
0 3677 153 153 3677
200 44404 0 153 44251
427 461 97 0 0 0 42000 42984 -43076
523 464 98 0 66 0 0 1151 832
523 464 98 0 69 0 0 1153 921
523 464 98 0 71 0 0 1155 928
523 464 98 0 72 0 0 1157 932
523 464 98 0 74 0 0 1158 936
523 464 98 0 75 0 0 1159 940
523 464 98 0 76 0 0 1160 943
523 464 98 0 76 0 0 1161 945
523 464 98 0 77 0 0 1162 947
523 464 98 0 78 0 0 1162 949
523 464 98 0 78 0 0 1163 951
6180 5561 1 174 0 811 0 42000 55727 - 32851
0 10 30,000 15,000 45010
1 10 0 0 11
2 10 0 0 12
2 10 0 0 12
2 10 0 0 12
3 10 0 0 13
3 10 0 0 13
4 10 0 0 14
4 10 0 0 14
5 10 0 0 15
5 10 0 0 15
5 10 0 0 15
89 250 0 0 339 44671
88 250 0 111 448 -437
86 250 0 115 451 -440
85 250 0 118 453 -441
83 250 0 121 454 -442
82 250 0 123 455 -442
80 250 0 125 455 -442
79 250 0 126 455 -441
77 250 0 128 455 -441
76 250 0 129 455 -440
74 250 0 130 454 -439
1595 0 1595
395 1595 1990
482 1990 2472
487 2472 2958
491 2958 3449
495 3449 3944
498 3944 4442
501 4442 4943
504 4943 5448
507 5448 5955
510 5955 6465
4%
CASH INFLOW FROM FINANCING Interest earned Grants Received Equity funding Proceeds from Debt funding CASH INFLOW FROM FINANCING
Sept
3861 0 161 3700
4%
0%
Aug
(Worst Case Scenario)
Year 0 Dec Jan
NET CASH FLOW OPENING CASH BALANCES ENDING CASH BALANCES
COMMERCIAL IN CONFIDENCE
29
Year 1
Year 2
Year 3
Ye ar 4
2013 Total
2014 T otal
2015 Total
2016 Total
78185 241 271 78155
89913 271 977 89207
105550 977 1140 105387
121187 1140 1303 121024
0 49469 153 171 49451
0 56639 171 615 56195
0 66281 615 715 66181
0 75909 715 816 75809
2945 5892 1256 0 2407 0 0 12499 16206
3215 5645 1354 0 4186 0 8400 22800 10212
3392 6036 1433 0 5250 0 8400 24511 14696
3619 6535 1516 0 6286 0 8400 26356 18859
36 120 30000 15000 45156
109 120 0 0 229
121 0 0 0 121
131 0 0 0 131
168 0 0 0 168
73 250 0 131 454 -438
970 3000 0 1358 5327 39829
752 3000 0 4029 7781 -7552
517 3000 0 7007 10523 -10402
299 3000 0 8788 12087 -11957
82 3000 0 10522 13604 -13436
513 6465 6978
6978 0 6978
8653 6978 15631
-190 15631 15441
2739 15441 18180
5423 18180 23603
4%
4%
0