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With no surge pricing & driver incentives, here's how Sivasankaran aims to take on Ola & Uber

C Sivasankaran lays out a grand vision & breaks every rule in the book followed by large players in his maiden attempt to enter taxi aggregation biz.

, ET Bureau|
Last Updated: Jun 10, 2016, 09.25 AM IST|Original: Jun 10, 2016, 09.22 AM IST
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C Sivasankaran lays out a grand vision & breaks every rule in the book followed by large players in his maiden attempt to enter taxi aggregation biz.
C Sivasankaran lays out a grand vision & breaks every rule in the book followed by large players in his maiden attempt to enter taxi aggregation biz.
Company-owned cars for starters; electric cars and even driver-less ones whenever they come by. No driver incentivisation or surge pricing and a business that puts profitability over revenue. Add to that uniformed drivers who will get a special health package for the day-long driving.

Climbing out of a bankruptcy-led wilderness he stepped into nearly two years back, trans-national businessman C Sivasankaran laid out a grand vision and broke every rule in the book followed by the large players in the country in his maiden attempt to enter taxi aggregation.

To be based in Chennai, UTOO Cabs currently has 180 cars running in Chennai. But, it will be quickly scaled up to 1,000 cars. The service will be expanded to eight other cities with at least one lakh cars in the first phase of expansion. The second phase will add 1.8 lakh cars to cover 104 cities.

The Nissan Sunny sedan will charge Rs 40 as base charge, Rs 8 a kilometre and Rs 2 for every minute of ride and the SUV category will have slightly higher rates. The company has tied up with the Japanese car maker for the sedan and the SUV will have cars from Toyota and Mahindra besides Nissan. There will be a compact segment too.

"Why I am into this business? Because I see profits," Sivasankaran said in a press conference to announce the launch. Sivasankaran said the initial investment in the venture is anywhere between Rs 350 crore and Rs 1,200 crore, which will be generated from "close friends and family," refusing to elaborate further.

The company floats four ways in which a driver can associate with the company: a monthly salary of Rs 18,000 along with 10% of earnings for driving the company-provided car, which is the most sought-after method. The others include a leasing arrangement for cars with a daily price for the lease and loan facilitation for making the driver the owner through a credit system.

Sivasankaran says there was plenty of space for taxi aggregation, a market he says is a Rs 5,400 crore ($800 million) industry growing at 20-25% and with organised sector counting for about 5%. He believes it will grow to Rs 46,704 crore ($7 billion) by 2020.

Sivasankaran's venture, say entrepreneurs who have tracked the aggregation business, is a digital native, driven by mobile applications, and the attachment model for drivers targets a large section of drivers.

"I see what Sivasankaran is targeting. He is going for drivers who are not owners of their own cars.They form a large number in this business. I believe they will be attracted to this offer," says R Narayanan, a Chennai-based angel investor who has evaluated companies in the aggregation business and who knows Sivasankaran.

MR Venkatesh, a chartered account, says Sivasankaran has the business acumen to make this venture click, even though he is up against large companies backed by wealthy investors. Currently a self-founded company, UTOO is not averse to venture capital.

"Any capital is welcome," said Sivasankaran.

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