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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.)
