Entropy brings order and sustainability in bike servicing biz

How has the business faired so far?

We have made good progress on both the product side with the automated bike wash machine and the service side with franchisees operating Express Bike Works as a one-stop motorcycle care centres. While the product was fine-tuned and perfected based on feedback well before introducing it in the market, we have been working on the store automation, thus making the operations more smooth gradually. We currently have eight franchisees operational and will be adding five in another 30-45 days. We have also sold seven machines to various authorised service stations. So while sale of machines will be a part of our business model, I think franchising will play a major role as far as visibility and regular cash flow is concerned.

What is the pricing strategy adopted for authorised service stations and franchisee partners?

We broadly sell the machines to authorised service stations for around Rs 9 lakh. The cost of setting up a franchise store comes around Rs 10 lakh that includes the automated machine and other aspects like the look and feel of the stores, billing software, amenities and various others services to be offered.

How long does it take for a franchisee to achieve breakeven?

On an average, if the franchisee is doing around 30 vehicles a day, the store should be able to breakeven in nine months. In fact, our automated machine can very easily cater to around 230 vehicles in day on a 9-hour shift. So the possibility of a faster breakeven is very high in case of a very good catchment area.

What kind of revenues has the company clocked since launching business?

We are not disclosing revenues for now, but can certainly say that business has grown 100% on year between 2014 to 2015. In terms of footfalls, we have been growing 30% month-on-month. In fact, our franchisees have serviced over 1.7 lakh bikes already. The numbers from authorised service stations would be over and above.

Could you tell us about the services being offered at your bike wash stores?

Our services are broadly offered in three categories viz. Express Care, Express Maintenance and Express Diagnosis. The first category is basically a spa service for two-wheelers involving cleansing, polishing, etc. In the second category we do things like oil change, lubrication and other maintenance-related aspects. The diagnosis service is like a lab test that tells you how well the vehicle is performing, its rating and parts that need to be replaced at an authorised service station.

How have you priced the services? What is the average ticket size?

The pricing for these services range between Rs 50 to Rs 1,300 on the higher side. The average ticket size is Rs 250. Majority of our customers go for the care category of service followed by maintenance. Diagnosis is a very new offering and is picking up gradually. We envisage a higher average ticket size to pick post traction for other two categories.

Are you also tapping international markets for franchising the stores?

We have started exploring that opportunity in Indonesia and Columbia and are talking to interested parties. We should have some clarity on it in a month or so. The idea is to tap international markets with a large two-wheeler population. I think countries like Vietnam, Pakistan, Bangladesh, etc are worth exploring for sure.

Any plans of expanding manufacturing given the growth being chalked out?

We already have two units, one in Mumbai and the second one in Palghar area. We are looking at another one in the northern region. We are taking the co-investment approach for the manufacturing facilities, it's more like a rental model where we bring in the machinery to make the product. While we are currently producing 4-5 machines a month based on purchase order, if we have to scale it up, we can easily go up to 20 machines a month.

How challenging is it to deal with so many investors already on board?

There is always a different side to having multiple investors. However, we think, the key factor is how well is the business communicating with the investors on board. The communication channel needs to be transparent and frequent, and that's something we have been doing diligently. So reaching out to them on a regular basis and ensuring everybody is on the same page is very important. The good side is that there are a lot of benefits to be derived from their experience and expertise. Right connections and contacts are very crucial for any venture and getting them early in business building stage only helps to grow faster.

Are there any plans to do a new round of fund raise?

Being a sustainable business, we have chalked out an aggressive growth plan for the business. We are looking to tap the extensive network of 40,000 petrol pumps on Indian roads in addition to malls, corporate parks and service stations. This apart, while also expanding in international markets, the business has received good traction and we have reached a decent stage now. So scaling up will definitely require funds and we might look at a bigger round of funding a couple of months down the line.