Rokda Read online

  In 1998, Neeraj and Farhat got married. His was the first inter-religious marriage in a family where nobody had yet had a love marriage. To his surprise, despite their conservative background, his parents did not oppose the match.

  Farhat’s traditional Muslim family though, was aghast. ‘So much so, that her brothers and uncles threatened to kill me if we went ahead with the ceremony. But no threats were going to stop us from getting married and so in full filmy style, with the drama quotient high as always, the wedding happened under full police protection,’ Gupta recalls with much amusement.

  Having exhausted all his cash though on a big-bang wedding, and after trying his hand at multiple businesses, professionally things were back to square one. With Farhat having changed jobs, moving from Jet Airways to British Airways the only thing that changed was that instead of chauffeuring his girlfriend from college to domestic airport, he was now ferrying his wife around from home to the international airport.

  Joblessness though was soon beginning to affect him and even became an embarrassment for Farhat who was not quite sure what to say when people asked her what her husband was up to.

  ‘You need to make a definite start somewhere, Neeraj,’ she said one day.

  ‘I’ve been thinking about an idea. My friend Arun Shetty who services our cars has approached me for a partnership to open a service garage,’ Gupta told her.

  ‘A garage!?’ she exclaimed.

  ‘Yes, there is a lot that can be done in this space to formalize the existing set up.’

  ‘How much is the investment?’

  ‘He is putting in Rs, 50,000, and I will have to put in the same amount. We are doing a 50:50 partnership.’

  Farhat dished into her savings and gave Neeraj the money without batting an eyelid. And that is how Elite Class Garage was founded in late 1998.

  The garage industry at that point was a large, informal trade with very little agreeable about it from a customer standpoint. Neeraj would often harangue Arun, who worked for one of the garages in the city and serviced his father’s car, about how the existing model could be changed for the better and how corporate clients who wanted a value add in the service delivered to them was a segment that was largely untapped. Their conversations had got Arun thinking, and that is how he approached Neeraj to partner him.

  With a lakh rupees in capital raised between the two of them, the duo got into business straight away. They bought tools and paid half the amount as deposit for a shed in Oshiwara—a neighborhood full of unauthorized automobile repair shops. The idea was to remain in the thick of all the action, differentiate in the middle of competition, rather than do business in an isolated part of town. In a trade where there was no discernible feature that one could consider to tell apart the hundreds of repairwallahs in the vicinity, Neeraj and Arun got thinking on how they could do things another way.

  The first thing they did to stand apart, was to set up a small cabin in the garage where they could entertain clients. Where customers next door were sweating it out and getting uncomfortable in a greasy, grimy shack, refusing to sit on the dirty plastic chairs strewn about for the fear of having their clothes soiled, Neeraj and Arun were enlightening clients about their ‘premium services’ over a cup of tea and biscuits.

  They came out with annual membership offers, loyalty cards, and scores of freebies bundled in with their service packages which included small things like six free car washes per annum, toeing services, oil change at no cost etc. They were small but significant value adds that helped them make a distinction and capture customers without charging too much more than their competitors. They also realized that for reliable service, the customer was willing to pay a small premium.

  Within a matter of months there was lot of work coming in. Over 200 clients had signed up on annual memberships and business was on a roll. Neeraj, however, wasn’t a mechanic by profession and beyond a point would get bored sitting in office twiddling his thumbs. Oshiwara, was in those days largely an industrial zone, but with many corporate offices, BPOs (Business Process Outsourcing) and multinational companies setting up base in the area. Blue Dart, Tata Infotech, and Sony were among companies that had their headquarters right across the road from Neeraj and Arun’s garage. He immediately spotted an opportunity here. The logical next step to grow was to acquire retainer corporate clients who serviced their fleet only at authorized dealerships, by offering them the same service at a much cheaper rate.

  Gupta soon began seeking appointments with these companies. Turning up at their offices impeccably dressed, he would prod them with bulk discounts, so that they would shift business from authorized dealerships. He convinced them not to dispose off their old vehicles, which he promised he would restore to as good as new. Clients were impressed with the idea of a well turned-out garage owner, speaking with them in clear English and also the value-for-money proposals they were being lured them with. He positioned his service as an in-between. If an authorized dealer charged Rs 1000 for a repair and a local garage charged Rs 500 for the same service, Elite Class would charge Rs 650-700 combining low operational costs with a professional approach and faultless service.

  ‘We soon had clients signing up by the dozens, with a battery of 20 cars lined up outside their office at any given point, waiting to be serviced much to the chagrin of other rivals,’ Gupta says.

  But a garage was after all a garage, and Neeraj Gupta, the itchy, restless being that he was, wasn’t about to spend his lifetime in a car repair workshop!

  The creative and monetary limitations of the business started niggling him soon enough, bringing him at crossroads yet again—scaling up meant acquiring more land and resources, which in turn meant more capital investments. The financial aspect could still be taken care of, but the thought of being a garagewallah all his life was bothering him somewhere at the back of his mind. What he really wanted to do at this point was associate firmly in some way or the other with a strong corporate brand and become an exclusive travel vendor rather than a mere service provider.

  This wasn’t difficult. Gupta’s personal relationships with Elite Class’s corporate clients were only going from strength to strength because of his affable, easy-going nature. And it was as a result of one of these associations that he formed Travel Link, now known as V-Link Travel Solutions, the holding company of Meru Cabs, the brand that he is famous for today.

  Back then, in its initial avatar, it was basically a company that owned one shuttle coach and employed two people—a cleaner and a driver to ferry BPO workers across the city.

  RIDING THE BPO WAVE

  The year 2000 was when the BPO boom had just taken off in India, with several American as well as Indian multinational companies setting up back offices and call centers in Indian cities, making it a global hub for outsourcing. This explosion of back offices not only created huge employment opportunities for young professionals and a demand for swanky office spaces, but also for shuttle services and cabs to ferry the large pool of employees working odd hours.

  Tata Infotech (which was later merged with TCS or Tata Consultancy Services) was coming out with a tender for one such executive shuttle coach to provide transfers for its employees in five of its offices in the city. The administration head of the company immediately got in touch with Neeraj and asked him to put in a bid. He won the tender for a five-year contract which entailed operating a state-of-art fourteen-seater air conditioned coach.

  Neeraj had a customized bus ready in no time, equipped with TV screens, writing boards, microphones, reading lights and a refrigerator—it was ‘beautiful and one of its kind in those days. Even the Managing Director came to inaugurate it’ he remembers with pride.

  But undertaking this contract meant saying goodbye to the garage, as his partner Arun, was unwilling to shell out the Rs 14 lakh investment needed to buy the bus. Between Farhat and himself, Neeraj managed to raise Rs 3 lakh needed for the 25 percent down payment and took a loan for the rest of the amount. While it was a
big risk at that point in time, in hindsight it was the best decision he had made.

  The thumb rule in the car rental business is that the cost of a vehicle should be recovered from roughly a year’s revenues. With a single bus in its fleet, Travel Link, was to be sure bringing in revenues of Rs 1 lakh a month and a tidy profit of Rs 50,000 for Neeraj, after paying off EMIs and salaries. With Farhat also bringing home a handsome pay packet, the two were, in today’s lingo, the quintessential turn of century DINK (double income, no kids) couple, having a time of their life. But this was just a teaser. Success in its true sense, that would take the business to soaring heights and catapult Gupta into a different league altogether, was yet to come.

  Travel Link’s growth trajectory pretty much coincided with the hectic pace of growth in the BPO industry and it was only a matter of time before the lakhs on its balance sheet morphed into crores. One bus soon became two, and two became four and soon enough as BPOs expanded their back offices across cities like Delhi, Chennai, and Bangalore, Neeraj too was spreading his tentacles to capture these new markets as a travel services provider.

  As the outsourcing industry expanded and late-night call centers flourished, thousands of workers scattered across the length and breadth of the country, working late-night shifts had to be picked up from fifty different points in each city, which meant companies had to deploy scores of cabs. The Tata Infotech connection, where he had started out with a contract of barely 10-15 vehicles taken on dry lease in Mumbai, helped. The reputation he had built there for honesty, clean dealings, and faultless service-delivery ensured that Neeraj had almost all the BPOs signing up with him. He soon had to expand rapidly to cater to scores of other back offices of companies like JP Morgan, EDS, Daksh etc.

  Soon, even as competition started heating up and several other players, wanting to cash-in on the opportunity, tried to make aggressive inroads, undercutting and using all sorts of tactics to compete for contracts, Gupta managed to stay ahead of the curve.

  How?

  He used the very same principle that he had during the garage days—constant value-add. He introduced what were then considered unique concepts like safety training, driver identity cards, uniforms, car supervisors on site to ensure smooth operations, annual dinners for clients at five star hotels as relationship building exercises, and unmatched service delivery. With Farhat on flights three to four days a week, Gupta plunged himself entirely into work, dedicating 12-14 hours in personally supervising operations.

  The motto was to deliver on commitments by hook or by crook. So, sometimes when he was short of a car he’d borrow his parents or in-laws’ vehicle. Very often, if there were guests from abroad in need of an English speaking driver, he’d chauffeur them around in his own Maruti Esteem. ‘I had no qualms doing this. You have to be completely involved in your business and if need be, get your hands dirty as well. The day you start running it superficially it will suffer,’ Gupta says.

  The business model was straightforward—Gupta’s company would liaise with car suppliers, and play the role of an aggregator to ensure that service quality was maintained. The idea was to keep the business asset light and so only a few of the vehicles were to be owned by the company. He had as many as 1300 vehicles on the road, but by 2006, with business on a roll and vehicle ownership becoming a critical selling-point for vendors, Travel Link had to purchase and maintain hundred vehicles of its own. This would, as Gupta realized later, prove to be a burden rather than a blessing, as problems of parking, maintenance, drivers on the pay rolls, frequent accidents etc. would keep him awake all night.

  In the larger scheme of things though, these were just teething issues in what was otherwise a blooming business. A large part of the success was a function of being at the right place at the right time. Travel Link was only riding the dot com wave, growing in tandem with the BPO industry. What helped it sustain the momentum and gather scale though was the dedication and risk taking capacity of the man who ran it. Neeraj never dithered from ploughing back the money he was making into his business.

  In a span of just a few years, the company was growing in rapid multiples of five-six times. Between 2000 and 2001, annual turnover grew ten times from Rs 12 lakh to roughly Rs 1.2 cr and by 2005-2006, Travel Link had a top line of Rs 43 Cr, with operations in five cities. Initially, operating with just one driver and one cleaner from home, Neeraj now employed 200-odd people across the country and worked out of his sprawling 4000-square feet office in Goregaon.

  ‘In a shot I also shifted into a swanky six bedroom apartment in Andheri, spending a whopping Rs 1 cr just on interiors,’ he smiles.

  But with success came its ugly baggage of problems that almost threatened to scuttle the existence of Gupta’s booming enterprise.

  The shooting incident happened in 2006.

  While it was nearly a year after the first call from Dubai, it proved to be the proverbial last nail in the coffin. The underworld threats had persisted despite the fact that the family had full police protection, including two cops at Gupta’s side at all times. His case was also being looked into by the Anti-Extortion cell, but the police got fed up of the calls and told him there was nothing much they could do to stop the menace, as he had already been given two bodyguards, a licensed rifle and were doing all they could to keep him safe.

  With two little daughters and a wife at home, work piling up in office and constant stress about the safety of his family, life had become a living hell. Farhat even suggested that the family move to London, where the couple had friends, who could help them settle initially. She was at that time, working as cabin crew for British Airways and frequently travelled to the United Kingdom. Neeraj was disturbed at the thought of shifting bag and baggage to London, even though somewhere in the back of his mind the thought of a safe environment for the girls was a comforting idea.

  As luck would have it, London never happened, and within a few months of the shootout the threats faded out. Neeraj was convinced he wouldn’t pay a single penny of ransom and he stuck to that resolve. They eventually gave up. But the pressure was intense and it took a toll on him mentally. The intimidation had stopped, but his passion and zeal to grow his business also ebbed out swiftly. Those 24 hours between the 25 and 26 of July 2005—and the terrible year after that, till the shooting incident at office was the worst period of his life. But through this adversity, also came the big opportunity he was looking for all along.

  ‘I was provoked to disrupt the status quo. In due course, I got so fed up that I firmed up my decision to scout for an investor and sell out.’ That investor, which Gupta was seeking to cash out of Travel Link, would end up becoming a key force behind the Meru story.

  But little did he know that back then.

  THE GOVERNMENT TENDER

  Around the time he was getting ready to fold, Travel Link, Neeraj hired Mind Spring, an investment advisory firm, to scout for a buyer. Through them he met Vikram Nirula. Vikram and Vishal Nevatia, former Arthur Anderson employees, had quit their jobs in 1999 to co-found GW Capital, the antecedent of IVFA or India Value Fund Advisors. IVFA, with investments in a dozen marquee names apart from Meru, was a firm that liked to do controlled transactions, whereby it could hold a majority stake, take the business to a certain scale, professionalize it and then exit in a five-seven year timeframe.

  With Meru they approached things a little differently.

  ‘We used a more venture capital rather than PE approach,’” says Nirula, who with hindsight believes that the investment could have happened in 2010 rather than 2007, but cautions that sometimes you need to be ignorant about the market realities and throw caution to the winds if you are to make a success out of a very difficult, but exciting business. ‘If you know too much about a business, you will think only about the difficulties,’ he adds.

  Gupta’s first meeting with Vikram was a debacle. He rejected Travel Link’s buyout proposal right away saying IVFA was not interested in the B2B staff transportation space owing to conc
erns about scaling up. Several other players in the private equity world had also responded to him in a similar manner.

  Neeraj’s option to pack his bags and leave was suddenly no longer available. He thought he had hit rock bottom with all doors closing on him. But quietly, a bigger one had opened. That fateful meeting with Vikram, even though he didn’t know it yet, would change his life quite dramatically. Around this time—in May 2006 to be precise, another opportunity had landed at his doorstep and that is where the two would end up collaborating.

  Neeraj was in office going about his usual morning routine one day when a colleague excitedly barged into his cabin. ‘Look at this,’ he said, pointing to a newspaper advertisement. ‘The state government is coming out with a tender to give out licenses for new AC fleet taxis. Should we apply?’

  ‘Put in a bid,’ said Neeraj disinterestedly, not enquiring about the nitty-gritty of the tender process, when it was decided that the company would throw in a proposal. He was still wallowing in dejection, with very little of his brain focused on what was happening in business.

  This was the time of the Vilas Rao Deshmukh administration, which was working on hectic plans for the city’s makeover. The Chief Minister’s officials were deeply absorbed in working on a much-touted dream of turning Mumbai into Shanghai—a plan that was presided over by one Mr Sanjay Ubale, the then Secretary of Special Projects—Maharashtra State. As it is now widely recognized, while Mumbai is still a distant dream away from becoming Shanghai, the bid to give Mumbai’s rusty old cabs a facelift as a part of this vision fructified, making along the way, a millionaire out of the small- time garage owner who wanted to pack his bags and leave for London.

  Travel Link applied for the license, and much to their surprise won the bid. ‘There cannot have been more than two or three applicants at the time,’ says Gupta.

  In 2006, there were virtually no players in the radio taxi business and the closest thing to what the Maharashtra government had in mind was someone like Travel Link with its 1,500 odd cars and solid experience in operating a fleet of air-conditioned cabs. The magnitude of this opportunity had still not hit Neeraj. It was only after an initial meeting with the concerned department in the government to understand the business model that Gupta realized what a coup it had been and what a goldmine he was sitting on.