Six weeks ago, Japan’s SoftBank chairman Masayoshi Son announced his plan to put money in taxi service aggregator Ola Cabs at a valuation of $ 1 billion. Son’s $ 210 million investment in Ola Cabs was the largest so far in an Indian cab service company. The valuation didn’t seem atrocious considering the huge market potential that lured San Francisco-headquartered Uber, which is backed by investors such as Goldman Sachs, Google Ventures, Menlo, First Round, Lowercase Capital and Benchmark, to India.
But, the reality is different. Most of the taxi services aggregators, who are currently under probe following the alleged rape by Uber cab driver, are under financial stress.
ANI Technologies that runs Ola Cabs reported a 50% jump in net loss at Rs 34.21 crore in fiscal year ended March 2014 from Rs 22.80 crore posted in the previous fiscal year, according to its filings with the Registrar of Companies (RoC).
TaxiForSure, which is also facing a nationwide ban, saw its net loss widen during FY14. Serendipity Infolabs, the holding company of TaxiForSure, reported a 665% jump in net loss at Rs 17.08 crore in FY14, from a profit of Rs 3.02 crore reported in fiscal year ended March 2013.
Meru Cab Company that runs Meru Cab has reported a maiden profit of Rs 3.55 crore in FY14. This is a 111.4% jump compared with the Rs 31.11 crore loss that the company had reported in FY13. However, Meru Cab has an accumulated loss of Rs 215.24 crore at the end of March 2014.
In terms of revenue, Ola Cabs has reported solid growth. Its revenue stood at Rs 51 crore in FY14, an increase of 219% as compared with Rs 16 crore posted in the previous fiscal year ended March 2013.
Hellion Ventures and Accel India-backed TaxiForSure reported its revenue at Rs 4.29 crore in FY14, while Meru Cab did not disclose its revenue details.
The cab market in India has received increased attention from the global investors despite the financial stress, essentially because of the fact that radio taxi model has emerged as the fastest growing and most reliable form of public transport in the world’s second largest population. There are about 600,000 cabs in India and they together generate close to Rs 11,000 crore revenue annually.
There are 19 radio taxi operators including Mega Cabs, Easy Cabs, Meru Cabs, Tab Cabs, according to the Association of Radio Taxis. The radio taxi operators run about 25,000 cabs across the country and generate revenue between Rs 70,000 to Rs 80,000 per month, the association has said.
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