Meru Cabs has turned its focus on B2B clients and is attempting an overhaul hoping it will help raise its revenue in a market where the heavily funded Ola and Uber pose a stiff competition, as per media reports.
Meru Cabs had started operations by serving B2C and B2B clients. It is looking to double down on its B2B offering, that would include corporate employee transportation, car rentals, and airport contracts. It intends to grow this as the primary business line.
Meru’s B2B business accounts for 40-45% of its revenues and Gupta is looking to increase that share to 70-75% in the next three years.
“The best viable option for us is to focus on B2B. We are looking at a three-year time frame where the model will shift from a B2C business to a B2B business,”
said Neeraj Gupta, founder of Meru Cabs.
How has the company grown?
The decision to change focus came after the loss of market share which has seen Meru’s revenues and rides volumes dip by 30-40% in the past few years.
Meru Cabs earned Rs 322.6 crore in revenues in FY16, growing 11% from a year ago, as per documents filed with the Registrar of Companies and sourced from business research platform Tofler.
Although Meru has not yet filed its financial returns for FY17, industry watchers say the company’s revenues have fallen both in FY17 and FY18.
How would this shift in the model help?
The B2C segment is being handled well by Ola and Uber, and therefore, this shift would help in the company to get back in shape.
This B2B segment has not been tapped into properly till date and Uber has a platform where they can serve this segment.
Future plans
To enable cost efficiencies, Meru aims to grow its fleet four times to about 20,000 over the next five years for its B2B model, and use the same to also serve its B2C customers.
To enable customer retention for its B2C business, it had recently launched the marketplace model to test the waters on affordability and viability.
Meru is also in talks with several strategic investors to raise $20-25 million as it looks to create and retain market leadership in the B2B business. Currently, PE firm India Value Fund Advisors holds an ownership stake in Meru at about 87% but it is looking to completely or partially exit its investment through an impending fundraise.
There has been growing news of Softbank, the Japanese multinational conglomerate calling for a merger between the US firm Uber’s India Unit and homegrown Ola as a part of its planned amalgamation in Asia’s rapidly growing ride-hailing app market.
Softbank’s push for amalgamation in India’s ride-hailing market came days after Uber sold it’s local unit to rival Grab and stated its exit from Southeast Asia. After the deal is signed, Uber will be controlling 27.5% stake in the combined entity.
In this situation, one waits and sees how this new development with Meru cabs is going to affect this market.
Also Read: CEO Greg Moran Considers Rajasthan As A Big Market For Zoomcar
