Thursday, November 8, 2012

How a damsel in distress triggered a business idea

Vijay Gummadi and Venu Donepudi are cousins, friends, married to sisters and partners in a business. Both were working in the automobile industry in the US and, one fine day, decided that they should go back to India and start a venture in the automotive sector, may be a multi-brand car-service chain. On their trips home, they noticed the growing number of vehicles on the roads with only the dealer network available to take care of these cars.
“Apart from that, there is a story that you should read on our Web site,” says Venu. “It is about the love for a distressed damsel and the automobile, and how it got us into this industry,” adds Vijay, quite helpfully. “A triangular love story,” pipes in Venu. What is it about, you ask them. “You should read it,” replies Venu, during a recent interaction in Delhi.


Now cut to Carz’s Web site: Vijay and Venu were on a visit to India in 2007. Both were movie buffs. And both had gone to watch the Hollywood movieTransformers on the first day of its release in India. Dinner after the second show, they were driving out of the basement car park when they saw a woman waving at them to stop. The duo stopped and found that she was having problems starting her car and could not find help anywhere. Being auto-industry professionals and knowing a thing or two about checking a car, Vijay and Venu jumped out, fixed the problem and sent the woman on her way. She — Vedika — thanked them, said they should keep in touch and suggested, as she was driving away, that they should build something out of their expertise. Vijay and Venu still argue about whom Vedika wanted to keep in touch with. But one thing they are not arguing about is their business. Carz — or Vahan Motors Pvt Ltd, as the company is known — was set up in Hyderabad. Vijay, 37, has a bachelor’s in mechanical engineering and a master’s in manufacturing systems, and is Founder and CEO. Venu, 38, has a bachelor’s in electronics and telecommunications and is Founder and Managing Director.


The two studied the market for servicing cars, including in smaller towns. They even hired a professional market-research agency, whose findings validated their own conclusion that there was scope for an independent multi-brand car-service chain. Carz was formed in March 2008, with about Rs 1.5 crore of funds, mainly theirs and some from family and friends. Indo-US Venture Partners, a venture-capital firm, invested about Rs 22.5 crore ($5 million) in Carz. There are 16 Carz service centres now, all in the South, and this number will increase to 20 by January. They hope to add 30 centres next year.
They have positioned Carz as a neighbourhood service centre, where customers can even watch their vehicles being serviced. Everything is explained upfront to the customers.
Each centre, according to Vijay, will be spread over 10,000 sq. ft and requires Rs 1.2 crore to set up. They will have 12-16 bays and will be able to carry out all kinds of repairs, including accident repair. The service centres will have a paint booth too.
What about getting genuine spares for the vehicles, especially since automobile manufacturers do not sell spares outside their network? “There is a whole network of aftermarket parts manufacturers worldwide,” says Vijay. “We source a large part of the components from these reputed global manufacturers,” he adds. Besides, all the vehicles made in India are part of global platforms for the manufacturers; which means they are sold in other countries, from where too parts can be bought. There are importers who source parts and supply them for the aftermarket.
Each centre handles about 25 cars a day, and Carz has a 75,000-strong customer base. It has about 400 employees. The challenge as they grow, say Vijay and Venu, is in maintaining customer satisfaction levels.
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