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Ola drives in $60 million to run operations in UK, Australia, NZ

Capital invested only reflects additional costs of running local ops, marketing & incentives.

, ET Bureau|
Updated: May 15, 2019, 10.44 AM IST
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The amount is spent on technology, people and call centres, all of which are housed in India. Therefore, these expenditures are not reflected in the filings made in the island nation.
BENGALURU: Ride-hailing platform Ola has pumped in about $60 million into its international operations over the last 15 months, according to regulatory filings sourced from Singapore’s Accounting and Corporate Regulatory Authority. The India-based company competes with America’s Uber across markets like Australia, New Zealand and the UK.

The capital invested only reflects additional costs of running local operations, marketing and incentives, according to sources aware of Ola’s plans.

The amount is spent on technology, people and call centres, all of which are housed in India. Therefore, these expenditures are not reflected in the filings made in the island nation, the people said.

“The international business alone is expected to contribute more than a third of Ola’s consolidated revenue by the end of this financial year,” said one person cited above.

Ola Singapore Pte — the investment entity that controls Ola’s interest in international markets — received $6 million from its parent ANI Technologies in March this year. New Zealand, Australia, UK, Sri Lanka, Bangladesh and the US fall under Ola Singapore. Recently, the cab aggregator moved the entity which runs its UK operations from Singapore to The Netherlands.

Ola’s decision to go international was prompted by the potential of clocking higher revenues with lesser burn in these developed markets compared to India. It was also an opportune time for the domestic cab-hailing platform to enter regions where Uber was facing regulatory challenges like in London.

“The cities (where it has launched services) including Sydney, Perth, Cardiff, and Auckland make up roughly the same market size as the top five cities in India that contribute to Ola’s topline,” said one source.

Ola did not respond to ET’s emailed questionnaire seeking comments.

The Bengaluru-based company reported consolidated revenue of Rs 2,222.6 crore for financial year ended March 2018. The losses were Rs 2,842.3 crore in the same period, regulatory filings show.

A reduction in incentives for drivers, increase in prices and the introduction of subscription and value added services on the platform, have helped Ola trim losses in India.

It has also expanded its offerings to include financial services as well as food delivery under the Foodpanda brand. In all, these new services along with the international business are expected to drive growth for the company at a time when it is faced with slowing growth in the core ride hailing business in India.

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Currently, Ola offers ride hailing services in about 20 cities internationally including nine in Australia, seven in the UK, and three in New Zealand.

Rival Uber generated about 52% of its gross bookings outside of its home market, the US, in the quarter ended December 2018. It runs operations in more than 60 countries and 400 cities.

“If Ola is careful in how it selects which markets to enter, this can be a good way for it to grow its topline,” said Karthik Hosanagar, a professor at Wharton Business School.

For instance, Uber’s IPO filing showed that its gross bookings in markets like India, Middle East and Africa are lower on a per trip basis compared to the US, Canada, Europe, Australia and New Zealand, largely as a result of pricing dynamics within these geographies.
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