The Economic Times: November 12, 2014
Traditional cos relying on acquisitions for gaining a foothold in the market dominated by big players
Riding on the success of taxi aggregation service providers Uber, Ola Cabs and Taxiforsure, traditional cab services and aggregators including Helioss Travel and Bookmycab are entering the market, flush with investments. These firms are relying on acquisitions for gaining a foothold in the market dominated by big players which work on a marketplace model.
Mumbai-based black and yellow taxi aggregator Bookmycab has announced its entry in the southern zone through acquisition of Hyderabad-based Cabonclick. The buyout will provide access to 150 cabs to the company, which aims to scale up to 500 cabs within six months.
“We are looking to add 10-plus cities over the next six to eight months and Delhi will be our next launch from where we will be spreading to the northern zone,“ said Avinash Gupta, CEO of Bookmycab.
The company had earlier this year announced that it would raise ` Rs 40 crore to fuel its expansion.
Corporate car rental company Helioss Travel has launched its direct consumer facing business, Magic Cabs, in Bengaluru with an initial investment of Rs. 10 crore in the new segment. The company plans to raise about Rs. 40 crore of fresh funds to expand its footprint. Magic Cabs has launched with a fleet of 100 cabs in Bengaluru and it expects annual revenue of Rs . 600 crore in five years.
The high valuations and size of the market are the major drivers for the entry of traditional businesses in taxi aggregation service. “We expect Magic Cabs to be our fastest growing and largest business segment in the next couple of years,“ said B Rajiv, CEO of Helioss Travel Solutions. Gupta of Bookmycab said his company would go for a mix of organic and inorganic growth, depending on the market, and focus on underserved markets for expansion.
“Our launch of Kolkata operations was organic as there were not many players operating there. Similarly, Delhi will be an organic market and we are currently running a pilot there,“ he said.
The Indian taxi market is estimated at . 36,000-54,000 crore), of $6-9 billion (about ` which only 4-6% is organised. Olacabs last month received $210 million (about . 1,290 crore) of funding from Japan’s Softbank.
Uber is backed by Goldman Sachs and Google Ventures, among others. India has an estimated 5.5 lakh commercial cabs for its 10 large cities which have a combined population of about six crore.
The mix of organic and inorganic growth is likely to lead to consolidation of the market given that multiple players are eyeing similar centres for expansion.“The biggest thing will be the consolidation of the market in near future,“ said Jaspal Singh, co-founder of Valoriser Consultants, which provides market research services for transportation companies. “Domestic firms will make acquisitions to enter this segment or strengthen their position or some of international players will look to enter the Indian market and will acquire the existing players to get easy entry,“ said Singh.