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ENTREPRENEURSHIP PROJECT REPORT

ON

BUSINESS PLAN OF OLA CABS

ENTREPRENEURSHIP PROJECT REPORT ON BUSINESS PLAN OF OLA CABS SUBMITTED TO:- Prof. Moid Ahmad SUBMITTED BY:-

SUBMITTED TO:- Prof. Moid Ahmad

SUBMITTED BY:- Komal Bakshi (PGFA1429) Pavan Kr. Gautam(PGFA1431) Kunal Madan (PGFA1430)

Name of company:- olacabs Contact Details :- 24x7 Call us (022) 33553355 Corp office : ANI

Name of company:- olacabs

Contact Details:-

24x7 Call us (022) 33553355

Corp office: ANI Technologies Pvt Ltd 4th Floor, Sunteck Centre, 37-40 Subhash Road, Vile Parle (East), Mumbai - 400 057 Tel : 022- 30947900 Ph no - 022-30947900

Company registration number:- U72900MH2010PTC240894, registered at Chandigarh.

Date of Incorporation:- 3 december 2010

Name of company:- olacabs Contact Details :- 24x7 Call us (022) 33553355 Corp office : ANI

Prospective Financer:-

Name of company:- olacabs Contact Details :- 24x7 Call us (022) 33553355 Corp office : ANI

Tiger Global Management, Matrix Partners,

Steadview Capital,

Sequoia Capital, SoftBank Internet and Media Inc.

EXECUTIVE SUMMARY

Vision

The vision behind Ola cabs is to provide hassle-free, reliable and technology-efficient car rental service to Indians. In a deeply fragmented and highly unpredictable market of car/taxi services, there is a significant shortage of easy and comfortable on-ground options for transportation, be it within a city or outside.

Revenue Model

Runs on a pay- for- performance model.OLA charges a commission in whatever sales they make. Also to get access to technology platform. OLA charge taxi owners a small fee.

Technology

The mobile app is not what makes Olacabs different from the several radio taxi services that have sprung across the country. Bhavish Aggarwal, co-founder and chief executive officer of the company, describes Olacabs as a technology firm rather than a cab-services firm. One of his ambition is to be able to deliver a cab within 20 minutes from the time of booking. For this, the company is making use of data analytics, so that they can forecast demand for its services on a daily basis. Based on this data analysis we intend to providing service within 20 minutes of booking. At present it is around 30-35 minutes.

Target Market

The Indian radio taxi market alone is pegged anywhere between $6-$9 billion dollars by different estimates, and is forecasted to grow at 17-20% annually. More importantly, the organised taxi market is still minuscule as compared to rest of the taxi market in India; it constitutes only 4-5% of the market in terms of sheer number of vehicles. The rest is by operators who own fleets of 2-50 cars and typically have a presence in 1 or 2 cities. Ola cabs is targeting three sectors of market that is providing services to customers for outstation, city taxi and local rentals. These services are offered by making variation in fleet those are luxury , sedan, hatchback and Ola mini.

Financials

In 2012, the company had raised over $5 million in its Series A funding from Tiger Global. Prior to that, it had raised angel funding from a bunch of individual investors, including Rehan Yar Khan and Anupam Mittal. November 2013, Olacabs had raised its Series B round of funding led by Matrix Partners India for a big minority stake, with participation from

existing investor Tiger Global Management. Although the company had not disclosed the

amount at the time, media reports pegged it at $20 million. Prior to that, it had raised Rs 19.2 crore ($3.2 million) from existing investor Tiger Global in July the same year, which was

believed to be part of the same round.

It raised Rs 250 crore ($41.8 million) in its Series C

round of funding led by Hong Kong-based hedge fund manager Steadview Capital and Silicon Valley-based Sequoia Capital. Existing investors Matrix Partners India and Tiger Global Management also participated in this round. Olacabs had raised $210 million in its Series D round led by Japanese internet and telecom giant SoftBank. The proposed fundraising, which would be its Series E or fifth round of institutional funding, it is back in the market to scoop between $300-500 million more, would strengthen its position as the most heavily funded player in its business.

Management

Olacabs, founded in January 2011 by two IIT Bombay alumni Bhavish Aggarwal and Ankit Bhati is India’s largest aggregator of car rentals and point-to-point cab services. Olacabs integrates car transportation, be it point-to-point services within a city, hour-based rental services or outstation travel, onto a technology platform, ensuring convenient, transparent and quick service fulfillment for the customer. Right now, we’re a two-member team Ankit is the CTO and handles the technical aspects, from building the website, building the backend platform, scaling servers etc. I’m the CEO and I handle the operator partnerships, sales and operations. And yes, we are looking at hiring like- minded and passionate people for technology and product development roles.Ola has also hired professionals for corporate affairs, public policy, marketing and category management among others.

"We look for people who have a shared vision in shaping something futuristic and have done it in their own," said Bhavish Aggarwal, co-founder and CEO, Ola Cabs.

BUSINESS IDEA AND OPPORTUNITY

I had once rented a car for a weekend trip with friends to Bandipur from Bangalore. The driver turned out to be a cheat. He stopped the car in Mysore en route to Bandipur and asked to be paid more than what had been decided earlier. He was so rigid and ill mannered that we had to leave him there and continue our journey by bus.

existing investor Tiger Global Management. Although the company had not disclosed the amount at the time,

This led to the business idea of using technology to offer a better and more predictable experience to consumers, right from easy online access to car rental bookings, quality assurances through reviews/ratings and proper information about the car and the driver.

Our market is large enough because India’s rate of vehicle ownership is low to 41 per 1000 people and ranks 128 th worldwide and therefore our company has a strong belief that there is an opportunity for population to “leap frog” automobile ownership altogether and instead rely

on booking services like ola cabs. The population of India is 1.2 billion which is large enough for our company to capture the market. It is estimated that the radio taxi market in India is $6-9 billion dollars growing at 17-20%. It is also estimated that the number of taxis in the

organized sector will reach 30,000 by 2017.

The entire ground transportation industry in

India is run in a very opaque, inefficient and ad-hoc manner. There is no service guarantee or

price transparency for the consumer and operators are also troubled with no structured channel through which customers can be sourced. We believe that technology will help make this industry efficient and drastically improve the consumer experience in years to come.

Olacabs provides cab-booking services to customers through multiple channels but it does not own any cabs. "We are a technology company. We are a technology platform for transportation. We help connect customers and drivers better," said the Olacabs CEO .Most of the existing portals work as opaque agents, offering marked-up rates. Olacabs, on the other hand, has a marketplace approach. We tell users the rates of different operators along with what accessories and features each car has. So, users can compare and book the one which suits their needs the best. The rates displayed are also exact fares that a customer would get directly from the operator.

Also, most cab booking portals are plain vanilla websites with price listings. Our strategy is to focus on the backend interface with car operators because that would ensure a certain level of quality and predictability with respect to the consumer experience. We intend to bring all car operators and all taxis on to a single technology platform to enable real time inventory distribution, nationally.

Unique offerings

Customers can book cabs through its apps, website and even call centre. Recently, it launched the facility of cashless payment by offering an in-app pre-paid wallet will allow customers to recharge their account through a credit card. The firm also began making auto bookings available on its platform in beta mode across six cities in India including Bangalore, Mumbai, Delhi, Chennai, Pune and Ahmedabad. Another new category that is currently in beta mode is ‘Ola Pink’, cabs driven by women drivers and is only for women passengers in Bangalore. It also started adding the conventional black & yellow cabs of Mumbai to its platform. Recently, the firm roped in Gurgaon-based background-verification firm AuthBridge to vet the drivers.

Among the other initiatives, the firm released an SOS button for customers, which, when activated, sends out all ride details in real-time including GPS coordinates to pre-set friends and family members of the user via SMS and e-mail.One of his ambition is to be able to deliver a cab within 20 minutes from the time of booking. For this, the company is making use of data analytics, so that they can forecast demand for its services on a daily basis.

Ola Prime’s business class experience fleet includes cars like Toyota Innova, Altis, Skoda Rapid and Honda Civic. Ola Mini shall remain the most affordable personal transportation option in the city and its fleet include hatchbacks like Tata Indica and Nissan Micra amongst others. The flagship Ola Sedan is aimed at a regular city traveler looking for a spacious car and comfortable drive and is currently available across all 12 cities where Ola is present and includes cars like Suzuki DZire, Mahindra Verito and Toyota Etios.

MARKET ANALYSIS

The taxi space in India is heating up and has been seeing a phenomenal growth in

The taxi space in India is heating up and has been seeing a phenomenal growth in the past 6-7 years. Over $400 Mn (INR 2400 crores) of VC money has been pumped in into these companies in the past 4 years itself.

Olacabs recently raised over $210 Mn in Series D from Softbank at a valuation of over $1 Bn to focus on expansion. TaxiforSure also raised over$30 Mn in it’s latest round while Uber has a warchest of over $1.5 Bn to fuel it’s international expansion. Uber has also committed almost $400 Mn to grow and promote it’s service in India.

The Indian radio taxi market alone is pegged anywhere between $6-$9 billion dollars by different estimates, and is forecasted to grow at 17-20% annually. More importantly, the organised taxi market is still minuscule as compared to rest of the taxi market in India; it constitutes only 4-5% of the market in terms of sheer number of vehicles. The rest is by operators who own fleets of 2-50 cars and typically have a presence in 1 or 2 cities.

Olacabs recently raised over $210 Mn in Series D from Softbank at a valuation of over

With this in perspective one can now see why each player is trying to aggressively expand and is raising such humungous funding rounds. The aggregators like Ola, Uber and TFS have just conquered less than 3-4% of the total available market of India so far and have a huge opportunity in front of them.

Starting Up:

Olacabs started its operations in 2010 from Mumbai under the name of ANI Technologies Pvt. Ltd.

TaxiForSure.com started its operation in 2011 from Bangalore under the name

of Serendipity Infolabs Pvt. Ltd. Uber started its operations in India in 2013 starting from Bangalore, but the

parent company operates under Uber Technologies Inc, incorporated in the state of Delaware, US

Going Mobile:

OlaCabs launched its Mobile App on Android first, followed by iOS in 2012

followed by Windows in 2014 TaxiForSure launches its Mobile App on Android & iOS in 2013 followed by

Windows in 2014 Uber started its operations in India (2013) with Android and iOS apps. Uber

App on Windows platform is published by Caro Apps

Senior Management Hires:

Ronald Rosario, India Head of Operations at Meru Cabs, moved to TaxiForSure.com (2012)

Unique Marketing Initiatives:

OlaCabs provided a lot of promo codes on their website to give huge discounts

in various segments. They also started the trends of providing fixed rate drops to the airport when they launch in a city OlaCabs provides cabs at INR 13 per kilometre whenever Auto Unions call a

strike TaxiForSure provides promo codes on Tuesdays

Uber is way ahead in marketing as they did campaigns during elections (providing Uber at a discounted rate for voting), UberStud (to encourage referral) and free credits while introducing a new customer. Recently they launched Ubber Chopper by which you can ride a chopper and have a view of your city’s skyline

MARKET OF THE ORGANISED TAXI SECTOR IN INDIA

Mega Cabs and Fast Track Taxi started out in 2001 itself with small fleets. The market, however, started seeing traction only from 2006 onwards when the likes of Meru Cabs, Easy Cabs and Savaari came up. There are now several competitors eyeing for a piece of the pie.

Phase 1 – Fully Owned Fleets

In the initial phase of the market companies owned the complete fleet with the drivers as salaried employees. This was characterized by high capital costs to the company – car loan EMI’s, high maintenance costs. While this model facilitated rapid expansion, it also came at a huge cost. Caused high stress levels in drivers and there were driver strikes that affected the service.

Bookings were mainly done via telephone calls and cash was the dominant model.

Phase 2 – Fleet Aggregation Model

Companies like TaxiForSure and Ola started this model where small fleet owners or single car owners can put the company brand on the car, and get registered with them. Cars are free to take up non-company rides, but for every company-initiated ride, they pay the company a fixed percentage as commission. This model had low capital expenditure and lower maintenance costs.

Booking was done via telephone calls as well as through their websites. While cash was still the dominant payment form, in-cab POS terminal for credit / debit cards started being used as well in this phase.

Phase 3 – The Hybrid Model (Current Phase)

In this model part of the fleet is owned by the company and part of the fleet is from an aggregation model, hence providing the best of both worlds – better control on cab availability and service quality while keeping costs low.

Booking are done via telephone, website as well as mobile apps and the payments via cash, card and wallets.

THE ROAD AHEAD The radio taxi space in India has a huge headroom for growth and

THE ROAD AHEAD

The radio taxi space in India has a huge headroom for growth and is far from saturation. While there is a good scope for expansion in tier 2 cities, the metro’s will still be the primary market for all the players. Hence we might see price wars and more fleet variations (like Ola Auto, Ola Nano and UberGo) being introduced.

More and more hatchbacks and low cost options will be introduced to cater to the price conscious Indian market and to compete against other forms of public transportation. Service assurance & quality and convenience will emerge as the long-term differentiators. Ride-

Sharing might come up in the next 3 years and has the potential to bring down costs even further for the consumer as well as reduce costs even further for the taxi players. There are

quite a few small ride sharing start ups

already like Lets Ride, Ridingo, Zify, PoolCircle and

Rocket Internet’s Tripda to name a few. Uber is already experimenting with this in other markets and might bring this to the Indian market soon as well. There will also be scope for M&A activities with consolidations happening among ridesharing players or one of these taxi companies scooping up ride sharing players to fuel it’s foray into ride sharing. There are definitely some exciting times ahead, both for consumers as well the taxi companies.

FINANCIAL ANALYSIS

For 2013-14, ANI Technologies, which runs Ola Cabs, reported a 50 per cent jump in net loss at Rs 34.21 crore (Rs 342.1 million), against Rs 22.80 crore (Rs 228 million) in 2012-13, according to filings with the Registrar of Companies.

TaxiForSure, also facing a nationwide ban, has widened its loss, too. Serendipity Infolabs, the holding company for TaxiForSure, reported a loss of Rs 17.08 crore (Rs 170.8 million) for 2013-14, compared with a profit of Rs 3.02 crore (Rs 30.2 million) the previous year.

For 2013-14, Meru Cab Company, which runs Meru Cabs, reported its maiden profit, of Rs

  • 3.55 crore (Rs 35.5 million).In 2012-13, it had recorded a loss of Rs 31.11 crore (Rs 311.1

million).As of March-end this year, the company’s accumulated loss stood at Rs 215.24 crore

(Rs 2.15 billion).

Mega Cabs, which owns and has been operating taxis round the clock across six cities since 2001, reported a loss of Rs 2.55 crore (Rs 25.5 million) on revenue of Rs 36.37 crore (Rs 363.7 million) for 2013-14.

The company, which claims to have the largest radio taxi network in India, had posted a net profit of Rs 12.18 lakh (Rs 1.21 million) on revenue of Rs 39.55 crore (Rs 395.5 million) the previous year.

In terms of revenue, Ola Cabs, backed by private equity funds Tiger Global and Matrix Partners, has reported solid growth.Its Rs 51-crore (Rs 510-million) revenue in 2013-14 was 219 per cent higher than Rs 16 crore (Rs 160 million) the previous financial year.

TaxiForSure, backed by Hellion Ventures and Accel India, had revenue of Rs 4.29 crore (Rs

  • 42.9 million) in 2013-14; Meru Cabs did not disclose its revenue details.

There are 19 radio taxi operators in the country, including Mega Cabs, Easy Cabs, Meru Cabs and Tab Cabs, according to the Association of Radio Taxis.These operators run about 25,000 cabs across India, generating combined revenue of Rs 70,000-80,000 a cab every month, the association says.

Of these, Easy Cabs is operated by Carzonrent (India), which also has other businesses such as a personal ground transportation service.It offers short- and long-term car rental solutions through its fleet of 6,500 cars.

Quick Cabs, which runs about 1,000 radio taxis in the National Capital region, had not filed financial details with RoC till the filing of this report.

Lately, India’s taxi services market, despite its financial stress, has received increased attention from global investors, primarily because of the fact that the ‘radio taxi’ model has

emerged as the fastest-growing and most reliable form of public transport for the world’s second-largest population.

There are about 600,000 taxis in India, generating combined annual revenue of about Rs 11,000 crore (Rs 110 billion).

PRODUCT AND PRICING

Olacabs provides different types of cab service:

Ola Prime — A business-class car service for luxury travel available in a few cities offering bigger cars like Toyota Innova.

Ola Sedan — A regular-class car service aimed at providing the customers a spacious car for comfortable travel with cars like Toyota Etios.

Ola Mini — An economic-class car service to serve customers looking for affordable personal transportation with cars like Tata Indica.

Ola Pink — A car service driven by a lady driver service lady travellers.

Ola Auto — An auto service provided to the customers, removing the need for haggling the price with the drivers.

The cabs can be reserved through a web browser or a mobile app. This cab service supports both cash and cashless payment options with Ola money. It clocks an average of more than 150,000 bookings per day and commands 60 percent of the market share in India.

FLAT RATE

Non airport pickups and drops

Standard Rate

Category

Minimum bill

Extra km charges

Wait time charges

 

Sedan

Rs 150 for first 8 km

Rs 13 per Km

Rs 2 per min

Mini

Rs 100 for first 6 km

Rs 10 per Km

Rs 2 per min

* Waiting time includes time taken to board the cab after pickup time as well as waiting during the trip.

Prime Rate

Category

Minimum bill

Extra km charges

Ride time charges(for entire ride)

Prime

Rs 200 for first 5 km

Rs 18 per Km

Rs 2 per min

Extra charges

Peak Time Surcharge

Surcharge may be applicable during peak hours and will be conveyed during the booking.

Airport rate All airport pickups and drops. Additional toll charge of Rs 75 will be applicable.

Standard Rate

Category

Minimum bill

Distance charges

Wait time charges

Sedan

Rs 600 for first 30 km

Rs 16 per Km

Rs 2 per min

Mini

Rs 540 for first 30 km

Rs 13 per Km

Rs 2 per min

Prime Rate

Category

Minimum bill

Distance charges

Ride time charges(for entire ride)

Prime

Rs 800 for first 30 km

Rs 18 per Km

Rs 2 per min

Ola Advantage

 

* First 10 mins of waiting time is FREE (only for standard rates) * No night charges * Transparent pricing * Invoice mailed at the end of ride

DEVELOPMENT AND PRODUCTION PLAN

Ola in an exclusive chat that the money raised would be used to aggressively expand into new cities, categories and strengthen the cab aggregator's driver ecosystem in a highly competitive market. The startup has raised around $65 million of funds in three rounds of institutional funding.

Ola, which works on the marketplace model, has 11,000 cabs across nine cities on its platform and is said to be clocking 12,000 bookings per day, 50% of which are through its mobile app. The need for quick and efficient point-to-point transport is very large in urban India. Ola is the leader in addressing this via technology, benefiting both consumers and drivers. Ola is growing 30% month-on-month with Ola Minis seeing the sharpest growth. Having started off by offering only sedans, Ola recently introduced Minis and Luxury cars to broaden its portfolio. Ola Mini is 20-30% cheaper than fares charged on sedans and competes with UberX directly.

The new entrants in the taxi service market work on the asset-light model where, instead of owning the fleet themselves, they facilitate driver entrepreneurship. Ola, in fact, helps drivers in financing loans at lower interest rates for the purchase of their cars and has tie-ups with car manufacturers.

The overall Indian cab market, estimated at about $4 billion, has seen some frenetic activity of late with VCs lining up top dollars to push transportation startups employing technology to disrupt the traditional taxi services business.

Olacabs has raised Rs 250 crore of fresh funds, valuing the

taxi service start ups at over Rs

1,000 crore. This catapults the three-year-old company into the big league of India's consumer internet story. India focused-hedge fund Steadview Capital and Silicon Valley's blue-chip VC firm Sequoia Capital led the latest round of fund-raise, which also saw participation from existing investors Matrix Partners India and Tiger Global

Ola's valuation has more than doubled since November last year when it got on board Matrix Partners in a Rs 120-crore fund-raise. It now joins the likes of other consumer internet startups Quikr, Zomato and Bookmyshow which have crossed the Rs 1,000-crore valuation

figure , this list does not include e-commerce players such as

and

Ola's valuation has more than doubled since November last year when it got on board MatrixFlipkart and Snapdeal . Ola has more than 33,000 registered users on its platform and it has seen 9x growth in monthly bookings in January-October 2014. It claims that Ola commands 60 per cent market share in India, followed by Meru (16 per cent), TaxiForSure (14 per cent) and Uber (5 per cent). Olacabs is looking at an aggressive ramp-up to increase its presence four-fold to 200 cities by the end of this year from 64 cities at present, according to the source. It claims to have 60,000 cabs on its platform serving two lakh customers daily. The company has added over 15,000 cars to its platform in the last three months and has launched operations in over 34 new cities during this period. It says it has been adding over 1,000 cabs to the platform every day. Ola’s mobile wallet was introduced in October last year and the company claims that first- time users of this tool are growing at the rate of 40 per cent per month. The firm also began making auto bookings available on its platform in beta mode across six cities in India including Bangalore, Mumbai, Delhi, Chennai, Pune and Ahmedabad. Another new category that is currently in beta mode is ‘Ola Pink’, cabs driven by women drivers and is only for women passengers in Bangalore. Here’s what else happened in 2014:-  We used to add around 10 cars a day and now we add 1000 cars a day.  We have more than 60,000 cabs on the platform currently.  We went from 15% market share to almost 70% market share.  We started a completely new business with Kaali Peeli and Autos  We also made huge gains on mobile, with almost 70% of our bookings coming from mobile app, up from 20% last year " id="pdf-obj-16-10" src="pdf-obj-16-10.jpg">

Ola has more than 33,000 registered users on its platform and it has seen 9x growth in

monthly bookings

in January-October 2014. It claims that Ola commands 60 per cent market

share in India, followed by Meru (16 per cent), TaxiForSure (14 per cent) and Uber (5 per cent).

Olacabs is looking at an aggressive ramp-up to increase its presence four-fold to 200 cities by the end of this year from 64 cities at present, according to the source.

It claims to have 60,000 cabs on its platform serving two lakh customers daily. The company has added over 15,000 cars to its platform in the last three months and has launched operations in over 34 new cities during this period. It says it has been adding over 1,000 cabs to the platform every day.

Ola’s mobile wallet was introduced in October last year and the company claims that first- time users of this tool are growing at the rate of 40 per cent per month.

The firm also began making auto bookings available on its platform in beta mode across six cities in India including Bangalore, Mumbai, Delhi, Chennai, Pune and Ahmedabad. Another new category that is currently in beta mode is ‘Ola Pink’, cabs driven by women drivers and is only for women passengers in Bangalore.

Here’s what else happened in 2014:-

We used to add around 10 cars a day and now we add 1000 cars a day.

We have more than 60,000 cabs on the platform currently.

We went from 15% market share to almost 70% market share.

We started a completely new business with Kaali Peeli and Autos

We also made huge gains on mobile, with almost 70% of our bookings coming from mobile app, up from 20% last year

Our app serves over 200,000 customers everyday

Over 70% drivers on its platform are independent driver entrepreneurs

Recently OlaCabs has baught TaxiForSure which was valued at about $125 million for about $200 million

MARKETING PLAN

Calling a cab is just a tap away. Mumbai-based Olacabs is among the first in India to have launched an application that allows you to book a cab by just tapping on your phone. Having gained traction in Mumbai, the company is now expanding to Bangalore and Delhi.

With a few taps on the Olacabs application on any of the android-based phones, users can call a cab. The company uses GPS technology to let users book a cab. The company, describes Olacabs as a technology firm rather than a cab-services firm. One of his ambition is to be able to deliver a cab within 20 minutes from the time of booking. For this, the company is making use of data analytics, so that they can forecast demand for its services on a daily basis. Based on this data analysis company is intended to provide service within 20 minutes of booking. At present it is around 30-35 minutes. The company has a small team managing the data analytics for better forecasting in Mumbai.

Since the company has became operational in Mumbai for more than a year now, the company has generated enough data. Company also make use of demographic details while evaluating a region. The demand visualisation is done on a daily basis, so that accordingly we can have our cabs in areas where demand is high at specific hours.

Unlike other radio cab services provider, Olacabs is an aggregator of car rental service. The company does not have any inventory of cabs. We have focused on creating a technology platform that will act as an umbrella for small car rental firms.

Olacabs is addressing point-to-point cab services, outstation cab services and full-day rental services. So far, Olacabs have been successful in getting 600 suppliers on board with 1,000 cabs in Mumbai. In Bangalore where it started services a month back, it has 100 suppliers, and Delhi which is still in pilot mode also has 100 suppliers.

The company claims to do 2,000 bookings on a daily basis. We want to take this to 3,000 per day by the end of this month. Almost 50 per cent of these bookings come from its mobile applicaThe new service will offer the same starting fare as autorickshaws, that is, Rs 13 per km but with a base fare of Rs 100 for the first six kms, making it the cheapest AC cab service available in the city.The price point is so basic and 13 per km is extremely affordable. Someone who has to take an auto will have to think twice now. With Ola the customer has a hassle-free commute. With the touch of a button, a cab comes to your door, takes you where you need to go. Not a single word, you pay your fare at the end and go. Since the past three months we’ve had a great testing time.

Taxi aggregation company Ola cabs on Tuesday launched its low cost service called Ola Mini across three cities and flagged off a new 'Business Class' service Ola Prime, across six major metros. Ola will offer AC compact cars like Tata Indica, Vista and Ford Figo under the Ola Mini service. Customers can book the cabs online by calling Ola’s call center or through the Ola mobile app. With Ola Mini, customers will also get the usual cutting edge services like the ability to book and track the cab through their mobile phones, e-mailed receipts, accurate meter and well trained professional drivers.

The launch by Ola Cabs signals a tough fight ahead for country's new age start-ups such as TaxiForSure, Uber, Meru and Mega cabs who are eyeing for a share in India's $6 billion taxi rentals market.

Bangalore based Ola has 18,000 cabs across 12 different cities along with three different product lines. The 3-year old company has launched Ola Prime, a business class service for customers with a fleet that will include cars like Toyota Innova, Skoda Rapid, Honda Civic etc. The company has priced Ola Prime between Rs 17 to Rs 20 per km across different cities, almost similar to the rates that Uber and Meru Cabs are charging in various cities. We have arrived at these offerings based on our understanding of travel patterns in these cities over the years and the results derived from our analytics exercise that brought to light the price points which different customers will find attractive. The company announced the launch of the low cost 'Ola Mini' across Mumbai, Chennai and Pune Ola Prime has been launched across six cities of Bangalore, Delhi, Mumbai, Chennai, Pune and Jaipur.

In a bid to get users to experience cab services and bypass auto-rickshaws Ola Mini has been priced at Rs 10 per km with a base fare of Rs 100, thus targeting long distance city travelers, who rely typically on a bus or metro for local transportation.

Ola Cabs, mobile application for cab bookings, has partnered with the famous black and yellow cabs in Mumbai. With the new partnership Ola has included black and yellow cab bookings on their mobile application. Presently, Ola has tied up with a fleet of 2,000 cabs and will operate between Bandra west and Colaba in Mumbai.

Currently we have partnered with 2,000 cabs, but down the line we have plans to increase the fleet to 20,000 within the next six to seven months.”

For inclusion of the black and yellow cabs in their application, Ola Cabs has provided smartphone devices to 2,000 drivers without any charge. Each smartphone contains the Ola app which has been uniquely designed to book these cabs. By using the cab, a customer can see all the partnered cabs around him, by entering the location and confirming the request the drivers in the vicinity will be alerted though the smartphone. Customers have a option of selecting the normal black and yellow cab or a cool cab. The pricing for these cabs will be the regular charges set by the government.

The Ola application is available on the Windows, IOS and the Android platform.

Making all the difference

Ola driver can never refuse service to a customer. When the driver wants to take a break, he has the freedom to turn off the GPS tracker. But, once the booking is made, he cannot back- out. Similarly, Ola, as a policy, does not ask where a customer wants to get dropped. Be it 100 meters or 100 kilometers, our goal is to ensure that the customer’s journey from point A to point B is an experience by itself, and has nothing to do with how far he/she is travelling. To help maintain its service quality, the company has put in place quite a few criteria to bring an operator or driver on board. As a first, the Olacabs team holds an operational and functional level audit to assess if the car is worthy of being on the road. Secondly, it holds a training session for the drivers, to bring them up to its standards. Thirdly, the Ola team conducts planned and surprise audits from time-to-time, to ensure that the service is being delivered as per the company’s expectations.

Overcoming challenges

Today, the car rental industry in India is pegged to be at US $6 billion, growing by 20 per cent annually. While this presents a huge opportunity for companies such as Olacabs to grow in this space, it is also fraught with regulatory and infrastructural challenges. As a first, there is no policy framework around the market. We more or less created the market and that leaves us with the responsibility of setting a high benchmark. Secondly, given that Ola relies largely on mobile and Internet data to deliver customer experience and process transactions, connectivity poses a challenge at certain locations across cities. To tackle this, the company is in the process of developing alternate devices that are less reliant on mobile and Internet data. The third challenge lies in the lack of proper road infrastructure and connectivity. We don’t have a good mapping system in place, so we have to rely on Google maps.

Like any other startup, Olacabs builds its brand presence by interacting with its customers on social media and advertising on radio and other mass media. The company, however, focuses most of its energy on the customer and its branding activities are accelerated only when they launch in a new city. In the next five years, Olacabs is looking to create a presence in 10 to 12 metro and Tier-II cities and make transportation economical, efficient and effortless for everyone. In all, our goal is to empower the operators as entrepreneurs and hence deliver great customer value.

What Olacabs has in store for its customers

Ola Mini, a series of hatch-back cars, with a base fare of Rs. 100 for the first six km and Rs. 13 per additional km. The sedan series, with a base fare of Rs. 200 for the first eight km and Rs. 18 for each additional km Ola Luxury is priced at Rs. 250 for the first two km and Rs. 20 for each additional km.

Best practices to build customer satisfaction in a service-oriented business

 

Understand the pain point: In our case, while a customer expected a great cab experience, we went one step further, integrated technology at every level and innovated the on-touch booking experience through our mobile application. Put the customer first: Ensure that the customer is at the centre of every initiative and his/her experience is delivered to the best of your ability. Offer a seamless experience: From the time a customer reaches out to you till he receives his invoice, makes the payment and shares feedback, the experience should be seamless. For us, consistency in communication across our web, SMS and e-mail applications helps us achieve this. Take care of your other stakeholders: In our case, the drivers and operators are our stakeholders and they play a critical role in determining the overall experience. Our vision of creating micro entrepreneurs in the driver community and enabling business for them goes a long way in our customer experience. Always action feedback: Slip-ups will happen occasionally. Be quick to accept, resolve and ensure it never repeats again.

FINANCIAL PLAN

Funding

It raised $330k in its initial round of funding on April 21, 2011. The company received Series A funding of $5 million from Tiger Global Management; Series B funding of USD 20 million from Matrix Partners and Tiger Global; Series C funding of $41.5 million from Steadview Capital, Sequoia Capital and its existing investors. In Series D round of funding on Oct 25, 2014, it raised $210 million from SoftBank Internet and Media Inc. and its existing investors.

It is back in process to scoop between $300-500 million more

in its series E funding.

REVENUE

For 2013-14, ANI Technologies, which runs Ola Cabs, reported a 50 per cent jump in net loss at Rs 34.21 crore, against Rs 22.80 crore in 2012-13, according to filings with the Registrar of Companies (RoC).

In terms of revenue, Ola Cabs, backed by private equity funds Tiger Global and Matrix Partners, has reported solid growth. Its Rs 51-crore revenue in 2013-14 was 219 per cent

higher than

Rs 16 crore the previous financial year.

ORGANIZATION AND MANAGEMENT

We are India’s first online aggregator of car rental services. We integrate car transportation, be it point-to-point services within a city, hour-based rental services or outstation travel, onto

a technology platform, ensuring convenient, transparent and quick service

fulfillment for the

customer. Not having our own fleet actually works to our advantage.

which meet our defined standards to be a part of our fleet.

We only select cars

We also conduct regular service

audits, train and certify drivers and do thorough background checks of both operators and

drivers before partnering with them.

Customers can access us, on the web, through a mobile

app or through a customer service centre. Our customers vouch for the superior experience

they have had.

The inventory utilisation among small cab operators (ownership of 2-5 cabs) in India is an abysmal 40-50%. Cab owners benefit from the Ola Cabs network and technology platform and that in turn helps them procure customers and enhance their income through better inventory utilisation. In Mumbai, inventory utilisation levels have gone up to 70% for cars that are on the Olacabs platform. Olacabs provides convenient, transparent and quick cab services, both car rental and point-to-point, by leveraging technology to provide a uniform and highly customer-centric experience.

Our aim is to use technology to bring efficiency and superior customer experience (in par with the hospitality industry) to the car rental industry. We endeavour to bring convenience, price transparency and standardization to consumers booking car rentals and cab services. There is also a freely downloadable mobile app using which customers can book cabs and monitor their position by the built-in GPS system. We have a dedicated customer care centre to address all queries of our customers. Technology has enabled us to adhere to the 10 minute service level agreement (SLA) which we provide to all our customers.

We also use ‘heat maps’ to efficiently manage the demand and supply of cabs in various parts of a city at different points in time. The traffic alerts using information from various sources including social media help in guiding the drivers to reach the destination in the shortest possible time. Both these help in effective inventory management for Olacabs. We plan to scale quickly as we have an asset-light and technology-focused business model. Also, with the capital raised from Tiger Global, we plan to significantly ramp up our technology infrastructure.

There are customers who use us multiple times for point-to-point services, in a day. We intend to bring all car operators and taxis pan-India on to a single technology platform to enable real time inventory distribution.

Thoughts on work culture

I devote a lot of time to hire the right people. We keep on looking until we’ve found the right person. More than the skill match, we’re looking for the culture match. Being a very aggressive company, it is not everyone’s cup of tea and finding the right people is invaluable. Ola has a rather strict policy in terms of recruitment and gives the employee a decent amount of time but if it’s not working out, ways are parted in about 2 months time. If something isn’t working, you can’t hang on to it. It’s better for both parties.

In April, Ola tied up with auto maker Mahindra & Mahindra to offer cars to drivers and operators at discounted prices with suitable finance options .Ola is supporting this driver to be an entrepreneur by helping him buy his own car and invest in his training and development.

Ola has also introduced a "panic button", second layer of GPS security and is in the testing phase for a female-only cab service called 'Pink' to ensure woman safety.

SoftBank-backed Ola currently serves more than 200,000 rides every day and claims to be growing 40% month on month. The Bengaluru-based company said it is adding over 1,000 cabs to the platform every day and plans to expand to over 200 cities by the end of 2015. TaxiForSure, too, has the panic button and GPS installed in cabs.

We have worked with MapmyIndia for GPS systems and Sun Telematics for panic button installation in our cabs and also work directly with the government for verification and documentation work. Taxi aggregators say they are willing to go past the prescribed government standards to ensure safety.

Bangalore-based Ola Cabs has tied up with India’s largest lender State Bank of India (SBI) to extend vehicle financing for its drivers under a new programme called Ola Pragati.

Under the programme, SBI will offer car loans to drivers on Ola’s platform with a daily repayment scheme as against the current practice of an EMI. Drivers on the Ola platform will also benefit from lower down payment of just 10%, 24-hour loan approval from SBI and easier documentation.

SBI says that it will provide loans at an average rate of 13% and the daily repayment amounts would be about Rs 500- 600. It’s also reported that cars financed by SBI will have GPS for enhanced safety.

Olacabs had initiated a similar program to fund drivers, but out of its own pocket,

in

partnership with Milaap. The program involved sending a ‘message’ to the driver on

Milaap’s platform which would contribute Rs.100 towards buying a new car.

At a time when the online taxi aggregation industry is struggling with high demand and low supply, Bengaluru-based Ola (previously Ola Cabs) on Friday launched a daily loan repayment program for drivers, in association with the country's largest lender State Bank of India (SBI).

Under the program, which has been named 'Ola Pragati', SBI will offer car loans to drivers who work with Ola under a daily repayment scheme as against the current practice of equated monthly installment (EMI). The program will also give the benefit of a lower down payment and faster clearance of loans for Ola drivers.

Drivers who avail a loan under this program will need to continue working with Ola for 60 hours a week for a stipulated period of time, depending on the terms of their loan. If they choose o change the operator that they work with, their loans would be converted into a regular car-loan with SBI.

As per the program, a driver can get a loan for a down payment of just 10%, with an average interest rate of 13%. The loans under the scheme will be cleared within 24 hours and the

repayment amount for drivers is estimated at Rs 500-600 per day.

EMI is best suited for the

salaried class. Drivers have a cash inflow on a daily basis and for them to pay a lump sum at

the end of the month is difficult.Ola expects at least 1,00,000 driver entrepreneurs enrolling under the Ola Pragati program in the next couple of years.

The company said that the daily payment mechanism gives the financing institution better visibility of loan repayment and more lending comfort. The program will work in sync with the daily settlement process of Ola drivers.

Ola currently operates in 67 cities and clocks over 2,00,000 rides per day. The company has launched several initiatives in the past to encourage drivers.

Recently, Ola had set up a fund of Rs 100 crore to enable drivers buy their own cars and turn driver entrepreneurs. The company has run several initiatives in the past two years to support drivers.

OWNERSHIP

Olacabs, founded in January 2011 by two IIT Bombay alumni Bhavish Aggarwal and Ankit Bhati is India’s largest aggregator of car rentals and point-to-point cab services. Olacabs integrates car transportation, be it point-to-point services within a city, hour-based rental services or outstation travel, onto a technology platform, ensuring convenient, transparent and quick service fulfillment for the customer. Customers can access Olacabs, on the web,

through a mobile app or through a customer service centre. Currently, Olacabs currently operates in Mumbai Delhi and Bangalore and is rapidly expanding to other cities.

CRITICAL RISKS & PROBLEM

Fix your location tracking

The drivers are unable to reach the pick-up point based on the GPS / location from the app. Many drivers have complained that they don't get a clear location or a route map on the apps. Ola is accurate but not real-time .

Penalize errant drivers

In order to increase the availability of the cabs, the service providers (Ola) give them a bonus for being online for a certain time daily or weekly. Therefore, many of the drivers keep their apps turned on even when they are unavailable to respond to a request. They are willing to take the chance of turning away a customer in order to add to punch in more hours. Also, some drivers refuse to show up when they realize that the destination is not very attractive to them.

Set an example on the roads

While there has been much discussion on improving security / transparency through better verification of drivers, an equally important expectation from Ola is that they would follow safe traffic practices. No mobile phone while driving, following speed limits, obeying traffic lights, using a seat belt, using turn indicators while shifting lanes / turning. These have to become standard driving practice. If Ola cannot have better driving practices than the regular taxis, autos and buses, then what's the point?

Ola cabs stop taking online booking

Olacabs, an online car rentals and cab services venture has stopped taking rental booking from all the Indian cities where it operates. Olacabs has indeed stopped accepting rental bookings, citing poor demand behind this move.

Government Regulations

With the increasing crime rates in the national capital, Delhi government has banned radio taxi and certain services of taxies acting as a critical roadblock in their expansion and growth.

SWOT ANALYSIS

STRENGTH

WEAKNESS

High Market share

Price competition from MERU cabs,

Pan India footprint

easy cabs etc.

High degree Customer care services

No significant product differentiation

Promotions

from competitors.

High degree customer flexibility

Complaints of Booking cancellations

Boom in Smartphone and internet

 

capability Advanced location tracking GPS system.

OPPORTUNITIES

 

THREATS

The fast extending market

High degree of new entrants into

Latest technology and low cost advantage Branding on social media

market at a great pace. Unexpected government regulations

Untapped rural market