Successful Entrepreneur Stories|Famous Young Entrepreneur How to Start a Small Business?: Automobiles

GRAPHICS and decorations on vehicles was once a business pursued by the small-time garage operator catering to a local clientele. Even abroad, there were only a few companies in this business, and in India, virtually none. Two decades ago, not many would have seen sense in the need for an organised business to put stripes and designs on automobiles. But Kishore Musale has not only taken that business mainstream, he has also made a number of car and bike manufactures factor in exterior adornment as part of their design.

So, it was a milestone for Classic Stripes, which Mr Musale founded in a 120-sq-ft room outside Mumbai in 1987, to have won an order from Tata Motors to provide body-side graphics to the Rs 1 lakh car. The company already serves a range of Tata vehicles in addition to global giants like Honda, Yamaha, Suzuki and Toyota and Indian companies, including Bajaj and Mahindra & Mahindra.

CLASSIC STRIPES PVT. LTD. (CSPL) was established in 1987. The Company is in the business of producing decals which are used in the 2-wheeler and 4-wheeler industry. With ISO-9001 certification and a staff strength of over 300 people, CSPL has propelled its brand to the forefront of Graphic and Printing Industry. The Company has a production capacity to produce over 6 million motorbike decals per annum and is the largest manufacturer of 2-wheeler Graphic worldwide. The Company also produces Doming Labels and has a production capacity to produce over 2,00,000 Doming Labels per Shift. The Company has also invested in the state-of-the-art in-house design studio which caters to the requirement of the industry and as per customer’s design requirement.

Classic Stripes Pvt. Ltd. for the second consecutive year has featured in the survey conducted by the Grow Talent Company in partnership with Economic Times as the “Great Places to Work” we were rated 5th in 2007. . This is a tribute to our Core Competence which is our “People”.

Mr Musale’s business goals are ambitious and global. While selling to the local market and retail buyers would have been easier, Mr Musale, from the beginning, wanted to have original equipment manufacturers as his clients. He particularly wanted to target Japanese vehicle makers, which had the best volumes to offer, but insisted on the highest quality possible.

Classic Stripes had to struggle for business for four years after its birth. In the first year, it made only 20,000 units. But Mr Musale believed the automobile industry in India was set to explode and his time would come. He was amply rewarded when the country’s economic growth, technology advances and a growing population began to translate into a rapid growth initially for two-wheelers and later for cars.

With experience serving tough Japanese clients, Classic was quite ready to meet the new domestic demand. There has been no looking back since and today, the company has developed the capacity to produce 10 million units of graphics a year. It employs 600 people and has been ranked among the 25 best places to work in the country by Businessworld magazine.

“OEMs have always been our main focus. But, now we are concentrating on after-market graphics for cars, graphics with original designs through their showroom,” says Mr Musale. Mr Musale can now afford to take more time off to spend with family or to listen to Led Zeppelin’s songs. But he is already chalking out global expansion plans for Classic and two sister companies. “We are also looking at supplying signages like the big ones you see at petrol stations, shopping malls in India and abroad,” he says.

Article Resources:
The Economic Times.
Classic Stripes

TATA's small car is spawning so many business oppurtunities that you can even assemble and sell it.

Preeti Burde, who owns a chain of driver training schools in Maharashtra’s Thane city, plans to buy Tata’s Nano the moment it is launched later this year. She is not exactly from the price-sensitive middle class family that the world’s cheapest car is targeted at. She is a businesswoman trying to profit from it. Ms Burde believes a large part of her future customers will be Nano buyers and she may have to migrate at least part of her fleet to the new car to help them learn on the car they’ll drive. “We definitely see a growth in the business as more and more people would come in wanting to learn how to drive in a Nano, which means we too would have to buy more of the Nano model,” she says.

As Ratan Tata pushed gears to ceremonially drive the Rs 1 lakh car at its unveiling in New Delhi, he was not just challenging the automobile industry with its radical economics, but also firing up new business dreams of scores of entrepreneurs across the country who expect the high volume sales of Nano to spawn opportunities to make money. While people like Ms Burde will leverage the high volume sales of Nano to power their businesses, Tatas themselves will be doing their bit for entrepreneurship. If Tatas’ plans succeed, Nano will not just be a car but a new business model and the central piece of ecosystem of entrepreneurship. The way Nano will be built and sold is going to be very different from the way others cars are brought to the showroom. Call it McDonaldisation of the car industry, but Tata wants the small guy to help him assemble and sell the car. This way, he hopes to create new business opportunities for young engineers across the nation, even while finding a cost-effective way to push Nano to the remotest corners of the market. “We would create entrepreneurs across the country over time that would produce the same car,”

Tata group chairman told ET in an exclusive interview. “We would produce all the mass items and ship it to them as kits so it is similar to an SKD or CKD operation,” he said. He explained that the company will bring together business aspirants from around the nation to set up satellite assembling and dealership operations. These entrepreneurs need not have experience in the automobile industry. “My aim was that, I would produce a certain volume of cars and then I would create a very low-cost, low-break-even plant that a young entrepreneur could buy and that bunch of young entrepreneurs could establish an assembly operation,” Mr Tata said. Tata Motors would retain the responsibility for quality assurance and train people who will oversee the operations of these entrepreneurs. The whole ecosystem will look up to the manufacturing strengths of Tata Motors, but will do final assembly at the local units. “It will be very satisfying if the small car created 10 or 15 satellite groups of young engineers who thought they could get together and do a business and never be able to get, normally, in the assembly of cars,” Mr Tata said.

TAKING THE PLUNGE

While much more details would be needed to fix the risk and reward ratio for the entrepreneurs, a quick chat with industry veterans suggested each small set up would have to invest about Rs 15-20 lakh. Nano, being a Rs 1 lakh car, will have to work with wafer-thin margins and make up with very large volumes. Dealers in India’s car market typically make a profit of 2.5% or less of a unit’s sale price. Even assuming such a margin will be available on the small car’s sales, it will be a small amount in rupee terms. “Although we know that margins are minuscule in car business, we are hoping we can concentrate on other areas too like finance, insurance,” said one of the entrepreneurs already shortlisted by Tata Motors. To understand what Tata is talking about, it may help to go to a McDonald’s outlet and watch the process there. The core food is prepared at a central kitchen, frozen and sent across to the chain of outlets, where the food is reheated, “assembled”, and served. The Speedee Service System, as it is called, makes the service faster, reduces cost, standardises the product and is easy to manage from the quality control angle. Now, if the central kitchen were Tatas factory and the franchise be the entrepreneur’s operation, the hamburger would be the people’s car. It is new and radical and the industry is still trying to understand it. The jury will not return until the car is launched and the new model tried. But dealers are already speculating whether the after-sales service would also be decentralised. After all, this is the area where the current players make maximum money. With Tatas’ plans to sell 2.5 lakh cars in the first year and reach the one million mark in four years, there will be enough room for the business model to evolve and entrepreneurs to jump into.

HEY, TAXI

The roadscape of Mumbai has been dominated for long by the rickety black Premier Padmini taxis, only to be changed a little recently with the government-sponsored modern taxi service. But cab operators are already imaging the sleek Nano in their place. With its low price, high mileage and small size, it is compelling city taxi material and can be a stylish alternative to the current fleets. Middle class families, the target market, can easily be trapped. “From the first look of the car, it’s definitely a sound buy for the taxi services,” says Arun Sabnis, managing trustee of Fulora Foundation, which runs the Mumbai Gold Cab Services. On an average, a cabbie gets to ferry two people per fare, which the new car can easily take. At a total cost of less than Rs 2 lakh, including taxes and permits, Nano is exactly what the cash-strapped taxi operator will go in for. For an officially-backed fleet service like Mumbai Gold, however, the government stipulates a minimum engine capacity of 1000 cc, which Nano lacks. If black taxis go away, can autorickshaws be behind. Bringing an autorickshaw on to the road, complete with the paperwork, can cost anywhere between Rs 2 lakh and Rs 4 lakh, they say. So, switching to Nano can be a profitable and low-cost alternative for the owner-driver too, Mr Sabnis says.

LENDERS CHARMED

The Nano has also enthused lenders and at least some investors. Car loan operators believe the demand will rocket. Ratan Tata’s dream to nurture an ecosystem of entrepreneurs has also made project lenders sit up and take notice. Most venture capital investors think this satellite manufacturing may not be the field for them, but at least one of them says otherwise. Avnish Bajaj, co-founder and managing director of Matrix Partners India, says he would look to invest in “someone whose core competence and demonstrated expertise is in low cost, high volume and high quality manufacturing with applicability to all lowcost cars and not just Nano.”