Meru, TaxiForSure plan overseas drive


July 25, 2014

Nikita Garia, Mint

Bangalore, 25 July 2014

Meru Cabs, India’s largest taxi fleet operator, plans to start services outside India by the next financial year and is evaluating entering countries such as Malaysia, Vietnam, Myanmar, Nepal, Bangladesh and Sri Lanka.

“There are many countries around India which face similar problems related to taxi service—a huge consumer need and gaps in services,” chief executive officer Siddhartha Pahwa said on Thursday. “We have the capability to address these.”

Meru Cabs is not the only one planning an overseas foray. Rival TaxiForSure is also firming up plans to start operations abroad.

“We are looking at launching overseas early next year,” said Raghunandan G., founder and director at TaxiForSure. He declined to elaborate as the plans are in a preliminary stage.

However, Raghunandan said it makes more sense for TaxiForSure to go abroad as the company works on a so-called asset-light model and does not own cars, unlike Meru Cabs. “With our existing model, we would be better positioned to tackle the international market,” he said.

Companies such as Olacabs and TaxiForSure do not own vehicles but work as aggregators.

Meru Cabs, which started operations in 2006 by creating its own fleet of cars, has been trying to move to an aggregator model since 2012.

Currently, Meru Cabs is evaluating the kind of model it would follow abroad and the capital investment that would be required to operate internationally.

“It will be a significant investment,” said Pahwa, without disclosing the amount as the company is still working on details such as whether it would have to open call centres abroad or operate completely via a mobile app, acquire taxis in those countries or aggregate those already run by other operators.

The move to go international comes at a time when competition in the Indian taxi industry is intensifying, with local firms attracting investor interest on one hand, and international companies eyeing the Indian market on the other.

In recent months, Olacabs and TaxiForSure have raised funds.

In contrast, Meru’s growth has been almost entirely been funded by equity capital. Private equity firm India Value Fund owns 85% in Meru. San Francisco-based Uber had launched its India operations in August last year with its luxury car service UberBLACK and introduced the lower-priced service UberX last month.

Meru’s plans to launch elsewhere are afoot even as it looks to expand in more cities across India. It is present in eight cities including Hyderabad, Bangalore, Mumbai and Delhi and is planning to expand operations to 20 cities within the next 12-18 months. It had recorded a positive profit after tax for 2013-14 and expects to post Rs. 650 crore revenue this fiscal year compared to Rs. 395 crore a year ago.

TaxiForSure is also looking to expand its footprint in India as it looks to enter 22 cities by end of this year, said Raghunandan. It now operates in Ahmedabad, Bangalore, Chennai, Delhi and Hyderabad.

Olacabs is not looking to expand outside India as it deems India to be a large enough market at this point. “India is a sizeable market and there is a genuine taxi problem to be solved here before we can think of moving elsewhere,” said Anand Subramanian, director of corporate communications at Olacabs. Olacabs has so far covered nine cities with the launch of its operations in Chandigarh on Thursday.

Analysts say establishing a successful operation outside India won’t be easy as taxi is a very local business.

“The companies will have to deal with the complexities of managing new markets and invest on marketing and technology,” said Devangshu Dutta, chief executive of retail consultant Third Eyesight.

(Published in Mint.)