Friday, March 16, 2012

The beautiful business of the Auto.

From Infosys campus, Hyderabad, to a place called Kondapur is Rs 32 by meter. The autowallah stuffs in 5 people in his shack of a vehicle and charges Rs 15 per head for the distance. That is a profit of 134% over and above the stipulated profit included in the meter fare.
Let’s delve down a bit deeper.
Typical mileage for an Indian-made auto rickshaw is around 35 kilometers per liter of petrol.
Kondapur is a distance of 3km from Infosys.
Therefore in 1 litre, the auto makes around 5 up down trips to kondapur.
Thus, for 5 trips,
Cost: Rs 70.
Revenue: 75*10=750.
Profit: Rs 680.
Assumptions: 1) auto driver enjoys life and does not make more that 5 up down trips.
                            2) His vehicle needs a maintenance of Rs 30 everyday.
                            3) He does not work for more than 20 days in a month.
His monthly take home is Rs. 13000. Considering that he did not go to engineering college he has saved some 2-3 lac Rupees with which he can buy another 2 autos and rent it out to a driver. If he keeps 50% of earning for himself then he earns Rs 13000 for the 2 autos. Considering he did not also go to MBA college, he had saved another 7-8 lacs, with which he can buy another 5 autos which gives him another Rs. 37500.
Thus at the age of 23-24, he can easily earn Rs. 63500 per month.

I am 28 and an MBA, and I am feeling like an utter fool. This calculation cannot be true. Where did I go wrong in the logic? Wait till I find it and come back.
Shit, this cannot be true!!

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