Short Story
46-year-old Vinay owns an auto-garage in Mumbai. He lives with his wife and two kids. His garage caters to customers who have privately owned vehicles, and tourism companies that send their fleet of cars for any sort of maintenance or repair work. In the next five years, he wants to see his business expand in terms of more customers. Apart from providing efficient services and keeping the customers satisfied, he wants to introduce different modes of payments in his business. He believes this will lead to acquiring more customers due to convenient payment options for them.
Business
- Vinay offers all kinds of car-related services. His garage doesn’t sell any parts. If a part is required to be changed, he buys it directly from the distributor and the cost is added to the cost of service.
- The workshop is open from 10:00 a.m. to about 8:30 p.m. on most days. Vinay is usually present here throughout the day unless he has to head out for some business-related work, like picking up or dropping off a car.
A: Who are your major customers?
V: We generally cater to customers who have privately owned vehicles. Otherwise, there are tourism companies who send their fleet of cars here for any sort of maintenance or repair work.A: Is your business GST registered?
V: No, it is not. I had provided my Ghumasta license for borrowing this loan.A: What was your initial investment in this business?
V: I had started my business with a sum of Rs. 5,00,000-Rs.10,00,000. These were my savings and I didn’t feel the need to borrow anything.A: Have you tried to find any business online?
V: Yes, I have. My business is registered with JustDial and QuikrCars. I get calls from customers through these platforms, whose cars need to be repaired. If it is any major work, we prefer getting those cars to the workshop. Otherwise, I send one of my boys to repair the car wherever it is.
Finance & Banking
- Vinay doesn’t accept any payments using cards. Payments are done mostly through cash and sometimes through cheques.
- Major expenditures for the workshop include rent, employee salaries, and electricity bills.
A: How much of your sale happens through cash or cheque?
V: In this business, cash is the most preferred mode of payment. Even though we do use cheques, cash always makes the work easier. You can say, about 75% of the transactions happen through cash and the rest using cheques.A: What are the major expenses your business incurs over a month?
V: The main expenditures that are incurred over time, are the rental payments of the workshop, the salaries of these employees and electricity, which is negligible. So, all in all, the sum of utility expenses come up to about Rs. 45,000.A: Have you ever had to take a loan for these expenditures?
V: Yes, I have had to take a loan for these small working capital expenditures in the past.
Loans
- Vinay prefers taking loans of amounts between Rs. 2,00,000 to Rs. 5,00,000. He generally takes loans only according to the need of the hour.
- Before taking a loan, to decide on the amount to borrow, he looks at the amount he owes his creditors. Post this, he compares the interest rates and repayment time.
A: Where do you use this money in your business?
V: I usually spend this money on buying machinery and other equipment for the workshop or if I have to make certain payments, I fulfil those obligations with this money.A: What is your credit cycle with your customers and vendors?
V: I do get about a month from my vendors to pay off their dues. But with my customers, I literally give them all the time in the world to pay back their dues. I have waited 4–6 months in the past to receive these payments. So much so, that I actually have bad debts worth Rs. 5,00,000 — Rs. 7,00,000!A: Here are three dummy loan products:
1. 100 Day Loan
2. Line of Credit
3. Term Loan
Please state the preference of these loan products from your business’ point of view in terms of need.
V: Out of the three products that you have displayed, I think the 100 Day Loan and the Term Loan would be suitable according to my business. The thing is that I am looking for a long term loan, but at the same time I would also want the 100 Day Loan because it seems like a simple product. Plus, the fact that I can actually close a loan within such a short period gives me more confidence to take loans and also builds confidence in the loan partners, which would lead to more money being available to me. When it comes to the long term, I would prefer the payback period to be about 3 years and these two products hence, suit the nature of my business.
Accounting & Taxation
- Vinay doesn’t file GST, the only tax he pays is the income tax. For this purpose, he shares all his bills and invoices to his CA at the end of the financial year.
- He maintains a ledger book to record every minor or major incomes and expense. To keep track of inventory, he writes off challans against the delivery of stock.
Business Goals
- Vinay wants to do up his workshop as it is the place where all the work happens. He wants it to look presentable and give off positive vibes.
- In 5 years, he would want to see his business expand in terms of more customers and hence, more work. Earlier, he was into the purchase and sale of second-hand cars as a side business but has discontinued that now.
A: Do you think the business has changed in recent times? How?
V: The business hasn’t really changed over time, actually. Even with big players in the market, the business has not been affected majorly. The only thing is the lack of liquidity in the market. Before, people would get their vehicles repaired or maintained even if they faced a minor inconvenience. But now, they just wait till all such inconveniences accumulate and that leads to a slow down, work-wise.A: What are the top three things on your mind w.r.t. your business?
V: Firstly, I would want to completely renovate my workshop. Secondly, I would want my workers to provide efficient services and keep the customers satisfied. Thirdly, I want to introduce different modes of payments in my business, which might lead to acquiring more customers by enabling them to pay according to their convenience.
Credits:
- Interviewed and transcribed: Ansh Chawla & Nikhil Kambli, Flexiloans
- Analysed and published for Medium: Geetika Shukla
Read our other research series
About the research
This documentation is a result of the in-person interview, along with the participants’ consent. The interviews might be conducted in their native languages and translated to English in the best possible way to reach a large audience.
Disclaimer: The identities of people and places in this documentation have been changed to honour the privacy of the participants.
About D91 labs
This research was executed and documented by D91 labs. D91 labs is an open-source initiative by setu.co to help Bharat build great fintech products. We organize and publish user research, insights, and frameworks for fintech in India. Please follow us on medium for more exciting stories and insights on Bharat.
Psst! We are looking for collaborators and contributors to D91 labs. If you are interested, please drop your details here, and we will reach out to you.
