Name of the Franchise Ajmera Indi-Karting

No. of years of the Franchise 5

One Time Expenditure: 14,00,000

Total amount invested in the 1st Fixed Cost: 26,50,000
year Variable Cost: 12,30,400

Total Cost of the franchise period 3,63,99,510

Restrictions to business model Nil

Clauses of MOU Lenient

 Location
• The Track will be built on Reay Road near Mazgoan Dockyard
• The Track has to be approved by the Owners of Ajmera Indikarting
• The reason for selection of this location is relatively cheaper open air spaces in South
Bombay. Karting is becoming a tradition in South Bombay, the next big thing after Turfs, and
as such, demand needs to be met by Supply
 Track requirements
• 8,00,000 sq. feet of space
• Track length – 410 meters long
• This is done so that the racer can set an ideal lap time between 45-55 seconds
 Business Model
• The Business is divided between 3 models
1. The Hire a Car and Race Model
2. The Subscription Model -
 Franchise Tenure
• The franchise model is Locked in for a period of 5 Years
• The Payment of the Franchise model is split over 5 Years
• An extention after the 5 Years at a 20% increased Fees is Agreed
 Franchise Model- FOFO
• In this format, the company gives its name to the investor in exchange for Franchising Fees
• The franchise is an independent unit operating under the name of the original
 Support offered by Ajmera Indikarting
• Negotiating deals with the property owner of the track in order to get the best deal
• Helping with resources to get the necessary licenses and filing of paperwork
• Helping negotiating deals with Go Kart Manufacturers to supply in bulk as needed
• Help in recruiting Personnel for management, officiating and repairing
• Help in negotiating with contractors to build the race track and with the layout
Ajmera Indi-Karting: Business Model
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Our business model is inspired by the Razor Blade
concept where we have incubated 3 services, 1
primary and 2 complimentary

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The primary service includes the Go-Kart services
for customers, where we are targeting maximum
sales profit

-------
The 2 complimentary services include Go-kart
training for students and Intercollege/Corporate
Go-kart events
 Competitors:
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Franchises
AjmeraRatings
Indi- karting 4.6
WW Go-Karting Track 4
Smaash Go- Karting 4.2
Hakone Go- Karting 4.1
Raymond Race Track 4.5
Rayo Racing 3.9
Particulars UNITS COST TOTAL

ONE TIME
EXPENDITURE
GO Karts

Level 2 GO Karts 12 35,000 4,20,000

Level 1 GO Karts 8 30,000 2,40,000

Carriage Inward 20 1,000 20,000

Direct Labour 10 60,000 6,00,000

Licensing Fees 1 1,00,000 1,00,000

POS 1 20,000 20,000

TOTAL ONE TIME 14,00,000

EXPENDITURE
Fixed Cost Valuation:
PARTICULARS UNITS COST TOTAL
Franchise Fee 1 Year 5,00,000 1,00,000
Factory Rent 12 months 30,000 3,60,000
Factory Insurance 1 Year 70,000 70,000
Depreciation of Go Karts and Tools 1 Year 50,000 50,000
Cost of research & development 1 Year 10,000 10,000
Race Track Development 1000 Mt 2,000 4,00,000
Tire Walls 200 100 20,000
Office Rent 12 Months 60,000 7,20,000
Depreciation & Repair of Office 1 Year 10,000 10,000
Furniture
Office Salaries 5 Years 12,000 7,20,000
Audit Fees 1 Year 50,000 50,000
Office Insurance 1 Year 1,00,000 1,00,000
Factory Manager Salary 1 year 20,000 20,000
Management Expenses 1 year 20,000 20,000
TOTAL FIXED COST 26,50,000
Variable Cost Valuation:
PARTICULARS UNITS COST TOTAL
Power & Fuel 1000 100 1,00,000
Factory Lighting 12 months 10,000 1,20,000
Factory Water Supply 12 months 3,000 36,000
Factory Stationary 12 Months 12,000 12,000
Factory cleaning 12 Months 500 6,000
Other Factory expenses 12 months 3,000 36,000
Office Lightning 12 months 20,000 2,40,000
Office Stationary 12 months 500 6,000
Office telephone & Postage 12 months 200 2,400
Charges
Legal Charges 12 months 50,000 6,00,000
Bank Charges 12 months 10,000 12,000
Office Cleaning 12 months 5,000 60,000
TOTAL VARIABLE COST 12,30,400
Sales Projection:
COST REVENUE PROFIT/LOSS
1st Year 52,80,000 46,24,000 (-6,56,400) Loss
YOY increase 7.80% 11%

2nd Year 57,27,018 51,32,640 (-5,94,378) Loss

YOY increase 4.09% 11.9%

3rd Year 59,74,425 57,58,822 (-2,15,603) Loss

YOY increase 4.02% 12.8%

4th Year 62,18,780 64,78,583 2,59,803 Profit

YOY increase 4.05% 13.9%
 COST REVENUE PROFIT/LOSS
5th Year 64,68,774 73,76,105 9,07,331 Profit
YOY increase 4.04% 15%
6th Year 67,30,113 84,82,521 17,52,408 Profit

BUSINESS BREAKUP
8,000,000

7,000,000

6,000,000

5,000,000

4,000,000

3,000,000

2,000,000

1,000,000

0
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

-1,000,000
Business Breakup For The First Year:

Go-Kart Services Go-Kart Training for Go-Kart Events

(Primary) students (Complimentary)
(Complimentary)

• Rs 700 – per Ride • Rs 11,500 per month/kid • Rs 40,000/ Events

• No. of Customers per • Projection @8 kids per month • Average 4 Events
day(approx.) • Rs 11,500 *8 *12 : Rs 1,60,000/ year
=20 = Rs. 11,04,000
• Per Day revenue= 20 * 700= (per Total Sales = Rs( 33,60,000 +
14000 year/Training) 11,04,000 + 1,60,000)
• No. of working days in a
month= 20 = Rs. 46,24,000 (per year/
• Monthly Revenue= 14000*20= Events)
2,80,000
• No. of Months in a year= 12
• Yearly Revenue Form Go-Kart
services
= Rs 33,60,000 (Customer
Sales)
 Marginal Costing
Particulars 21-22 22-23 23-24 24-25 25-26
Sales 46,24,000 51,32,640 57,58,822 64,78,583 73,76,105
Less Variable Cost 12,30,400 12,83,553 13,36,050 13,89,759 14,46,045
Contribution 33,93,600 38,49,087 44,22,771 50,88,823 59,30,060
Less Fixed Cost 40,50,000 44,33,600 46,14,934 48,00,454 49,94,873
Profit -6,56,400 -5,84,513 -1,92,163 2,88,369 9,35,187

Analysis & Interpretation

Particulars 21-22 22-23 23-24 24-25 25-26

PV Ratio 73.39% 74.99% 76.80% 78.55% 80.40%

BEP 55,18,387 59,12,070 60,09,034 61,11,460 62,12,872

MOS -19.34% -15.19% -4.34% 5.67% 15.77%

 Summary
 Even though the business has been lucrative, not everyone can afford to enter
into this market the reason being extensively high entry costs and a high
potential for running massive losses for first couple of years or even more
 Testimony is BEP being less than the forecasted sales and even the current
sales implying that business has taken massive losses in the first few years
 Since margin of safety is negative in the first three years and is becoming
positive & increasing at an exponential rate which shows this business in the
long run is a good investment
 The cost was increased by the projected inflation rates for those 5 years
 The business generates revenue in 3 methods but the profit is achieved only
through the first method. The other 2 methods run at a loss as they have been
used as a marketing gimmick which is called razor blade model where the
organization sells the razors at a loss to earn from the blades. This method
helps them acquiring new customers as well as retaining the existing ones
THANK YOU!