Meru Cabs gets $25 million from Brand Capital
Mumbai: Taxi operator Meru Cab Co. Pvt. Ltd has raised Rs.150 crore ($25 million) from Brand Capital, the investment arm of Bennett, Coleman and Co. Ltd (BCCL).
The company is looking to raise an additional $75 million as part of its $100 million fund-raising plan. In the last round, in March 2015, it raised $50 million from existing investor India Value Fund.
“Sixty-seventy per cent of the money will be used for advertising and providing user incentives which would include discounts, loyalty schemes and providing quality service,” chief executive officer Siddhartha Pahwa said over the phone.
The company began a course correction in September last year with a focus on profitability. As part of the policy, it stopped giving subsidies to its drivers. “We are looking to have 15-17% of the total market share that will make us a $1 billion company by 2022,” adds Pahwa.
Meru was launched in 2007 as an air-conditioned radio cab service. It is now competing with newer rivals such as Uber and Ola (ANI Technologies Pvt. Ltd) that are backed by deep-pocketed investors. Mint reported in June that Ola wants to raise $300-400 million and Uber raised a massive $5 billion , with its Indian arm expected to receive a significant part of the money. Uber had pledged to pump $1 billion into India in July last year.
“Meru’s profitable and growing business, strong technology and analytics driven platform complemented by an experienced management team were strong and attractive determinants to partner with the company in this high-growth, consumer-facing industry. This partnership will help accelerate the process of creating the requisite brand positioning as well as awareness for customers who are present across mediums/platforms like Print, OOH, digital, social media, etc,” said Shrenik M. Khasgiwala, director, Brand Capital.
Meru currently operates in 23 cities and has an operational fleet of 20,000 taxis, 5,000 of which are company-owned. “We are looking to increase the fleet by 15-20% over the next one year and will own 25% of the inventory. We should be present in 45 cities by end of 2018,” added Pahwa.
According to company estimates, India’s organized taxi-hailing market, presently at $1.2 billion, is estimated to reach $15 billion by 2022, presenting an enormous opportunity for growth. Meru is doing everything to tap into the potential of this large market.
It has launched the carpool and ride-share services last year, along with a cheaper taxi service, Meru Genie.
“Seventy percent of the bookings are on the app, we have about 4.5 million users and are looking to clock Rs.850 crore in revenue in the current financial year,” said Pahwa. The company also launched a specialized service for differently abled and elderly commuters called Meru Enable, a booking system with Facebook’s Messenger Bot, and a taxi service only for women in Delhi.
Bennett Coleman publishes Times of India and Economic Times, which compete with HT Media Ltd dailies Hindustan Times and Mint.